College Planning

How to Appeal Your College Financial Aid Award

Very few families are excited when they receive their financial aid packages and far too many are confused with the jargon and how to interpret what the aid package says. The first thing that comes to a parent’s mind is “this can’t be right, the college can’t expect me to pay this much.”  The financial aid package is a direct result of completing the complicated financial aid forms and the colleges applying their financial aid policies to your “college tax.”  It is not unusual to see Boston University giving a family $10,000 more in free scholarship money than say Northeastern.  The reason is that Boston University’s financial aid policies are more generous to those families who exhibit financial need than Northeastern’s.

What happens if this family wants to appeal their package from Northeastern?  Most parents’ first inclination is to call Northeastern touting the Boston University package and asking for more money. This is not a good idea for a number of reasons; the primary one being the parent is treating the financial aid counselor at Northeastern as they would a used car salesman. The chances of that appeal strategy netting them more money is minimal.

If a parent wants a fighting chance to get more money from a college on an appeal, they need to do three things. The first is to resell their child, not to Admissions, but to the Financial Aid office, so they will know that if they do “budge,” the student will attend their school.  The second thing is to do the math to determine the amount of unmet need. As in the example of the family at Northeastern it is $10,000.  The third thing is to determine what the colleges don’t know about their particular family situation. The only thing a college knows about a family is what they put on their financial aid form, verified by their taxes. There could be a number of extenuating circumstances that the college would not be privy to, such as a loss of income, care for an elderly parent, etc.

Financial Aid Forms Galore - CSS Profile

Students who apply to a private college will need to complete two financial aid forms to qualify for financial aid and free scholarship money.  In addition to the Free Application for Federal Student Aid form (FAFSA), 90% of private colleges will require a family to fill out their own financial aid form or the College Board form which is called the CSS Profile form.

The Profile form asks over 250 financial questions, including tax information for the most recent two-year period. The basic difference between the two forms is that the Profile form asks questions regarding the value of your primary residence, and all mortgages and equity loans against it. In addition, you are not required to electronically sign it.  There are many intrusive questions (a.k.a. nosy ones). For example, some schools will ask your religion, which in any other situation is illegal. But as the colleges have found, there is no harm in asking and the majority of parents will answer the questions, even though they are not legally required to do so.

The most glaring difference between the FAFSA and the Profile form is that a family does not receive a report stating their Expected Family Contribution (EFC) as with the FAFSA form. More importantly, what happens after the form is completed? This is where it gets complicated. Every college in the country has a different financial aid policy, therefore making it next to impossible to compare and contrast “packages.” Some schools will only send the “aid package” and will not include the cost of attendance (the all in cost). Other schools will include the cost of attendance making it easier for parents to determine the families’ cost.  It’s all very complicated and confusing. Unfortunately, there is no dictionary to make the translations from “government-ease” to the parents’ language. If a family does not like the aid package, they can appeal the financial aid decision to the Financial Aid office. Again, each school has their own policy on how to handle appeals. Our next blog will deal with appeals.

Please keep in mind that a Financial Aid office is there to take in money, not to give it out.

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.  

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.

The ABCs of the FAFSA

FAFSA? What’s Thatsa? Yes, it may sound like the latest influenza, but, for the uninitiated, FAFSA is actually the acronym for the Free Application for Federal Student Aid, the official application used by all colleges to determine eligibility for federal aid.

It sounds scarier than it really is. FAFSA is the universal application used by American colleges and universities each year to gauge a family’s financial resources and their ability to contribute to a child’s college education. I say family because it is not only the parent’s income and assets that are reviewed, but also the child’s.

 

The FAFSA application can be completed online and submitted directly via the web for consideration for federal aid. There is a portion that asks for the student’s financial information and another section that surveys the parents’ financial information. To submit the FAFSA online does require a PIN (personal identification number) which can also be applied for online but takes several days to process.

The FAFSA website is user-friendly and the process of filling out the questionnaire can be as easy as A, B, C. The information can be saved online, which streamlines the process for the following year, particularly helpful since it’s an exercise that has to be done each year with up to date financial information. High school seniors have to submit their FAFSA application for regular decision by the end of January of the student’s senior year and those applying early decision should have forms submitted between November 15 and December 15 of the student’s senior year.

However, parents who feel confused or intimidated should try and find professional help since even though the website is designed to be easy to follow, mistakes can be literally costly.

Photo by joshuaheller via Flickr.

Saving for College 101

In 2016, elite college tuition is projected to be $281,101 for four years. If that number doesn't shock your socks off, consider that you must save $1,737 per month at a 4 percent interest rate return to meet that tuition obligation.

That might be doable for some families, but for those who may tend to find a target of nearly $300,000 a struggle to meet, there's still hope. Of course, it's common sense that the longer you save, the more you'll have in the bank. That's true because you're saving money over a longer period of time, but it's also true because any interest you're earning has a chance to compound over time — giving you a bigger bang for your buck.

But what about those families who have already missed years of saving opportunity? Or the families who have saved routinely but haven't come close to their target, in spite of their best efforts? And what of the families whose savings strategy has been upended by unemployment, job loss or a medical crisis? How can they possibly catch up?

There is much research that can be done independently to find workable strategies for college financial planning, but sometimes the best course is the simplest one: to get the best teacher. If that's your choice, look for a professional who can offer a comprehensive service — someone who can analyze your financial status to determine your family contribution, knows how to reduce your expected contribution, is available to assist with complicated financial aid forms and can answer your questions knowledgeably and accurately.

Photo By California Cthulhu (Will Hart) via Flickr.

The ABCs of the FAFSA

FAFSA? What’s Thatsa? Yes, it may sound like the latest influenza, but, for the uninitiated, FAFSA is actually the acronym for the Free Application for Federal Student Aid, the official application used by all colleges to determine eligibility for federal aid.

It sounds scarier than it really is. FAFSA is the universal application used by American colleges and universities each year to gauge a family’s financial resources and their ability to contribute to a child’s college education. I say family because it is not only the parent’s income and assets that are reviewed, but also the child’s.

The FAFSA application can be completed online and submitted directly via the web for consideration for federal aid. There is a portion that asks for the student’s financial information and another section that surveys the parents’ financial information. To submit the FAFSA online does require a PIN (personal identification number) which can also be applied for online but takes several days to process.

The FAFSA website is user-friendly and the process of filling out the questionnaire can be as easy as A, B, C. The information can be saved online, which streamlines the process for the following year, particularly helpful since it’s an exercise that has to be done each year with up to date financial information. High school seniors have to submit their FAFSA application for regular decision by the end of January of the student’s senior year and those applying early decision should be submitting forms between November 1 and December 1 of the student’s senior year.

However, parents who feel confused or intimidated should try and find professional help since even though the website is designed to be easy to follow, mistakes can be literally costly.

Photo by joshuaheller via Flickr.

Is FAFSA a Friend or Foe?

The mere mention of the term FAFSA, which stands for Free Application for Federal Student Aid, can strike fear into grown and otherwise reasonable adults.  Parents of prospective college students are terrified of FAFSA, and just the mere thought of logging in to apply for financial aid can make them panicky, tense, and anxious.

But the truth is that FAFSA is neither friend nor foe.  Rather it is a gateway to help. 

FAFSA is the official application used by all colleges to determine eligibility for federal aid.  Children applying to most private colleges will also be required to complete a College Scholarship Service Profile Application (CSS). 

And the Department of Education has gone a long way to making the site user-friendly and accessible – it is now more navigable than ever.  Although, that is not to say it is easy to complete the forms.

On the other hand, it is not so much hard as it is mostly time consuming.  You will need to devote yourself to gathering the financial documents you need, such as your and your child’s tax returns.  And, you will have to do it each year again.  This is because a family’s situation changes each year and income may go up or down, inheritances may have been received, or assets may have been reduced.

But, the bottom line is... the effort is worth it.  FAFSA is the federal door to thousands of dollars worth of grants, loans, waivers, tuition reductions, and work-study programs.  And this is true for those attending public colleges, as well as private.

Photo by cydneycap via Flickr.

 

Using Home Equity to Pay for College

For most freshman college students, the transition from bedroom at home to dorm room at college is an exciting one.  It’s the first time most teens will leave the safety and security of their home and move into independent living situations.  But there is another less obvious relationship between home and campus.

First to consider is whether home equity is a hindrance to financial aid.  The answer is... that depends.  It turns out that 90 percent of private colleges do use home equity in determining financial aid, while 98 percent of public colleges do not.

And there is also another potential relationship between home and college – using home equity as a resource to pay for college.  For years, during the boom real estate market, many homeowners treated their residence like a credit card, borrowing money against the equity in their home and hoping it continued to escalate in value.  That notion came to a crashing halt after the fall of 2008 when the real estate market reversed and unemployment rose.  Then, the easy-breezy borrowing of home equity came under scrutiny.

These days, people are rightfully more cautious about borrowing home equity in order to pay for college bills, and sound college financial planners warn parents against jeopardizing their own financial future by over-borrowing home equity.  While your child has enjoyed the security of home in the past, and until the time he or she flies out of the coop to head to college, it’s important for you to manage your finances to ensure the surety of your home as collateral for stability in your future.

Photo by R. Clock via Flickr.