Posts Tagged ‘College’

If You Visit Colleges During The Summer Months – Look Beyond The College Brochures

Wednesday, July 6th, 2016

Stanford_13677363 copyDon’t judge a college by its brochure! If you’re serious about going to college, then you need to look beyond those expensive, glossy, full-color college brochures, or fancy websites, which tout the institution’s image and credentials.

To get the most out of your campus visit, you must gather first-hand intelligence about the schools on your list. And the summertime is an excellent time for high-school juniors (who are about to become seniors) to plan summer/fall college visits.

The most important source of information about a college is the personal impression you receive from visiting the campus. Personal visits are mandatory. Unless you actually visit your candidate schools, you’ll never know what it’s like to be there.

Going to college is one of the most important decisions that a young person makes and with over a million students starting college every fall, the campus visit is serious business. However, most visits fall far short of their potential. This is because prospective students and parents don’t ask the right questions and they end up settling for the information that institutions routinely provide. Does it really matter how many books are in the library, or how many faculty members have Ph.D.s (which says nothing about their ability to teach)?

Many research studies show that what matters most to a high quality undergraduate experience is whether students engage in a variety of educationally sound activities, inside and outside the classroom. The more students study a subject, the more they learn about it.

Likewise, the more students practice and get feedback on their writing, analyzing, or problem solving, the more adept they become. And the more experience they have with people from different backgrounds, the more sensitive, comfortable and effective they will be when working with such people. Simply put, the more engaging the college, the more students learn.

Surprisingly, students hear almost nothing about “learning” when they visit campuses. But they can find out by asking certain questions of tour guides, admissions staff and faculty members. Answers to the following questions will reveal things about a college that you may never discover otherwise:

  • How much reading and writing is assigned in the first year?
  • How often do students meet with faculty members outside of class?
  • Are students encouraged to work together to solve problems or work on projects?
  • In what ways is information technology used in the classroom?
  • Who do students talk with about career plans? Do they have a career center?

The summer is a great time to visit colleges, but asking the right questions can reveal matters of substance and style that reflect the educational quality of a college. If your student plans to visit colleges this summer, give us a call first. We can help you get the “inside information” during your campus visit.

The author of this newsletter is Brock Jolly.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.

The Verification Process

Tuesday, March 1st, 2016

dreamstime_xxl_24696837Once the government calculates your family’s Expected Family Contribution (EFC), it will then be displayed on your Student Aid Report (SAR). And once the colleges receive their copy of your SAR, they may decide to do a verification (audit) of the financial information provided by your family. Verification is a simple process for families and if your financial aid application is selected for verification, the school will require you to submit additional documentation, such as signed copies of your IRS tax returns, W-2 and 1099 forms. The federal government selects 30% of the FAFSAs for verification. However, some public and private colleges will select as many as 100% of the FAFSAs for verification.

The Financial Aid Award Letter

Once the verification process is completed, each college will begin the process of issuing financial aid award letters to all deserving students. This includes many high income families whose students will attend higher-priced private colleges. Private colleges often provide tuition discounts to reward good students from high income families.

The family should compare the financial aid package from each college. Do not look just at the total amount of aid, but conduct a bottom-line analysis of the net out-of-pocket cost of attending each school. Different schools, for example, may have different costs for room and board.

Depending on the type of college (private vs. public), you can appeal your award letter after finding out what your financial aid package entails. Private schools have institutional grant money that can be negotiated, but state schools are funded by the state and have less flexibility. Unfortunately, even private college financial aid packages can fall short of what you anticipate. You may also receive an award from a second-choice school that is more generous than the one from your first-choice school. But a school’s first financial aid offer doesn’t have to be its last. Improving your aid award is possible.

If you are appealing an award package, you should be able to demonstrate that there is a legitimate need for additional aid. For example, you may have had a change in employment or an unusual family circumstance, since completing your initial financial aid application. Since May is the standard time to notify colleges of your decision, you’ll need to take some swift action.

As financial aid offers turn up in your mailbox, you must first do three things if you want to try for an improved aid package:

  1. Understand the Components – First, you have to fully grasp what each school is offering you. Although, the financial aid award letter varies in format from school to school, it should contain the following items:
  • Your cost of college
  • Your family’s expected financial contribution (EFC)
  • Your family’s need (the cost of college minus your EFC)
  • A listing of each aid source and dollar amount
  • A date by which you must return the award letter
  • Information on “appealing” any detail in the award letter
  1. Compare Packages – Next, compare your aid packages carefully. They can be as different as night and day. Consider the amount you have to pay out of your pocket now and how much you’ll eventually have to repay in the future. In other words, be wary of how much of the award is in the form of loans.
  1. Respond to the Award Letter – Don’t delay in responding to this award letter just because you’re still waiting to hear from other schools. If you don’t reply on time, the aid package can be revoked. Responding to an award letter does not commit you to attending the school(s); it merely safeguards your award. In responding, you have three choices – you can accept the award in its entirety, you can accept some components and reject others, or you can reject the offer entirely and request a revision in the composition of the package.

If you’ve decided to ask for additional aid, you will need to persuade the financial aid administrator () of the college. Be sure to contact the FAA as early as possible because the school’s extra discretionary aid runs out fast. Present your case in a well-thought-out and diplomatic manner. If you have a legitimate argument, you should support it with documentation.

Time is of the essence and an improper award letter appeal could cost you thousands of dollars. Contact our office as soon as your receive your award letter and we’ll help you develop an appeal strategy, prior to discussing your appeal with the FAA .

The author of this newsletter is Brock Jolly.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.

It’s Time To Complete The 2016-2017 FAFSA Form

Wednesday, January 6th, 2016

 

Financial aid applications, such as the FAFSA, should be submitted as soon as possible after January 1, but no sooner . You cannot submit the form before January 1, because the need analysis process uses your financial information from the prior tax year when calculating eligibility for the upcoming award year.

To meet the deadlines for most states you should submit the form no later than March 1 . Do not wait until you’ve filed your income tax returns with the IRS. You should either estimate your income – you’ll have a chance to correct errors later – or complete your tax returns early. (Your December pay stub should contain information about your total income for the year. You’ll find this helpful in estimating your income.)

When estimating your income, try to be as accurate as possible. Use your actual pay stubs from December. If your estimates are inaccurate, it will have a significant impact on your Expected Family Contribution. If there is a sizeable discrepancy, you will then need to correct the financial information when the Student Aid Report (SAR) arrives.

These financial aid deadlines and procedures are important if you hope to qualify for financial aid. If you have questions about completing the FAFSA financial aid form, please contact our office and we can help.

The 10 Most Asked Questions About Financial Aid

1. I probably don’t qualify for aid. Should I apply for aid anyway?

Yes. Many families mistakenly think they don’t qualify for aid and prevent themselves from receiving financial aid by failing to apply for it. In addition, there are a few sources of aid such as unsubsidized Stafford and PLUS loans that are available regardless of need. The FAFSA form is free. There is no good excuse for not applying.

2. Do I need to be admitted before I can apply for financial aid at a particular university?

No. You can apply for financial aid any time after January 1. To actually receive funds, however, you must be admitted and enrolled at the university.

3. Why can’t I submit my financial aid application before January 1?

The need analysis process for financial aid uses the family’s income and tax information from the most recent tax year (the base year) to judge your eligibility for need-based financial aid during the upcoming academic year (the award year). Since the base year ends December 31, you cannot submit a financial aid application until January 1.

4. Do I have to reapply for financial aid every year?

Yes. Most financial aid offices require that you apply for financial aid every year. If your financial circumstances change, you may get more or less aid. After your first year you will receive a “Renewal Application” which contains preprinted information from the previous year’s FAFSA. Note that your eligibility for financial aid may change significantly, especially if you have a different number of family members in college. Renewal of your financial aid package also depends on your making satisfactory academic progress toward a degree, such as earning a minimum number of credits and achieving a minimum GPA.

5. How do I apply for a Pell Grant and other types of Federal need-based aid?

Submit a FAFSA. To indicate interest in student employment, student loans and parent loans, you should check the appropriate boxes. Checking these boxes does not commit you to accepting these types of aid. You will have the opportunity to accept or decline each part of your aid package later. Leaving these boxes unchecked will not increase the amount of grants you receive.

6. Are my parents responsible for my educational loans?

No. Parents are, however, responsible for the Federal PLUS loans. Parents will only be responsible for your educational loans if you are under 18 and they co-sign your loan. In general you and you alone are responsible for repaying your educational loans. On the other hand, if your parents (or grandparents) want to help pay off your loan, you can have your billing statements sent to their address. Likewise, if your lender or loan company provides an electronic payment service where the monthly payments are automatically deducted from a bank account, your parents can agree to have the payments deducted from their account. But your parents are under no obligation to repay your loans. If they forget to pay the bill on time or decide to cancel the electronic payment agreement, you will be held responsible for the payments, not them.

7. Why is the family contribution listed on the SAR different from the family contribution expected by the university?

The federal formula for computing the expected family contribution is different from those used by many universities. In particular, the federal formula does not consider home equity as part of the assets, yet many private colleges will take home equity into consideration for their institutional funds.

8. If I take a leave of absence, do I have to start repaying my loans?

Not immediately. The subsidized Stafford loan has a grace period of 6 months and the Perkins loan has a grace period of 9 months before the student must begin repaying the loan. When you take a leave of absence you will not have to repay your loan until the grace period is used up. If you use up the grace period, however, when you graduate you will have to begin repaying your loan immediately. It is possible to request an extension to the grace period, but this must be done before the grace period is used up. If your grace period has run out in the middle of your leave of absence, you will have to start making payments on your student loans.

9. I got an outside scholarship. Should I report it to the financial aid office?

Yes. If you are receiving any kind of financial aid from university or government sources, you must report the scholarship to the financial aid office. Unfortunately, the university will adjust your financial aid package to compensate. Nevertheless, the outside scholarship will have some beneficial effects. At some universities outside scholarships are used to reduce the student loan level.

10. Are work-study earnings taxable?

Yes, the money earned from Federal Work-Study is generally subject to federal and state income tax, but exempt from FICA taxes (provided you are enrolled full time and work less than half-time). The student should be careful to report amounts based on the calendar year, not the school year.

The 5 Most Asked Questions About The FAFSA Form

1. How do I file the FAFSA financial aid form?

You may choose any of these three methods to file a Free Application for Federal Student Aid (FAFSA):

Apply online at http://www.fafsa.ed.gov (Recommended), or

Complete a PDF FAFSA (Note: PDF FAFSAs must be mailed for processing), or

Request a paper FAFSA by calling the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243) or 1-319-337-5665. If you are hearing impaired, please contact the TTY line at 1-800-730-8913.

2. How soon after January 1 should the FAFSA form be sent in? Is it better to wait until the income tax forms have been completed?

Send in the form as soon as possible after January 1. Do not wait until your taxes are done. Although it is better to do your taxes early, it is ok to use estimates of your income, so long as they aren’t very far off from the actual values. You will have an opportunity to correct any errors later on the Student Aid Report. If you wait too long, you might miss the deadline for state aid. Most states require the FAFSA to be submitted by March 1, and some as early as mid-February.

3. My parents are separated or divorced. Which parent is responsible for filling out the FAFSA?

If your parents are separated or divorced, the custodial parent is responsible for filling out the FAFSA. The custodial parent is the parent with whom you lived the most during the past 12 months. Note that this is not necessarily the same as the parent who has legal custody. If you did not live with one parent more than the other, the parent who provided you with the most financial support during the past twelve months should fill out the FAFSA. This is probably the parent who claimed you as a dependent on their tax return. If you have not received any support from either parent during the past 12 months, use the most recent calendar year for which you received some support from a parent. Note, however, that any child support and/or alimony received from the non-custodial parent must be included on the FAFSA.

4. My parents are divorced, and the parent I’m living with has remarried. Does my step-parent have to report his or her income and assets on the FAFSA?

Yes, provided that the parent you’re living with is the one filling out the FAFSA (your custodial parent). If the step-parent is married to your custodial parent at the time you fill out the FAFSA, they must report their income and assets, even if they weren’t married to them in the previous year.

5. My custodial parent remarried and signed a prenuptial agreement that absolves the step-parent from financial responsibility for my education. Why does my step-parent have to provide financial information on the FAFSA?

Prenuptial agreements are ignored by the federal need analysis process. After all, two individuals (parent and step-parent) cannot make an agreement between them that is binding on a third party (the federal government). The federal government considers the step-parent a source of support regardless of any prenuptial agreements to the contrary. If a step-parent marries the parent, he or she is considered responsible for supporting the parent and children, even if he or she is unwilling to do so.

The author of this newsletter is Brock Jolly.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.

Financial Aid Time Is Near – Will You Qualify?

Tuesday, December 15th, 2015

Every year families go through the tedious process of filling out financial aid forms in hopes of getting enough money to make college affordable for their student(s). If you do happen to qualify for aid, most of it will most likely be in the form of loans, which today have a high fixed interest rate.

However, even if the student is awarded some grant money, many families will struggle financially to pay the balance due to the college. This ‘balance due’ is usually determined by the Expected Family Contribution (EFC) of the family.

The EFC is computed by using family financial data submitted on the FAFSA financial aid application form. Private colleges may use their own Institutional EFC forms. The EFC is then subtracted from the Total Cost of Attendance (tuition, fees, room and board, books and supplies, personal expenses, cost of a computer, and transportation to and from college) to arrive at the student’s “need”, or eligibility for financial aid.

Example

Johnny wants to attend XYZ Private College. The cost is $40,000 per year. XYZ college offers Johnny $10,000 in grant money and $6,000 in student loans.

Question Is this an attractive financial aid offer?

Answer – Maybe.

Question – Can Johnny get a better deal from this college?

Answer – With professional help… probably.

Question Does this offer make college affordable to the family?

Answer Probably not.

You see, the real problem is Johnny’s family must still come up with $24,000 per year to pay the balance due the college. And even if Johnny’s aid package was negotiated by a professional to $13,000 in grant money and $3,000 in student loans, the family still owes the college the $24,000 balance.

What can this family do?

They could go into debt and take out parent (PLUS) loans at an 6.84% fixed interest rate (this could very easily lower the parent’s credit rating). They could take out some loans and pay the balance out of their income and assets. They could also take money out of their retirement to pay college expenses (this is absolutely the wrong thing to do).

As a last resort, Johnny could decide to forego his dream college and attend a public university. However, with a cost of $20,000 and a family EFC of $24,000, Johnny would not receive any need-based aid. Consequently, the student and parents would have to decide how to split the $20,000 cost, which is still unaffordable to some families, especially if they have two or more children to educate.

Is there a solution for Johnny’s family?

Yes there is, but it can’t be found by pouring over voluminous college books in the library, or searching endlessly through Google for answers. Many families have tried to figure out how to pay for college all by themselves… and failed. And remember: even if you do get financial aid… it’s your out-of-pocket cost that you end up paying the college that comes back to haunt your bank account.

There are many financial strategies that can help you fund college expenses without raiding your retirement fund. Strategies such as:

  • EFC strategies – minimize your EFC and maximize your financial aid eligibility
  • Loan strategies – reduce your education debt so as not to jeopardize your current budget, your credit rating, or your retirement funding
  • Tax strategies – increase your potential tax savings that can be converted to funding college costs
  • Cash Flow strategies – find potential areas of cash flow improvement in your investments, health costs, insurance costs, mortgage costs, and current living expenses – all which can be used to help fund college costs
  • Investment strategies – uncover “hidden costs” that can be converted to real dollars used to help fund college costs

Have you seriously thought about how you plan to pay your tuition bill? If you don’t qualify for financial aid, will you need to go into considerable debt, or even raid your retirement fund, to cover college expenses? Do you really have the time to try to figure out all this for yourself?

Don’t wait until the last minute to find out if you qualify for financial aid. Waiting could cost you dearly. Give us a call ASAP! We can help, but time is definitely running out!

The author of this newsletter is Brock Jolly.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.