How to Figure the Future Costs of College with Online Calculators - dummies

How to Figure the Future Costs of College with Online Calculators

Calculating college expenses helps you plan for the time you’ll be sending your child to off to secondary school. Most college costs are paid with a combination of savings, financial aid, and student loans.

Millions of students go to college every year, and their parents are trying to figure out how to pay the price of admission. Statistics indicate that only one in three parents actually is prepared to fully fund his or her student’s college education.

Financial need is defined as the difference between the cost of attendance (COA) and your expected family contribution (EFC). Your EFC is defined as the amount of money you’re expected to be able to contribute toward your student’s education as determined by the Federal Methodology (FM) needs analysis formula.

The FM formula includes parent and student contributions and the student’s dependency status. Other factors in the formula include family size, number of family members in school, taxable and nontaxable incomes, and assets.

How institutions calculate financial aid can be subjective varies from school to school. Many online college-aid calculators are available online. They can help you determine your EFC and estimate how much a certain student can receive in financial aid.

The following are a few examples of facts you need to know before using the online college-aid calculators:

  • The parental income: In some situations, as much as 47 percent of a family’s income can be applied toward a student’s education. Parents with variable incomes need to pay heed to which years they report their incomes, because doing so can have an impact on financial aid.

  • The student income: Financial-aid administrators usually assess the income of students at a higher rate than parental income, a factor that’s important to keep in mind when you’re setting up a college fund for your student or deciding when or how much to pay your student for working in your business.

  • How and where money is held: Savings accounts held in the student’s name or in special accounts can negatively impact your financial-aid application. For example, any college fund for a student needs to be in the parent’s name or in an account that’s designated for the benefit of the student.

  • Assets: Not all assets are counted by financial-aid administrators. For example, the cash value of insurance policies, deferred annuities, and collections aren’t included in financial-aid applications for you or your student. For details about the Federal Methodology Needs Analysis formulas used by financial-aid administrators when tallying up parental assets, see

The Internet provides many financial-aid calculators that can assist you in gaining an understanding of the amount of money your family is expected to contribute to funding your student’s college education. The following are a few of the easier online EFC financial-aid wizards:

  • Mapping Your Future provides useful calculators for estimating your expected family contribution. Additionally, students can discover the minimum salaries they’ll need to cover their student loan payments after they graduate.

  • SmartMoney provides an easy-to-use worksheet for calculating your family’s EFC contribution to your student’s college education.

  • offers an online financial-aid calculator that breaks down the process into seven steps. You enter your personal information to find the cost of attending the college of your choice and your eligibility for a Pell Grant, Stafford loan, or other financial aid (additional scholarships, grants, or loans). You’ll also discover the deadlines for filing for requests for financial aid at the colleges you select.