By Janet Stanton Burt
When it comes to college financial aid, parents with twins, triplets or close-in-age kids often get a substantial price break. Find out how you can estimate the impact to your bottom line when more than one child in the family is a college student.
Expected Family Contribution
Finally, there’s some good financial news for parents of multiples. The total you’ll end up paying for college will likely be less than families with kids spaced more than four years apart. Thanks to the so-called “sibling factor,” the more kids you have enrolled at the same time, the greater the discount.
How’s that work? It all comes down to the Expected Family Contribution, or EFC. That’s the amount the government and colleges estimate your family can reasonably be expected to pay to help foot the family’s college bills.
Families receive financial aid (or not) based on the difference between the EFC and the estimated total cost to attend a college, including tuition, fees, room and board.
With each additional child your family has enrolled in college simultaneously, your total tab for college increases, but your EFC doesn’t. That’s because financial aid calculators rely on income, and your capacity to pay doesn’t increase just because you have three college students in the family at once.
Let’s take a closer look at how financial aid formulas work when a family has multiple students.
FAFSA vs. CSS
The two main financial aid forms, the Free Application for Federal Student Aid, or FAFSA, and the CSS PROFILE (the form used by about 300 elite colleges), figure your sibling discount a bit differently:
If you’re using the FAFSA, a rough way to calculate how multiple college students in one family will impact financial aid is to divide the EFC for one student by the number of children who’ll be enrolled that year.
Say your family’s EFC is $50,000 per year with one child in college. With two children enrolled in college, that number should drop to around $25,000 per child per year, and to about $17,000 with three college students.
CSS uses a slightly different formula than FAFSA, and applies about 60% of the parent’s contribution to each college student. Under that formula, your EFC would be cut by about a third for each collegian in the family.
Under CSS, if your family’s EFC is $50,000 per year with one child, with multiple children enrolled it should drop to about $33,000 per child per year.
How to Check College Prices
You can get a ballpark figure for your EFC from The College Board’s EFC calculator. Once you know what you’re expected to pay, compare that to what a college would charge your child by checking the net price calculator on the school’s website.
To find out how the price you’ll pay for older students will change when siblings enter or graduate from college, contact the financial aid office directly.
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Siblings in College at Same Time
Have closely spaced children? You could potentially improve or harm your financial aid chances when a child skips a grade, or an older sibling’s gap year causes him to overlap with a younger sibling for more college years, for instance.
Not every college treats sibling enrollment the same way. Some colleges consider relative costs when awarding their own institutional financial aid. So when you have one child at a pricey private college and another going to community college, your EFC might not be evenly split between your students.
At some point, you’ll be down to just one kid in college. At that point, the sibling bonus aid evaporates and your whole EFC will be devoted to the one child still in college.
Apply for Financial Aid
Think you’re too wealthy for financial aid? About a third of families earning over $100,000 a year didn’t bother to fill out the FAFSA in 2013, according to a Sallie Mae survey.
That’s a mistake because the formula for determining student financial aid is complicated, and there’s no income cutoff for eligibility for need-based financial aid. As ice hockey legend Wayne Gretzky said, you miss 100% of the shots you don’t take. Your family won’t get any financial aid if you don’t bother to apply.
Plus, if you don’t qualify for need-based financial aid with only one child in college, you might get something when you’re picking up the tab for two or more kids – even if your family income is well into the six-figure range.
If you’ll have two, three or more college students enrolled at the same time, don’t panic. College financial aid is one of the few times when having multiples may actually save you money.
A clear, practical plan and steady contributions win the college savings race. Find out what you need to set aside each month to save for the education you want to give your children.
This information is provided for educational purposes only and is not intended to provide investment or legal advice. SEI does not claim responsibility for the accuracy or reliability of the information provided.