College Selection, Admissions, Financial Aid Tips

Welcome back for part four of four. So does financial aid and how pay for college confused you? Well keep in mind this might be the simplified view of the current student financial aid delivery system. So let’s simplify it even more. Try to think in these terms, you’ll pay for college in thirds. One third from the past, meaning savings, one third from present income while you’re a student in college, and one third from the future, meaning loan debt. At some point, you’ll be frustrated by the alphabet soup of financial aid acronyms just prepare for this inevitable frustration and if you don’t know what an acronyms means, find out that way you can rule in or rule out is what’s important to you.

So here’s the three main types of financial aids: grants and scholarships which are good because of free money, loans and then work-study. In work-study, it’s usually a job on campus. FAFSA’s stands for Free Application for Federal Student Aid, and this is the most important form that you will fill out when you begin the financial aid process. Some students also have to fill out an additional form called CSS Financial Aid Profile. When it comes to scholarships, look locally and nationally. Find out if your high school guidance’ office has a local scholarship bulletin.

And then consider doing a national scholarship search. Keep in mind when it comes to what are my chances of winning a scholarship they maybe very slim on national level versus a local level. But above all else, know that the Federal Trade Commission has set up a website to try to help you make sure that you don’t get scammed because there are many scholarship scams out there. I show this slid to make one point, I know why people focus most of their efforts on scholarships, you can’t argue with free money. But it only makes up between 7 and 25% of all financial aid dollars, so learn as much as you can with the different types of college funding sources. The sticker price is called the Expected Cost of Attendance or ECA.

It’s made up of tuition plus room and board, books, fees, transportation, and personal expenses. Now oftentimes what you will see in printed materials may just be the tuition, so you have to be careful to make sure you have the complete Expected Cost of Attendance. Some people’s eyes glaze over this point in the process and I use this slide to help them focus on the big picture. Some people say, “Hey just tell me what to do and when to it.” Well, in December senior year, get PIN numbers, one for the student and then one for the parent. The PIN number will allow you to sign the FAFSA electronically, and also do a credit check on the student and the parent.

Now parents we know why to do that, but students you might be wondering why in the world would you do a credit check on me, I’m not even 18 yet or I just turned 18 I have no credit cards? Well the time to find out that your credit is broken is not when you’re trying to get a loan. And it could be as simple as someone at some point transpose two numbers on a social security number so something matches up to you when it shouldn’t. In January of senior year, that’s when you’re going to focus your efforts on filling up the FAFSA and possibly finish up the CSS financial aid profile. In February, you receive what’s called a SAR, a Student Aid Report. That’s going to tell you your EFC, Expected Family Contribution which is a fancy way to saying how much do you need pay out of pocket for your first year of college regardless of what school you go to.

In March you’ll begin to receive your award letters and loan applications. And during the summer, billing will begin. By the way, if this has not happen to you yet it will. But just keep in mind that you will not know your true cost of college until approximately May of your senior year in high school so don’t pick all of your colleges just based on sticker price. It’s difficult to do an accurate apples to apples comparison of two different schools because they probably format their award letter differently. You really need to slow down at this point in the process and ensure that you have accurate data and you are comparing evenly. While all these things are negative, they may seriously affect your ability to receive financial aid.

Sometimes you can qualify for more if you keep the financial aid office in the loop on new developments since you submitted your FAFSA. I’m not a certified financial planner but I’ve come to understand that borrowing from retirement plan is usually not a good idea. For a couple of reasons, there may be some kind of mandate where within five years you have to repay what you have borrowed. If you change jobs you might have to repay everything immediately. If nothing else you lose a tax break. We have often found this, families will prefer the first, maximize their ability to take out Stafford money, followed by PLUS loan money, and then look at is their a possibility that they can get on the Payment Plan, so they rather than taking out this amount in a loan, unable to pay it off over the next ten academic months.

Home equity line of credit or home equity loan is something that people will look at next along with alternative or private loans. You know, majority of students come out of college with some type of debt and that debt load rises every year. So if you think you’re coming out of this unscathed, you’re probably wrong. Another thing you need to consider is do you have a 529 plan? And which state is it? Is it prepaid tuition or is it more of a college savings account? And then you need to figure out how am I going to get that money disburse? Same thing with UPromise, if you have a Upromise account you need to begin to figure out how would I be able to get my hands on that money.

Overall, I want you to consider that CPI, this Consumer Price Index, tuition inflation over the next four years, maybe more than you plan for because the Consumer Price Index, the regular inflation rate is usually about 3% but historically over the past 10 or so years the tuition fee inflation rate has been doubled that. That in of itself is the reason why when students come to me and say I’m thinking of taking a year off before I go to college so I can earn money, I often try to dissuade them from doing that and say, at least consider going to school part-time and working part-time. Because you may not be able to make more than what you will lose just based on inflation. So to recap, your junior year should be devoted to visiting colleges, selecting the right schools, collecting all the paperwork that you have to deal with and take care of testing.

Senior year you should be finishing your standardized testing, send in your applications and then your focus should shift to financial aid. This is the folder of one of the most organized students I have the pleasure of helping. I can recall a time where she had an issue that would take most students three to four weeks to figure out, but because she was this organized she was able to put her hands immediately upon the piece of paper that we fax to her college and got the issue resolved within a few minutes that would have taken, like I said most students a couple of weeks to resolve. So please note students, organization like this pays off. So thanks for taking the time of using this presentation, and please contact me if I could be of further assistance.