College Planning

The Government’s Response to the FAFSA: It’s The Student Aid Report (SAR)

  If you’ve managed to survive the perplexity and stress of completing the Free Application for Federal Student Aid form (FAFSA), then congratulations are in order. It’s a complex journey and we can help you with all of the confusion. Once you’ve submitted your FAFSA you’ll receive a student aid report (SAR).  The SAR gives you your expected family contribution number (EFC). This is the dollar amount the government believes you can afford to spend on your child’s education for one year. The number is in five digits. For example, if your EFC says 15540, this reads fifteen thousand, five hundred forty dollars. If your EFC number is 03333; this is three thousand, three hundred thirty-three dollars.   

People are often confused by the EFC, they think it’s the amount of student aid they will get; in fact, it’s the dollar amount that Uncle Sam thinks you can afford to spend on college. Understanding your EFC can help you establish a financial plan. The lower your EFC, the more financial aid you should be eligible for. Carefully review your SAR for mistakes.  You will be able to correct any mistakes on the Information Review Form, which is on the back side of a paper version and is the last page of a computerized SAR report. If you need to make corrections to your information, click “Make FAFSA Corrections on the ‘My FAFSA’ page. You must use your Federal Student Aid PIN to access your record online. If you need additional help with your SAR, contact your school’s financial aid office or the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). If your mailing address or e-mail address changes, you can make the corrections online or call 1-800-4-FED-AID and ask a customer service representative to make the change for you.

All colleges that you listed on your FAFSA will get a copy of your SAR. The financial aid offices at the indicated schools will determine your financial need, according to their own financial aid policies. That being said, your EFC may differ from school to school and from year to year.

There are catch phrases that you have to be familiar with. Another name for the COA or cost of attendance is the “all in cost”, what college is going to cost you. Your “need” is the difference between the cost of college and your EFC:          

Cost of Attendance or Your “All in Cost”
– Expected Family Contribution (EFC)
= Financial Need

This “getting my kid into college” process is complicated stuff, we understand that. Check our website www.collegeplanningservices.org where we offer helpful tips.  It’s always a good idea to hire a professional college planner; it’s his/her job to help you make sense these annoying applications and better yet, help you fill them out correctly. The College Board reports that 90% of all FAFSAs are filled out with errors or inconsistencies. A good college planner will review your finances, tell you which colleges offer the most free scholarship money and inform you about the numerous ways to pay your tuition bill.

Photo courtesy of  mymcpl.org

Divorce and the FAFSA - which parent should file?

 It all starts with FAFSA!  The Free Application for Federal Student Aid, one the most significant yet perplexing applications that parents of college bound students will encounter.  A major source of confusion for undergraduate students with divorced or separated parents is: Which parent should fill out the FAFSA? 

The custodial parent is the parent that the child has lived with the longest during the preceding twelve months; this twelve month period is the twelve month period ending on the FAFSA application date, If both parents have shared custody equally during the past twelve months, the parent who has provided the majority of the financial support is the one who should fill out the FAFSA. Biological parents who never married are considered the same as parents who are divorced or separated.  Child support received from the non-custodial parent must be included on the FAFSA.

Financial Aid is not a lottery, filing first does not increase your likelihood of receiving aid; your information must be accurate. You must apply for a PIN number when filing the FAFSA.  This information can be found at The Federal Student Aid Web site @ http://www.pin.ed.gov/PINWebApp/pinindex.jsp. Filing errors could compromise the amount of aid could be entitled to. Colleges will verify supplied information by requesting a copy of your 2010 tax return. Remember penalties for FAFSA misrepresentation include a $20,000 fine and the possibility of a felony conviction. 35% of all parents do not fill out the FAFSA because they feel that they will not qualify for any financial aid. These people are misled by their assumptions if you do not complete a FAFSA form your child will not qualify for the Federal Stafford Loans.  Don’t forget that FAFSA must be completed all four years of college, not just the first year.

Never leave a field blank on the application, if FAFSA asks for a dollar amount and you are uncertain about the figure, use a zero, never use decimal points.  Haste makes waste filing errors could compromise the amount of aid could be entitled to. The College Board reports that 95% of FAFSA forms contain errors or inaccuracies.  Therefore, using a professional to help you to complete your FAFSA is a wise decision.  

Beware of the Scholarship Scam

There are all too many hustlers out there trying to separate you from your wallet. From TV miracle gizmos to foreign email schemes, most of us are skeptical enough to avoid the come on. But in the gentrified world of scholarships where hard-working parents are looking for some help to cover tuition bills, some of us might not suspect a swindle in the making.

Scholarship scammers prey upon families who need money for college - which is just about everybody, so unless you're astute enough to know what pitfalls to watch for, anyone can be a potential target. But by informing yourself, you will be better able to discern legitimate scholarship opportunities from a swindle.

Generally speaking, if something sounds too good to be true, it most likely is. Here are some red flags that should trigger a scam alert:

"The scholarship is guaranteed or your money back."
"You can't get this information anywhere else."
"I just need your credit card or bank account number to hold this scholarship."
"We'll do all the work."
"The scholarship will cost some money."
"You've been selected by a 'national foundation' to receive a scholarship."

The Federal Trade Commission, which works to prevent fraudulent, deceptive and unfair business practices, also provides lots of information to protect parents themselves from a scholarship scam shake down. There is even a link on the FTC website to file a complaint about shady scholarship programs.

So, don't get hustled. Get help.

Photo by iChaz via Flickr.

Sallie Mae is Not a Person

If you didn't know better, you might think Sallie Mae was a long lost relative or a 1950s-era television star, but if you've had any exposure to the world of student loans, you probably already know that Sallie Mae is a giant among loan lenders.

Sallie Mae actually is a nickname for the SLM Corporation which manages more than $180.4 billion in debt for more than 10 million borrowers. The company originally began in 1972 providing federally-guaranteed student loans under the Federal Family Education Loan Program, which is second only to Direct Loans. More recently, Sallie Mae, which had as many as 8,000 employees working in offices across the country, has expanded into private student loans, as well.

The organization has changed over the years since it first was entirely government-sponsored and then morphed into a privatized concern. It has also added innovative programs such as Upromise, the plan that provides rebates to consumers which can be applied to college savings accounts. 

For parents of prospective college students looking to find ways to underwrite a college education, Sallie Mae's website is worth a visit since there is information on its savings accounts, 529 plans and Upromise reward program, as well its various student loan options. It is the nation's leading saving, planning and paying for education company and since its founding, has helped more than 31 million invest in higher education. You might count yourself 31 million plus one.

Photo by anne.oeldorfhirsch via Flickr.