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College Planning

What Parents Actually Pay – The “Net Price”

By College Planning

The vast majority of families do not, in fact, pay the full sticker price for their children’s college education.  Two-thirds receive some form of financial aid. And two-thirds of that aid is in the form of “free money” – grants and scholarships that don’t need to be repaid. What parents actually pay is, in the parlance of financial aid officers, the “net price.”

Here’s how it works.

The college calculates the total “cost of attendance” or “COA” at their school. Sometimes it differs by program or major. For public universities, whether a student is a state resident or not will impact the cost of tuition and fees. Then they calculate a family’s “Expected Family Contribution” or “EFC.” You probably won’t be surprised to find that what the college expects you to contribute, from your income and savings, is far greater than what you would expect you should contribute! But I digress….

The college subtracts your EFC from their COA to determine a student’s “financial need.” The financial aid officers then figure out what mix of grants, scholarships, and work study they will offer you to meet that need. What’s left is the “net price.” A family is left to pay that “net price” from savings or loans (some subsidized by the government).

So how does a college determine your Expected Family Contribution? I’ll discuss that in more detail in my next post. One thing to know now is that each college will calculate your family’s EFC every year and that each college will use its own criteria when determining what mix of grants, scholarships and federally-guaranteed loans to offer. That said, each college will have a “Net Price Calculator” on its website to help you get an idea of what they might expect you to pay, given the income and asset figures you input. More broadly, the College Board has an “Expected Family Contribution” calculator on its website ( that can give you a good idea of what you might be expected to contribute towards college costs.

Was saving for college the easy part?

By College Planning

When my daughter Caitlin was in preschool I recall a mother with much older children warning me that the days may seem endless, but that the years fly by. How true! How could it be that my little Muffin is 15 and a sophomore in high school?!

Nowadays, she and her friends worry about getting into college. Are they taking the right classes? (Do they have to take AP’s?) Big college or small? Close to home – “No!” shouts Caitlin – or clear across the country?

And then, there’s volleyball. Caitlin is so very passionate about volleyball. It’s so much fun to watch her play! She was a Middle Blocker on her school’s varsity team last fall and plays the same on her club team now. She wants to play for her college team, so that adds to the complexity of her college search.

It makes me think that finding the right college for my daughter and getting her through the application process might turn out to be the hard part after all.

What College Really Costs

By College Planning

The short answer is – a lot, even at public universities. Currently, the average annual cost to attend a public university is $25,830 for in-state students and $41,980 for out-of-state. Those figures include:

  • Tuition and fees
  • Room and board
  • Books and supplies
  • Personal expenses and transportation

The costs to attend a private university are even higher, at $73,139. College costs have been rising by 5% each year, on average, over the last thirty years. That’s faster than inflation (2.5%) and there’s no reason to expect this rate to decelerate.  This means that parents of an eight year old are looking at a four-year college bill like this:

  Four Year Cost to Attend


Public University, In-state student $186,880
Public University, Out-of-state student  303,074
Private University $502,669

Parents ask me, how much they should be saving each year in the hopes of being able to fully fund their child’s education? And – reality check – how much should those parents of an eight year old have saved by now?

  Annual Savings from Birth Accumulated  College Savings
Public University, In-state student $8,100 $79,232
Public University, Out-of-state student 12,900 126,185
Private University $21,600 $211,286

Yikes! Those are big, scary numbers for sure. But take heart. All but the wealthiest among us pay the full “sticker price” for college. I’ll explain the how and why in my next post.

Looking ahead to the future.

Planning for College – What You Don’t Know Can Hurt You

By College Planning

As parents, we all want to give our kids the same support our parents gave us for college – or more. We have a vague notion that college – even at a public university – is going to be expensive and that we probably aren’t saving enough. We wonder, will we be able to get some financial aid? One thing most don’t realize is that where we place our savings – meaning, in whose name we place the assets – can substantially impact our ability to get financial aid. Over a series of posts, I’ll explain why.

What does a “personal financial plan” really look like? (And why should I pay a professional to craft one?)

By College Planning, Financial Planning, Retirement

It’s a question I get asked often.  After all, there are plenty of online calculators out there. They’ll take some basic inputs about your big picture goals – like private college for your child or retiring at 60 – and spit out a number for how much you should be saving every year. They’re easy to use – and free!

My answer? The reason those tools are easy to use is because they make so many simplifying assumptions.  And we all know that real life is always little more complicated…. Financial planning – when done thoughtfully and rigorously – creates a detailed, customized map to help you navigate your way to where you want to go.

Your plan should include a detailed analysis of your income streams and expenses, now and in the coming years. It should allow for the running of different scenarios around big decisions that you control, like

  • sending your child to an in-state university or more expensive private college;
  • plowing some of your savings into that dreamed-of vacation home;
  • retiring early to travel or pursue other hobbies; and/or
  • electing to take your Social Security benefits earlier v. later.

Your plan must also take into account what you cannot control, namely the potential pitfalls along the way – like stock market downturns, unexpected medical diagnoses and runaway inflation – and help you steer your way through them.

A financial planner worth their salt knows how to ask the right questions to help enunciate your goals and prepare a plan that shows you how you can achieve them.

What does such a plan cost, you ask?  Well, it depends. At McPeake & Company, we are happy to discuss your current situation and future goals in a free hour-long consultation. Following that, we’ll prepare a detailed proposal and cost estimate for you. If you decide to move forward with us, we’ll get to work!