BusinessReport.com

There’s plenty of money out there to pay for your kid’s college, though most parents have no idea where to look or even know what exists, instead spending most of their time hunting for private scholarships.

Edward Clarke, a financial advisor and senior partner with the Baton Rouge-based Lohengrin Group, says that’s a waste of time. College Advantage, a software program Clarke helped develop, is central to a service Lohengrin offers that helps parents put together a financial package that minimizes or eliminates the need for private scholarships.

College Advantage was developed from 13 years of data mining, which revealed among other things that only 2% of the money available for college comes from private scholarships.

“When you’re talking about spending 80% of your time on 2% of the money, that’s just not a real good trade-off,” Clarke says. “You want to concentrate on where the money pool actually is, and it’s at the universities themselves.”

Left to their own devices, parents only know what the college admissions officer tells them when it comes to what kind of deal the university is willing to give their child. Clarke says the database goes beyond what universities say they’re willing to offer to what they’re actually willing to offer.

The way universities price themselves is usually just the “sticker price,” he says, noting that the actual price of college is based on one’s ability to pay for it under federal rules.

Information in the database comes from what universities themselves report to the U.S. government. The software is central to Lohengrin’s overall package for minimizing the college debt burden for parents and students.

“We data mine that and we find out not what they say they’re doing, but what actually they are doing,” Clarke says. “Who are they really accepting? What are they really giving out in endowment funds, in scholarships from the university, not in private scholarships?”

Most of the financial aid available there comes from university endowments, he says, nothing that 35 of the nation’s universities have endowments over $1 billion and 200 have endowments over $100 million. College Advantage’s database covers 95% of U.S. colleges and universities.

“We can tell you how much of that is available for your student,” Clarke says. “We’re interested in mom and dad not having to shell out lot of money, and we don’t want you to be burdened with a lot of debt when you get out.”

Lohengrin Group is also interested in selling College Advantage, naturally, which costs $1,695. Ideally the process starts when the college-bound student is a sophomore or junior in high school. That gives plenty of lead time to tweak the parents’ financial portfolio in a way that minimizes their exposure.

In the 1960s, the average college education cost roughly 1/20th of the average income, he notes. Today it’s closer to one-fourth of the average income.

Filling out the Free Application for Federal Student Aid form is a standard ritual when it comes to applying for college. No one escapes it. The federal government uses parents’ financial information from the form to calculate the Expected Family Contribution—part of what College Advantage seeks to minimize.

“We can actually reposition your portfolio and get that EFC as low as possible,” Clarke says. “It’s perfectly legal. It’s kind of like doing your taxes a particular way. You’re not required to organize your portfolio for the benefit of the college.”

Parents frequently make costly mistakes on the FAFSA form, similar in many respects to a long IRS tax return. Enrollees in College Advantage have their FAFSA forms competed by a professional and submitted as early as possible to take advantage of first-come, first-serve aid.

Another key aspect of the program is matching your child to the right school to avoid the three major dropout factors: funding issues, changing majors and changing schools. The national college dropout rate is 52%, while the average for students who’ve gone through College Advantage is 14%, Clarke says.

College Advantage uses a student’s ACT or SAT scores, intended major and target university to make a “fairly accurate” prediction on what kind of aid package a school is likely to give, Clarke says.

Clients are advised to apply to at least six schools—including traditional academic rivals, meaning they go after the same type of student. LSU and the University of Florida are an example, as are MIT and Cal Tech. It’s one tactic for teasing the best aid package possible from the target university.

“Universities are looking for a mix of students,” Clarke says. “Some of them they want and are willing to pay out of endowment funds to get. Others will ideally write a check. We’re giving you the tools so as much as possible you fit in the first category, not the second category.”

Lohengrin Group rolled out the program three years ago and has had about five clients a month since. Roughly 18,000 students have gone through the program nationwide. Clarke admits the program isn’t well-known, partly because it takes time to explain. But he thinks it’ll continue to catch on.

Business Report was unable to speak with any clients locally who’d been through the program. But the CFS method, which is basically Lohengrin’s method, has apparently won fans elsewhere. Lucy Collete, an Idaho resident and the mother of Bryan Collette, an accounting graduate from Montana State University, wrote that her son probably would have succeed even without CFS but that “it would have been a lot harder and much more work” without CFS.

“There is some skepticism,” Clarke says. “We’re providing you with information. We’re helping you with your portfolio.”

It’s not a scam, Clarke says, though there are plenty of scams aimed at people looking for an edge, and lots of negative press has ensued.

As a matter of fact, a company called The College Advantage was forced by the Federal Trade Commission in 2005 to reimburse consumers $1.4 million in a financial aid scam in which the company misrepresented its ability to secure 100% of the funding necessary to go to college and reneged on a money-back guarantee.

Lohengrin’s College Advantage has nothing to do with that one, Clarke says. Rather, his program is part of College Funding Solutions Inc., a Port Angeles, Wash., company that the Better Business Bureau has endorsed with its BBBOnLine Reliability Seal.

“Quite frankly, as a financial services company, if I were to do anything underhanded, the FTC and commissioner of insurance would be on me in a heartbeat,” Clarke says.