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Mind The Gap – A College Financial Aid Perspective

Back in my younger days, I did a stint of travel over in Europe. It wasn’t anything fancy. My living arrangements consisted of a comfy (well-used) couch in a corner of a hostel that was being rented by a long time college friend of mine who was studying at BADA in London. I spent my days traveling across the countryside (mostly by train and foot) but I always came back to the hostel for a good night sleep and a hot shower.

I share this story with you because one of the things I saw during my travels was a “Mind The Gap” logo in just about every subway station in London.  Initially, I didn’t know what it stood for but I quickly figured it out as the first train/subway rolled into my platform area and I saw a huge “GAP” between the train and the platform. Like a light bulb had just turned on, I made a shrug of the shoulders and exclaimed “oh yea”… “Mind The Gap”. The three word phrase served as a warning to those that were not familiar with train/subway travel in London on the Underground and hopefully steered people safely clear of the gaping chasm following along the platform.

Gap In The World of Higher Education

Fast forward many years later… Now that I am employed in higher education and work in a campus setting, the term GAP has taken on a totally different meaning.  From a student financial aid perspective, gap references the difference between what the federal government says you can pay for college (via the FAFSA) and what the college or university you are planning on attending is providing you in the form of financial aid. Based upon that definition, I guess it could look like a gaping chasm as referenced above in the platform/subway analogy. 😉

For those that are numbers people, let me introduce gap to you in a different way. Let’s assume that the college you are attending is going to cost $50,000 dollars a year (that includes tuition, room, board, books, etc..). You do the proper thing and fill out the FAFSA to see what type of need-based aid you might qualify for and the results of your EFC (Estimated Family Contribution) shows that your family can afford to pay $10,000 toward your student’s education this year. Based upon that figure, you would automatically assume that the remaining $40,000 in college expense will be taken care of through financial aid resources. In some cases, it is. In other cases, not so much. If the college is able to offer the student $25,000 in the form of financial aid, that will leave an additional $15,000 in unmet need for the family…otherwise known as GAP. So the family will need to not only cover the $10,000 EFC but they will also need to manage a way to come up with the additional $15,000 (of gap) to cover all the costs for the year.

How Do You Bridge The Gap?

When paying for college, there are really only three solid methods that families resort to time and time again to cover their portion of the education expenses after all other forms of financial aid are maximized.

  • Discretionary Income is the first resource. Basically, this is the monies that are left over after a family has used their income to pay all other necessary household expenses.
  • College Savings (or any savings for that matter) can be utilized to help take care of college tuition and hopefully most families have some sort of college savings program in place, if only to cover textbook expenses…
  • Education Loans are becoming the more popular route for families when it comes to paying for college. If a family chooses the education loan route, they want to make sure that they maximize all federal loans available through the Direct Loan program. This would consist of student loans and also parent loans (PLUS). If their maximum potential of loan eligibility is met through these programs and they still need more funding, then they will need to look at private loan options.  Don’t forget your local credit unions as a resource as well. I recently chimed in on a query from NBC regarding the ever growing presence of credit unions in the education loan market. If you would like to see that clip, please feel free to check out the video below.

Mind The Gap

As families move through the college search process and start picking apart the financial aspect of what that experience will mean, they definitely want to be mindful of any gap in funding that may be encountered. Some colleges promise to cover all of the costs (up to the EFC dollar figure) but many colleges will probably fall short and rely upon the student to bring some additional outside scholarship dollars to the table to help bridge that gap. All-in-all, let’s hope your financial aid gap (if any) is more like that of a missing tooth and not so much like the grand canyon amongst the landscape. Even better yet, if it is like the gap on the platform at the London Underground, a properly placed footstep (planning ahead) will make sure you clear any financial challenge (or gap) presented to you.

I hope you find this article helpful.  If you know of anyone else that can benefit from this information, please don’t hesitate to use the “Share Tab” below to pass this along.

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