EFC PLUS College Cost Analyzer New Enhancements
Since 2006, the number of people with student loans and the amount of debt per person has almost doubled. One of the causes of this problem is student and families cannot properly project the final cost and debt needed to obtain a college degree. The EFC PLUS “In College Payer” software is now available for both financial advisors and parents to purchase. Our innovative software minimizes the uncertainty for families and students as they make various financial decisions during their path to graduation.
The “In College Payer” is a secure cloud-based program that combines technology and a proven customized student loan approach. According to a recent Lendedu survey, students are highly dependent on their parents to help them make the best college financial decisions. The survey shows that many parents are unprepared to provide the correct advice.
We have taken an approach that engages the student and the parent in the student loan borrowing process. We have customized the calculation so that it is easy to use, conveniently organized and puts all of the information in one place. Last month, we discussed how knowing your student debt could improve a student’s behavior. We pointed out that 70% of student may have made different decisions if they had better information.
The “In-College Payer” gathers your incurred debt and projects the additional debt needed to reach graduation. With this information, it then calculates your loan repayment options bringing transparency to your financial life at graduation.
With this software, students and parents can feel more secure in their decisions. It takes the mystery out of college funding, student loans and the loan repayment process.
The EFC PLUS In-College Payer has a 6 step process that includes Data Input, Award letter, Loan Inventory, Cost Projection, Income Projection and Loan Repayment. Each of these steps is unique to a student and his or her family. The software has a brief video on each screen to help the user through the process.
The software can be used for undergraduate, graduate, associate and technical students. Listed below is brief description of the methodology so you can see how powerful and actionable this system can be during the college financial decision process.
The first step in the system identifies the academic standing of the college student by semester and credit hour. The family will input their overall financial situation. It includes their Expected Family Contribution (EFC) number, other dependents, specific college and current financial budget. This unique process gathers this information so that the student and family can be engaged in a conversation about how their financial future will be projected.
Award Letter/Current Bill
The award letter section requires the information from the most recent award letter or current college bill. This information identifies for the family their current financial aid position and the EFC PLUS system uses this data to project future financial aid awards. Many families do not understand how important this detail is. Future awards and changes in financial packaging can be derived from this information.
This section simplifies the loan inventory process by gathering all the incurred student federal loans and other loans that are not federal loans. The other loans could include Parent Plus loans, private student loans, home equity or any alternative loans. The software allows the student borrower to download all of their current federal student loans easily through the National Student Loan Data System or NDLDS. NSLDS is a repository for all student federal loans and grants.
This information is an important step since it begins to organize the student debt in the repayment section. The debt structure drives the student loan repayment options. We use both the incurred and projected debt to graduation to customize the repayment calculations for the student.
The hardest part for current college students is projecting the future net cost. Colleges only provide students and parents financial information one year at a time. This missed part of the process causes many problems for student and parents since they are unable to estimate the additional funds needed to reach graduation.
The “In College Payer” provides this customized projection so that you can better estimate the required funds needed to reach the graduation goal. By using our approach, we create the transparency needed to make better decisions concerning student loan borrowing. The goal is to try and prevent excessive student debt.
As part of the planning, the student must identify their graduation target date, credits needed to graduation and current credits attained toward that degree. The system then factors in the current financial award structure, college historical gifting, family budget and other factors to project a customized cost projection
The software then summarizes a projected financial award and cash flow by year. This calculation exercise helps to open conversation of college grade status and borrowing in relation to current family budget.
A post high school degree is an investment in a person’s financial future. Their financial future needs to include the projected income that degree will generate at graduation. This information is important since it will be used to calculation the four different federal income driven repayment methods (IDR).
Understanding all the repayment options allows the student loan borrower to better plan, make informed decisions and better plan their future expenses. In addition, we use the income and loan repayment options to create a customized financial living analysis. This allows the student to better envision the consequences of their college decisions. By increasing financial literacy, our goal is that the student will make better borrowing decision.
Loan Repayment/ Summary Analysis
The loan repayment section has three key analysis elements. These parts help to clarify the options ahead and make the total cost more transparent.
The Outcome summary lets the borrower review a loan inventory of the current loans incurred and a list of projected loans needed to supplement tuition. The system then calculates the total amount of student loans needed to reach graduation. The loan summary groups the federal loans separately from the private or other loans. This is a critical step in the repayment process since repayment options vary by the type of loans. The borrower can also see graphically the total loans by type and the total loans by status. This gives the student a better idea of the amount being borrowed.
The Student Loan Repayment Analysis calculates all of the federal loan repayment options and other loans in one place. It lists the current payment amount and shows the maximum monthly payment over time. It also identifies the methods that qualify for Public Student Loan Forgiveness. The other financing options are also calculated. The In College Payer simplifies the process by putting all of these numbers in one place.
With all of the numbers calculated, the student and parent can better plan for life after graduation. Personal Cash and Income Analysis is the last calculation of the system. It allows the student to create a budget and cash flow analysis based on their loan repayment decisions and projected income. Student will see if they are cash flow positive with their other financial life decisions such as rent, cell phone, and food expense. It illustrates the reality of their financial life after graduation.
The major advantage to our approach is it can be done at any point in the student’s academic career. By envisioning the financial outcome, students and parents can make better financial decisions along the way.
In-College Payer Software Summary
As the number of people with student debt approaches 44 million people, we at College Affordability LLC, saw a need for more clarity in the college area. The EFC PLUS series of college funding software solutions can help students and parents make more informed decisions.
The In-College Payer will increases the transparency of the true cost of college and enables students and parent to engage in meaningful conversations about their future life decisions.