College Tuition Reduction — Finance Calculators

Step 1 — what the school costs

Cost of attendance ($ / year)

Tuition, fees, room, board, books and travel — the school's full published figure for one year, not tuition alone.

Step 2 — income and assets, by owner

Income

Parent

Student

I / iAdjusted Gross Income (AGI)

College assets — the pool the formula counts

Bank savings Stock / mutual fund / securities Equity in investment properties 529 college savings

A / aNet college asset

—

Non-college assets — the pool it does not

Life insurance cash value Retirement savings Equity in primary residence

Not assessed — costs you nothing

—

Step 3 — assessment rates

Parent income I (%)

Parent college asset A (%)

Student income i (%)

Student college asset a (%)

A student's dollars are assessed far harder than a parent's — which is why who holds an asset matters as much as how much of it there is.

Your share, and what the school covers

EFC = I×20% + A×6% + i×50% + a×20%
Financial aid = Cost of attendance − EFC

Worked out with your numbers

The lever — what moving a dollar is worth

Every dollar sitting in the college pool costs you its assessment rate, each year the school looks. Move it to the non-college pool and that cost goes to zero. Because the rates differ by owner, the same dollar is worth very different amounts:

A 529 is the case where ownership does the work on its own: it is normally reported as the account owner's asset, so a parent-owned plan is assessed at the parent rate rather than the student's — the same balance, several times cheaper. Confirm the treatment against the formula your schools use.

Income is the harder one — I and i are assessed at the highest rates of all, and unlike assets you cannot simply move them. That is why the planning has to happen before the year the formula looks at, not after.

One year at one school. Which assets fall on which side is not universal — the federal FAFSA formula and the CSS Profile used by many private colleges draw the line differently, notably on home equity — so set the categories and rates to match the formula your schools actually use. Aid is floored at zero: when EFC exceeds the cost of attendance there is no need-based award, and a larger EFC does not create a bill beyond the cost.