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.
I can’t stress enough the importance of saving for college. If you have little ones that are making their way through the traditional K-12 education ranks, it is a good idea to start a college savings account right away. Some experts state that the best time to start a college savings account is even before your children are born. However, the realist in me recommends shortly following their birth or kindergarten to start that education savings.
You can start out with a simple savings account at any bank with money provided from Christmas and Birthday cards and later make the decision to formalize the college savings by rolling it onto a 529 savings plan or something similar. The key thing is to start sooner versus later because if you think the cost of education is high now… just wait until your future high school junior/senior starts looking at their college options years from now.
In addition, having a college savings plan in place for your children will definitely be more encouraging as they consider whether a college education is the right path for them. If having a quality education isn’t convincing enough, the College Board states that the median family income in 2008 for those with a bachelor’s degree or more was $101,099, compared to $49,414 for those with just a high school diploma. The numbers speak for themselves.
If you are curious about the different vehicles in which you can save for college, don’t hesitate to check out our guide to college savings provided by CheapScholar.org Contributor Phil Laube, a CPA from Ohio. He provides comprehensive descriptions of the different options you can choose from to save for college and he also shares some great links to other sites for additional information.
Some Interesting Info About College Savings Month
Originally started by the College Savings Plan Network, more than 40 states have declared September “College Savings Month.” Section 529 plans make it easy and affordable for the average family to plan ahead for the cost of college attendance and are available in 49 states and the District of Columbia. In fact, the 108th Congress of the United States officially recognized September as College Savings Month in 2003. Across the nation, many activities are held and communications sent out to recognize the importance of saving for college during the month. CheapScholar.org included!
Students are always trying to score extra scholarship dollars to help fund the gap that is not covered by their initial financial aid packages. At CheapScholar.org, we provide a good number of tips and resources to help students with this search. Today though, we are highlighting a scholarship program that is geared for engineering students.
The American Society of Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE) is funding up to $100,000 in scholarships this year to students that are interested in mechanical engineering, HVAC engineering, or engineering technology. The funds are available to undergraduate and graduate students as well as high school seniors. Application deadlines are the first of May and December.
Scholarships will be awarded based upon the following criteria:
Full-time enrollment in an accredited undergraduate engineering or engineering technology program recognized by ASHRAE
A cumulative grade point average (GPA) of at least 3.0 on a scale where 4.0 is the highest and/or a class ranking of no less than 30% evidenced by submission of an official transcript of grades and/or statement from a school administrator
Three letters of recommendation, including an instructor or faculty advisor, a current or past employer, and any other character reference. In the case of institutions with an ASHRAE student branch, include a letter from the faculty advisor of that branch (may be one of the three letters of recommendation).
Evaluation form completed by the Student Activities Chair of an ASHRAE chapter, if one is within reasonable driving distance of home or school, following an interview with the applicant
Potential service to the HVAC and/or refrigeration profession
Financial need
Leadership ability (activities, leadership roles, community service, etc.)
Now Is Always The Time To Save For College and families just recently got an incentive to contribute to education savings through New York’s 529 College Savings Plan. Thomas DiNapoli is the state’s comptroller and he states that fees are going to be reduced by 50%. The old fee structure to manage the 529 fund was set at .49% but starting this month the fee will now be set at .25%.
“Family budgets are getting tighter, but families still need to save for college,” DiNapoli said in a statement. “When you’re saving for college, every dime counts.”
Based upon this change in fees, it is estimated that plan participants will have a combined savings of almost $20 million dollars annually. 529 program fees can range from .20 percent to upwards of 2.27 percent. At .25%, the New York 529 Savings Plan can now boast a reputation of being one of the lowest fee based college savings plan in the nation. New York’s 529 College Savings Plan is the largest of it’s type in the nation with over $8 Billion dollars invested in about 500,000 separate fund accounts.
New York’s 529 college savings plan is open to any U.S. Citizen (or resident alien) that has a valid social security number. The funds can be used at any accredited college, university, or vocational school in the country (it is not just limited to schools in the state of New York). The minimum contribution required to open an account is only $25.
If you have been thinking about starting a college savings account, you should probably take a look at the option provided by the state of New York. You can view additional information about their 529 program here on the web or you can drop them a call at 877-697-2837 or email: NY529@nysaves.org
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 can’t stress enough the importance of saving for college. If you have little ones that are making their way through the traditional K-12 education ranks, it is a good idea to start a college savings account right away. Some experts state that the best time to start a college savings account is even before your children are born. However, the realist in me recommends shortly following their birth or kindergarten to start that education savings.
Now Is Always The Time To Save For College
