Past Articles:

Year-End Tax Planning

Health Savings Accounts: Are They Just What the Doctor Ordered?

Stock-Based Compensation Strategies - Part II

Tax Planning for Employee Stock Optionsn

About SC&H Financial Advisors, Inc.

Personal Financial Planning is not a one-time event—it is a critical, ongoing process that, if managed well, leads to financial freedom.

At SC&H, we develop complete and flexible plans that are designed to meet your ongoing needs. They are complete, because you need a fully integrated and comprehensive financial strategy that incorporates all of the most important wealth care issues. They are flexible, because milestones in your life such as a marriage, a career change, the birth of a child, a divorce, or a death in the family will require adjustments to your overall financial plan.

To learn more about these services, visit www.scandh.com/fa.

In This Issue:

Message from Greg Horning

College Financial Aid Process

Welcome

How are you going to pay for college? That's the question many families are asking themselves as they see education costs increase and their savings and income stagnate. State budgets are still constrained, which is forcing many schools to raise tuition costs and reduce aid altogether. Private universities are also raising tuition costs and offering less aid. The average annual cost (tuition plus room and board) at private U.S. colleges is now $42,224.

So, how do you pay for college? This month's newsletter explores some of the options. Everyone's situation is different, so we urge you to contact us with any particular concerns you have.

Please feel free to contact us directly with any questions or feedback on these topics.

Best regards,

Greg Horning
President, SC&H Financial Advisors, Inc.
(410) 403-1512
GHorning@SCandH.com

College Financial Aid Process

There are three basic ways to pay for college:

1. You can save enough to cover all college expenses before your child enrolls.
2. You can work to pay for all expenses while he or she is enrolled in college.
3. You can take out loans and pay after your child graduates.

Where do you start? Many people use a combination of all three, but one of the most challenging pieces is trying to understand the college financial aid process.

The first thing a parent or student must understand is the difference between need-based financial aid and merit-based financial aid.

Need-based financial aid is based upon the financial circumstances of the student and the particular college he or she is attending. Income and assets of the student are taken into consideration, as well as the income and assets of the parents, if the student is legally classified as a dependent.

Merit-based financial aid is awarded based upon specific qualifications of the student, such as grade point average or SAT scores. Merit-based aid is generally in the form of scholarships.

It's never too early to start thinking about how much financial assistance you might be eligible for. A good starting point is to reach out to your child's guidance counselor, your employer, and various religious and service organizations about scholarships and grant options that may be available. Also, Fastweb.com has a free on-line tool that matches your child with various scholarships from around the country.

Next, you should begin to look at various loan options. Public colleges generally rely on the Free Application for Federal Student Aid (FAFSA) to dole out federal money, such as Pell grants, and to give students access to federal loans, including Staffords. The federal government pays the interest on Stafford loans for students with need while they are in college. The FAFSA form is usually completed when your child is a senior in high school.

Many private colleges and universities also require that you fill out the CSS Profile, a more-detailed financial-aid application that uses a different calculation — called the institutional formula — to determine how much you are expected to pay. Some tailor the profile to suit their criteria or ask that you submit a third application that dives deeper into your finances.

Which formula the college uses can make a huge difference in your potential for financial aid. When your child begins to make college visits, it's a good idea to make an appointment with the financial aid office to learn how the school determines financial aid. Beginning in October, 2011, schools that award federal financial aid are required to publish a net price calculator which will allow you to enter basic financial information and get an estimate of the school's bottom-line cost of attendance and how much aid a student might receive.

If your child is not eligible for any other scholarships, the Parent Loan for Undergraduate Studies (PLUS) will enable you to receive financing for any portion of your college or university bill not covered by other financial aid.

The Federal education loan programs offer lower interest rates and more flexible repayment plans than most consumer loans, making them an attractive way to finance your education. Eligible taxpayers who meet certain income requirements can also deduct up to $2,500 in student loan interest each year.

Another thing to consider when applying for financial aid is determining how specific assets affect the aid formula. Qualified retirement accounts, whether owned by you or by your child, are not counted at all in determining federal financial aid. The equity in your primary home, a family-owned business, insurance policies, and annuities are also excluded from your assets when determining aid under the federal formula.

529 plans and Coverdell Education Savings Account (ESA) may be two of the better options to save for college without jeopardizing financial aid. If a parent owns the 529 account or Coverdell, up to 5.6% of the value is included in the financial aid calculation as a parental asset. If grandparents own the account, none of the value is included. In addition, these accounts let you withdraw money tax-free to pay for qualified education expenses. You can compare all 529 plans at Savingforcollege.com.

Just remember, it's never too early to start preparing for college. Obviously, the earlier you start, the easier it will be!

For assistance with saving for college, or for your other financial planning needs, contact your SC&H Financial representative.

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Securities offered through Triad Advisors, Inc. Member FINRA/SIPC. Advisory Services offered through SC&H Financial Advisors, Inc. SC&H Financial Advisors, Inc. and Triad Advisors Inc. are unaffiliated entities.

SC&H Financial Advisors, Inc.

910 Ridgebrook Road
Sparks, MD 21152
(800) 832-3008