Summer Step #1: Strategically Prepare Your Base Financial Year"

Among the many numbers you will be facing this coming year, you will likely recall that the Expected Family Contribution (EFC) is absolutely key. Think about it this way – for the immediate future, this EFC number will have a bigger effect on your cash flow than your mortgage rate, tax payments, or credit card interest rates. Yes… it’s that important. The EFC will literally determine what you’re expected to pay toward your child’s education for the coming year.

Your EFC is determined based on a number of things. Of course, they will look at your salary, but it goes beyond that. Also included in the calculations will be your investment portfolio… in fact, if your child attends a private institution, they will probably also include the equity on your home. If it appears that it’s feasible for your family to foot the bill for your child’s higher education, the funding authorities are out to make sure you are on the hook for it.

Of course, we do not expect that you will actually agree with the decisions of the funding authorities! Including assets like your pension, home equity, and other finances may seem unreasonable in many ways, since these things have little or nothing to do with paying for the college education of your family. Well, be that as it may, the funding authorities look at it through their own set of lenses. Rest assured, they will dutifully calculate their statistics based on these numbers when they determine your EFC… and if history is any judge, they are likely to come up with a whopping number that will probably make you wince when you look at it.

With this reality in mind, you will want to ascertain that your finances are arranged with the utmost care this year! This is every bit as important as consulting a tax advisor before you submit your tax returns. Parents should not attempt to create their base financial year without first consulting a knowledgeable college funding advisor who can assist in making the most effective choices for this year and the college years to come.

The kicker: you should be doing this now! College funding is a process that ideally starts long before the submission of application forms, and well before the start of a new academic year. In fact, if you can complete the financial work at some point during this month, you’ll see almost immediate dividends – in terms of diminished stress now and down the road, and also in improved college funding circumstances!