saving for collegeIn The College Solution, Lynn O’Shaughnessy provides an easy-to-use roadmap that you can use to find the right colleges (not just the most hyped) and to dramatically reduce your costs. In this excerpt, learn more about saving for college and your family’s expected financial contribution.

How rich is too rich to qualify for financial aid?

A mother who is a judge and a Harvard graduate once asked me that question. She and her husband make a good living – much better than good actually – and their son attends a private high school. She doesn’t feel like she’s wealthy enough to underwrite an exorbitantly expensive college education, but she wonders if colleges will lump her family into that too-rich-to-help category.

The judge’s question is an excellent one because the kind of colleges and universities that families should target varies depending on whether the parents qualify for need-based financial aid. A straight-forward way to determine your eligibility for financial aid is to determine your Expected Family Contribution or EFC.

If you apply for financial aid, you will receive your own EFC. Actually, you could end up with more than one, depending on what types of schools are on your list. Your EFC is a dollar figure that represents the amount of money that a college will expect your family to pay, at a minimum, for one year of schooling. This number tips off schools, as well as the federal and state governments, to whether you will need their help in covering the college tab.

Your EFC is generated by a variety of factors, but the most important one is the family’s yearly income. Parents with large incomes generate higher EFC numbers while families that are barely scrapping by possess far lower ones. The smaller the EFC, the more likely that a college will offer a student need-based financial aid.

Other variables that can shrink or inflate your EFC include your taxable assets, the number of children in college at once (more is better), the age of the oldest parent (the older the better), and the marital status of a student’s parents.

Expected family contributions can be as low as $0. You’ll most commonly see a student with this EFC is the family earns less than $23,000. Just because a student’s EFC is zero, however, usually doesn’t mean that his college costs will be nonexistent either. Most low-income students will have to take out loans. Ideally, though, a child who has a low EFC will pay little for a college education.

On the other extreme, there is no EFC cap for wealthy Americans. I once talked with a father who was a corporate executive, whose EFC was $108,000. According to the financial aid formula, the father and his wife had the ability to pay $108,000 for their daughter’s college costs for one year. Obviously, no college costs that much – at least not yet.

What the mother who is a judge shouldn’t automatically assume is that her son wouldn’t qualify for financial aid. The financial aid formulas are studded with quirky provisions that make it difficult to rule anything out until she is in possession of her own family’s EFC.

A lot of experts have rightfully complained that the methodology used to generate EFC figures for millions of families is flawed. A family’s EFC isn’t always going to be fair. In fact, it’s likely that the EFC won’t pinpoint what a family can truly afford for college. And it’s no wonder. Congress, rather than financial aid experts, mandates what’s in the EFC’s secret sauce.

Buy The College Solution by Lynn O’Shaughnessy