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Suggestions for Minimizing EFC for Four Kids

Written by Sally Rubenstone | Oct. 23, 2010

Question: How do we strategically allocate our finances to minimize our EFC in the next four years? With the EFC calculations taking the majority of student accounts and parent investment savings, it appears wise to drain the student savings of our four kids in the next four years. It would also appear that we should allocate our personal savings and investments toward the principal of our home loan, rather than make them available for calculation as "savings." Thank you for your time and this resource!

You really need to talk to a financial advisor, not to an Internet "Dean." Certainly having money in your children's names will boost an EFC since their dough goes to the "bottom line" faster than parental savings do. However, having a big mortgage can work in your favor as well, so I'm not sure that paying off your house is the wisest strategy either. If you were thinking about spending some of those assets on your house (e.g., adding an extra bathroom or two as those four kids start spending more time in front of the mirror;) ), then that might be money you'd get back eventually (when you sell your home) but which wouldn't show up in an EFC calculation.

But each family's situation is different, and I suggest that you consult a pro who can crunch your own specific numbers with you and who can weigh the pluses and minuses of paying off the house.

According to my own financial aid guru (Ann C. Playe, former associate director of admission and financial aid at Smith College), the success of your proposed strategy (putting money from savings into your home payments) will depend to some extent on whether your children will be applying to colleges that require only the FAFSA or if they will be aiming for those that demand the CSS PROFILE form as well. FAFSA-only colleges do not consider home equity. So, by lowering your assets, you may indeed increase the amount of financial aid you are eligible to receive. CSS PROFILE colleges may--or may not--consider the equity in your home (and many will cap the amount of equity they consider at about two and a half times your household income). But, chances are, if all or most of the schools on your children's lists are PROFILE colleges, then moving the money will not have a significant impact on your finaid verdicts.

Good luck to you as you face the tough decisions ... and piles of paperwork ... ahead.

Sally Rubenstone

Sally Rubenstone knows the competitive and often convoluted college admission process inside out: From the first time the topic of college comes up at the dinner table until the last duffel bag is unloaded on a dorm room floor. She is the co-author of Panicked Parents' Guide to College Admissions; The Transfer Student's Guide to Changing Colleges and The International Student's Guide to Going to College in America. Sally has appeared on NBC's Today program and has been quoted in countless publications, including The New York Times, The Washington Post, USA Weekend, USA Today, U.S. News & World Report, Newsweek, People and Seventeen. Sally has viewed the admissions world from many angles: As a Smith College admission counselor for 15 years, an independent college counselor serving students from a wide range of backgrounds and the author of College Confidential's "Ask the Dean" column. She also taught language arts, social studies, study skills and test preparation in 10 schools, including American international schools in London, Paris, Geneva, Athens and Tel Aviv. As senior advisor to College Confidential since 2002, Sally has helped hundreds of students and parents navigate the college admissions maze. In 2008, she co-founded College Karma, a private college consulting firm, with her College Confidential colleague Dave Berry, and she continues to serve as a College Confidential advisor. Sally and her husband, Chris Petrides, became first-time parents in 1997 at the ripe-old age of 45. So Sally was nearly an official senior citizen when her son Jack began the college selection process, and when she was finally able to practice what she had preached for more than three decades.