Shrinking the “Gap” Between College Cost and Funding

Some families are surprised to learn the difference between what Uncle Sam thinks they can afford to pay for college—their Expected Family Contribution or EFC—and a prospective school’s Cost of Attendance (COA).

This is sometimes referred to as the college “gap,” and it can be significant. Check out these five options that can help your family shrink the gap without sacrificing your current lifestyle or larger financial goals:

1. Consolidate debt and streamline your family budget.

For many families, sending one or more child to college will be their most expensive commitment, often costing more than their first home. Cash flow is king during the college years, so free up as much as possible by setting realistic goals and sticking to a workable budget.

2. Manage your mortgage.

Even though it’s one of the largest and most common financial obligations, many families do not factor mortgage into their college budgeting process. Perform a mortgage analysis, and be prepared to change your plans if necessary. If the original plan was to pay off your home quickly by taking out a 15-year mortgage, for example, double-check that that goal will still be attainable when faced with annually rising college costs, and be willing to adjust if necessary to ensure you do not negatively impact your retirement and other long term financial future goals.

3. Review your college(s) of choice.

Choosing the right school as it relates to “need met” could determine what you will pay out of pocket—and should therefore be part of the decision-making process. For example, if a school’s COA is $25K, and your EFC is $15K, your gap will be $10K. Choose a school that meets as much of your need as possible, thus reducing the gap. Furthermore, of the need that is being met, you want as much as possible in the form of gift aid (“free” money) versus loans. The more gift aid you receive, the lower your out-of-pocket expenses, relative to the gap, will be.

4. Consider private scholarships.

Private scholarships are another great way to shrink the gap. Since many online and community awards have varying deadlines, it’s important to scour scholarship databases like and frequently for opportunities. This is the time to leverage as many qualifications as possible—SAT/ACT test scores, GPA, résumé, school activities and/or community involvement—to maximize your search.

5. Last resort: explore all loan options.

If you ultimately find that borrowing will be necessary, educate yourself on the pros and cons—of federal programs such as Perkins, Direct, and PLUS loans as well as private lenders—to get the best rate, terms, and benefits possible. In general, federal loans have fixed rates while private loan rates can vary. Private loans can be an attractive option for credit-worthy borrowers, and some now even offer fixed rate opportunities. Be sure to ask a lot of questions and read the fine print before signing on for any new debt.


This article was written by Todd M. Kelly

Todd M. Kelly, MBA/CCPS, is a financial advisor with Summit Financial Group. He has spoken to thousands of people nationwide about financial topics including short-term and late-stage college planning. Co-founder of College Planning Relief, Mr. Kelly is one of the leading financial planners in his field. He can be reached at


  1. Laurie Preston

    I want my children to pay for their own college education. After they finish, I will help them with their loans. How do I go about this? Every single plan has parents obligated to pay upfront.

  2. Realistic

    The market only bears thus because Americans keep taking out $100k in loans per child to pay for overpriced educations that no longer pay off. It is a scam on a nation of sheep who are all terrified their child will be left behind. Lets all just stop this madness and increase the demand for reasonably priced colleges. Before you know it, the others will have to become more affordable. If a college violists $50 per year, don’t go there. Tell them you will spend the next thirty years paying off student loans just to have their logo on your degree. F ‘em. I have a masters a d a BS degree and so does my husband. We are encouraging our kids to skip the 4 year drinking binge with the huge price tag and consider community colleges with hour job training certificate programs and associates degrees. If they decide to start a small business, well fund that instead.

  3. Realistic

    Streamline the family budget?! Cutting our cable bill in half and skipping the name brands and even calling a run through the sprinkler a family vacation isn’t going to put a dent in these absurd education costs.

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