College Planning

Financial Aid Appeal Revisited: The College Perspective

“I can’t believe this!” is the reaction of every parent who is lucky enough to receive a financial aid package. Unfortunately 80% of recipients don’t feel they are getting enough money from the colleges. Normally this causes a knee jerk reaction of “I’m going to call them and tell them I need more money” which is the simplest and easiest thing to do, but it won’t accomplish anything except create frustration and anger toward the financial aid counselor.

If you think about everyone doing the same thing – they are all arguing with a harried, overworked and underpaid financial aid counselor who has been instructed to give no one a break because “our college does not negotiate.” Many financial aid offices do not even have chairs for visitors because they are not encouraged to sit down and talk. Some phone calls are even blocked when their system has reached full capacity.

From my experience about 45% of financial appeals will be successful if the parent does 3 things:

1)    Determine the cost of attendance

2)    Subtract their Expected Family Contribution (EFC) to determine their eligibility

3)    Develop an approach based on what the colleges don’t know about them

There are many reasons why a college would consider revising a financial aid package. The complete list can be seen by clicking here.

There are many strategies someone can use to appeal an aid package. Since there are too many to list here, I’ll give a couple. All appeals should be in writing and addressed to the Director of Financial Aid. The appeals need to be in writing (snail mail or email) so there is a paper trail in the student’s file. Lastly, make a friend in the Aid Office. Even if you don’t have any success this person will be there in subsequent years.

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.  

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.

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.

College Costs - Numbers that Might Surprise You

Your child has gone through 13 years of schooling, and your 17 or 18 year old is about to enroll in four more years of higher education. These are all comfortable, familiar numbers that capture an important rite of passage your family is about to experience.

But, does the number $50,000 per year for college expenses scare you? For many people, that figure is a frightening prospect. And there are others just as alarming:
•    Prices for New England colleges have risen 374 % in the last 25 years, while family income has only risen 127 %.
•    Twenty years ago, the average college graduate had $9,000 in loans, but today, that figure is in excess of $27,000.
•    Financial aid forms have 225 questions spanning three taxable years.

However, before you get too overwhelmed by those numbers, don’t despair. Consider these figures instead, which may surprise you – and inspire you.

•    Many families I work with are able to slice 25 percent off per year of their child’s college tuition bill. That could be as much as $10,000 to $12,000 per year.
•    Our clients routinely receive $15,000 to $40,000 in scholarship money each year. This is free money, which is, in effect, a financial windfall.
•    There is $46 billion in free scholarship money awarded each year by the US Department of Education  and colleges.
•    There is another $35 million in scholarship given out through private companies, foundations and civic groups.

So before you let the high cost of a college education muddle your mind and keep you up at night with worry, consider the many ways there are to capitalize on the help that is available to you and how you might secure that support to realize the dream of an affordable college education for your child.

Photo by Tracy O via Flickr.

Searching for College Scholarships and the Pot of Gold

  


Your child has worked hard in school, prepared for his SATs, written his essay, done the college visits, narrowed his school search, but now the big question: how to pay for it? Scholarships are a welcomed answer because they are free and unlike a loan, don't require any obligation to pay them back.

But where are these elusive scholarships? And how to obtain them?

Fortunately, for the families of college-bound kids, there is a lot of help available no further than your computer keyboard. Log in and there at your fingertips are several websites that are virtual directories of thousands of scholarships, many of which go unclaimed because no one knows where to find them.

Take, for example, FastWeb, which claims that 50 million members have benefited by its services. According to FastWeb, 1 in 3 college-bound high school seniors use the website to search for $3.4 billion in possible scholarships. It's free, easy to navigate and there are sections devoted to high school students, college students, parents and educators.

Two other websites are the National Merit Scholarship Corporation, an independent nonprofit organization that offers Merit Scholarships  to the top scholars out of 1.5 million entrants, and the Scholarship Research Network Express,which offers a searchable database with 1,000 links to scholarships totalling $9,769,283,403.

So, college financing can get a whole lot easier if parents use the help available literally at their fingertips.

Photo by RambergMedialImages via Flickr.