10 Ways To Screw Up Financial Aid and How to Avoid Them

Welcome back. Today in Smart Money we’re talking about helping your kids pay for their college education. Daniel Winston is president of Professional Education Services and has written several books including “Cash for College”, something every parent hopes to get a hold off. He is here to tell us some of the biggest mistakes parents make when applying for financial aid. “Good to have you here” (Winston)“Thank you, it’s nice to be here.”

“Now is the time to get things going and in fact a couple of deadlines may past.” (Winston) “That’s right, it’s really important. Lot of parents should have started their FAFSA form back in January 1 because some schools have money that comes in a first come first serve basis.” “Yes.” “So some people missed out, that it is not very late into the program yet, there is still plenty of time. So if your child has applied or is already accepted in the university or college or whatever, get with their financial aid people they will direct you on how to get hold of whatever they got.”

“Yeah, absolutely sure.” “You’ve given us a list of ten mistakes that parents make in the whole financial aid process. So this is quite a mess through for a parent. First what you say, a lot parents will automatically assume well we’re not eligible. And often a lot of parents feel especially if their middle class family, “If I make $50,000 a year, my home’s paid for, there’s no hope for me.”

Well, that’s not true because there’s a lot of parents, if they have two kids in school at the same time, they could make even as high as a hundred and fifty thousand and still qualify for need-based aid depending on which school they go to. So don’t default, everybody should apply. Now you mentioned need-based aid because another one of your mistakes is a lot of parents would focus on that private money that might be available. “That’s right. That’s right.” And that need-based funding is out there.

“Yeah, the private money as scholarships, that would be the money if you’re a GM employee, there’s $1500 or my niece who’s at Produce she got $2500 dollars from the Startruck Club. Yeah. So everybody should try but only available money that will go to pay for college across the country in any year only about three percent come from that area. Ninety-seven percent of the money that go to pay the college bill come from some place else so there can be no overemphasis. Now another mistake you say is that we often assume that only athletes get the money or there a certain cases but it’s not true either. “Sure, sure. No, a lot of people think that I have some sort of special status.

My wife is 25% Indian and so some people think “Boy I have to have sort of bloodline to get the money” but it’s not about the blood, it about your finances and how you hold your money and what the government rule say you qualify for. So you probably say everybody should go after it. Everybody should try. Okay, your next mistake, picking colleges and universities without paying attention to where their child lies in comparison with the rest of the student body. Yeah and that’s an important point. When you shop for schools many parents can save up to $10,000 if they’re going to compare equal schools across the country by understanding how they would award extra money.

For example if your student is in the top 25% of the entering freshman class, assuming there are 3.75 in the school average freshman who goes or gets a 3.5, your student is probably in top 25%. So that school would give you more money. Same student at a different school, maybe that’s a higher in school average student going in gets 3.95, a pretty good GPA, yours is no longer in the top 25. So schools are different from each other on how they award the money. Another mistake you say is “assuming that all schools are created equal will give the same amount of money”.

Right, right. A couple of things with the financial aid system, there is something called a financial need. There’s a formula that everybody uses in exam, when it gets down to it there’s number at the bottom, that’s the need. Not all schools will meet a hundred percent of that need. Well you kind of want know that before you go to the school. Some schools will meet 75, some will meet 95 and some will meet 50. In West Michigan I don’t know if two schools are doing identical so it can vary a lot from school to school. Well, this top ten lists is very instructive. You can find the complete list on our website at www.zzm13.com undertake 5 lengths. Thanks for being with us and all of you for watching. We’ll see you all back here tomorrow for more Take Five.