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financial aid

Bummed About Your Financial Aid Award Package?

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financial aid

Picture this. A teenage daughter with her heart set on attending an expensive private college. A mother who knew it was simply not affordable unless the financial aid award package was substantial. Waiting, waiting, and more waiting for the package to arrive after she heard she was accepted.

I’m sure this is the scene in many of your homes today. As a parent, you know the financial realities of paying for college. Your student, on the other hand, is thinking with her heart. If she’s like my daughter, she can’t see the picture from a financial perspective. After waiting for the award to arrive, my heart sunk. When her first choice college offered her “zero” financial aid other than student loans, I knew we were headed for a tough conversation.

If you’re bummed about your financial aid award package, what can you do?

First, compare awards from all the colleges

My daughter applied to ten colleges. Not all of them offered aid beyond student loans, but several of them offered scholarships and school grants. Sit down and compare the awards. Many colleges have implemented the Financial Aid Shopping Sheet. If not, you can download the sheet and complete it yourself for each college. Look at the bottom line. Which college’s package gives you the best value: it’s what you can afford to pay and your student will graduate with minimal debt (if any)?

Second, if there are larger awards from other colleges, use them as leverage

Since one of the colleges that offered my daughter admission also offered her a full-ride scholarship, we had some leverage. If the college that your student is dying to attend doesn’t offer a substantial aid package and one of the other colleges she applied to does, use those figures for leverage. Have your student contact the college and let them know it is her first choice, but she needs more aid to be able to attend. Mention that other colleges are offering more aid and you would like them to at least match these offers. These appeals are common and most colleges will consider upping the ante if you just ask.

Third, if the college won’t offer more money, consider one of the other colleges that offer the best financial aid

After appealing the aid, and not being satisfied with the college’s decision, it was time for some tough love. I knew it was going to break her heart, but I had to be the logical one. If the money picture is bleak and her first choice college won’t budge, it’s time for your student to consider one of the other colleges that did offer financial aid. Take a deeper look at the other colleges, revisit if you have to, and make the final decision.

As it turned out, my daughter fell in love with one of the colleges that offered substantial aid. It was a perfect fit for her, and she was able to graduate with a very small amount of student loan debt. She thanks me every day that I led her in that direction. If she had attended her dream college, even with the outside scholarships she had won, she would have graduated with close to $75,000 worth of debt. It was a tough conversation, but one I’m glad we had.

Could this disappointment have been avoided? Absolutely. I should have had a serious talk with her before she applied about what we were willing to pay and what we expected her to pay. This way, she would have known that this college, although it was her dream to attend, was completely out of our financial reach.

FAFSA, financial aid

Art Imitates Life: Opening the Financial Aid Award Package

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What’s more scarier and nerve-racking than waiting for the college decision? Opening the financial aid award package. Families all across the country are waiting for the arrival of their financial aid award, knowing that their student’s ability to attend college depends on the amount of the award.

This is such a universal anxiety among parents, television shows have written episodes around the issue. My three favorites, Gilmore Girls, Dawson’s Creek, and The Middle paint a picture of how the award letter affects college attendance.

Dawson’s Creek

Joey Potter is accepted to a high-priced private university in New England. But accepting the offer of admission depends on her financial aid package. When she receives it, they didn’t offer her a full ride. She and sister meet with the admissions counselor, who tells them that since their business is doing well, Joey doesn’t qualify for financial aid.

financial aid award package

The counselor says, “Nearly everyone these days borrows some money to pay for college.” Joey replies, “I don’t want to do that. i don’t want to graduate with debt.”

Gilmore Girls

As graduation day approaches, Rory learns her financial aid was rejected. The irony, her mother received some financial assistance from her grandfather that altered the FAFSA results. Even though they were financially unable to pay, that money took them out of the running for aid.

financial aid award package

Rory’s mother explains, “We didn’t get financial aid for Yale. No scholarships, no hardship money, nothing.” Devastated, Rory questions, “I don’t understand what happened. Send them proof. A bank statement. I’ll take a student loan out from the bank. That’s what banks are for.” Her mother counters, “I don’t want you to be buried by loans the day you graduate from college.”

The Middle

Sue Heck opens her financial aid package and has problem deciphering it. She’s not alone. Many students and their families have difficulty understanding the award letter and don’t know how to compare awards from different colleges.

financial aid award package

As Sue is opening the package, her parents are screaming, “What’s it say!” Sue responds, “I don’t know. Is it one year or four years?” Her father grabs the letter and immediately exclaims, “Yes! They’ve given us everything we needed. We’re poor. If we had worked a little bit harder, none of this would be possible.”

In each of these episodes, the students managed to attend their first choice college without incurring debt. Two from generous benefactors who paid their tuition and one who received a full ride. But there are underlying realities that parents must face:

1. The college decision is first and foremost a financial one–I’ve said it before and I will say it again: have the “money talk” before you apply to colleges. This avoids any disappointment if the college does not offer enough aid to cover your costs.

2.  Even though a college offers admission, it doesn’t mean you will receive financial aid–Colleges use the money to attract the most desirable students. If they don’t consider that your student is desirable, they won’t offer aid or they will gap you.

3. Families anguish over the high cost of college–College has become increasingly expensive and it’s clear that the decision to attend college is not based on the education alone.

In the next few weeks I will be sharing my own personal experiences how to decipher the award package, how to compare with other colleges, and how to determine if a college is “gapping” you. Before the letter arrives, be prepared to take an honest look at your finances and have a discussion with your student about the weight the package plays in their acceptance of admission.

FAFSA, financial aid

FAFSA Week: Reporting Parent Information on the FAFSA

Reporting parent information on the FAFSA

Reporting parent information on the FAFSA might make you want to pull your hair out.

If you are completing the FAFSA, some terms can confuse you. Today’s post addresses those questions in an effort to help you understand them more clearly and fill the ambiguous categories like divorced, separated, living together but not remarried, divorced and living together, separated and living together, and stepparent married to biological parent.

Here are some detailed articles that will help you discern which FAFSA parenting category you fit into.

From TeenLifeMedia, “How Divorce and Separation Can Affect Financial Aid”

When students apply to college, there are many forms to complete. And if they are applying for financial aid, the FAFSA is No. 1 on the list. This form asks the obvious questions: name, date of birth, Social Security number, address etc. It also asks questions about parents’ financial information to determine financial aid eligibility.

If you are separated or divorced, this part of the FAFSA raises many questions:

  • How will colleges treat the income of two separate families?
  • Which parent’s income is used for determining the expected family contribution, or EFC?
  • Do both parents have to report their incomes?
  • What do the words “custodial parent” mean?

Read the entire article for clarification.

Studentaid.ed.gov published a PDF, “Who is My Parent When I Fill Out the FAFSA”:

Maybe you know you’re considered a dependent student* by the Free Application for Federal Student Aid (FAFSASM), and you’re supposed to put information about your parents on the application. But what if your parents are divorced? Remarried? What if you live with your sister? Whose information should you report?

Below are some guidelines that might help. Unless otherwise noted, “parent” means your legal (biological and/or adoptive) parent or your stepparent. In addition, the rules below apply to your legal parents regardless of their gender.

Download the PDF for instructions on how to complete this section

EdAdvisors Network addresses the issue of divorce and separation, “FAFSA Tutorial: Divorced and Separated Parents on the FAFSA”:

The marital status and living arrangements of a student’s biological and adoptive parents determines whether the Free Application for Federal Student Aid (FAFSA) requires financial and demographic information from one or both parents.

These topics are addressed:

  • Who is Considered a Parent?
  • Parents who are Married to Each Other
  • Parents who are Unmarried
  • Who is the Custodial Parent?
  • Stepparents
  • Increasing Aid Eligibility

Read the tutorial for detailed explanations of each category

SmartAsset.com provides parents with an easy-to-understand guide and some examples, “Divorce, FAFSA, and the Financial Aid Process”:

The Free Application for Federal Student Aid, known as FAFSA is the Hydra that strikes terror in the hearts of even the most financially savvy parents. Rendering otherwise competent adults mumbling, muttering wrecks. Creative hyperbole aside for the moment, most people are intimidated by FAFSA to some degree but those preparing the form as divorcees face a special kind of torment.

There are several problems with FAFSA when divorce is involved, none of which are insurmountable but lack of understanding can tear open long healed wounds and foster a renewed sense of acrimony. However, knowing the rules of the game can make life and FAFSA easier.

To understand the rules and see some practical examples, read this article

 

FAFSA, financial aid

Amping Up for the FAFSA

 

amping up for the fiefs

If you have a college-bound teen, the FAFSA is how you celebrate the New Year. Honestly, not many parents celebrate filling out the FAFSA, but you should. The FAFSA is your golden ticket for college money. Without it, your student won’t get a dime (even many scholarships ask if you’ve completed the FAFSA).

This should be your FIRST New Year’s resolution: complete the FAFSA within the first week of the new year. It becomes available online on January 1st and although I can’t picture you waiting by your computer at midnight, you should make it a priority over the next few days. And while you’re waiting during the countdown, you should be amping up for the FAFSA.

I wrote an article for University Parent last year (and it’s been updated for the changes) that should help you prepare: An Easy Guide to the 2016 FAFSA. Here’s an excerpt:

If there’s a piece of advice I give parents over and over again, it’s this: whatever your income, complete the FAFSA. Many parents believe that the FAFSA should only be submitted by financially needy students. Nothing could be further from the truth. Colleges use the FAFSA data to determine all types of financial aid, not just need-based. If your student doesn’t complete the FAFSA, he won’t qualify for any aid from the college or the government, including student and parent loans. You may be able to pay for your son or daughter’s education, but why not complete the form? It’s free and you have nothing to lose.

Take a few minutes to read the entire article which includes information about FAFSA basics, the documents you will need, how to team up with your student to get the form completed, and some technical terms, definitions and changes to the upcoming FAFSA.

It would also be good to read Diane Schwemm’s post: Changes to the FAFSA.

You can’t bury your head in the sand and ignore the FAFSA. Get pumped and start amping up for the FAFSA–your golden ticket to free money for college!

financial aid, Guest Posts, student loans

5 Tips to Avoid Debt After Graduation

 

debt after graduationAccording to US News, graduates from the class of 2013 averaged just under $30,000 in student loan debt. This is a lot of money considering the average graduate from that same class had a starting salary of just around $45,000. While it may seem like an impossible task to pay back these loans, if you make smart decisions about your finances you can slay the startling student loan dragon and avoid the student loan money trap. The following tips will help you pay off your student loans and avoid the crippling debt after graduation that many recent graduates deal with.

1. Know Your Loans

If you are like most graduates who have taken out student loans, it is crucial to know the ins and outs of them. You should know your monthly payment, interest rate, and the term of your loan. Knowing this information will ensure that you don’t fall behind on your payments and will allow you to come up with a game plan to pay them back. It is also smart to stay in touch with your student loan servicer. These people can help you if you need more time making a payment, want to change the terms of your loan, or want to explore options that may reduce your interest rate.

2. Refinance

Just like you can refinance your mortgage or car loan, it is also possible to refinance your student loans. You can usually consolidate and refinance your loan or loans into one single loan with a private lender. Because many graduates now have steady jobs and a better financial standing, the private lenders who deal with refinancing may offer much better rates than the initial loan. Refinance rates start as low as 1.90% for those with a very respectable credit score though most borrowers’ rates average around 3-5%. Even if you can lower your loans by a few percentage points, you will save thousands in the long run!

3. Student Loan Forgiveness

Student loan forgiveness is essentially just what it sounds like. After a certain amount of time or under certain circumstances, you are “forgiven” for your loans and are no longer required to make payments on any remaining balance. One of the most popular plans is the Public Service Loan Forgiveness Program from the Department of Education. This plan offers forgiveness for those who work in a public sector job, like the government or a not-for-profit, who have made at least 120 qualifying payments on their student loans. Starting in 2017 you can apply for this program on the Department of Education’s website.

4. Maintain a Budget

Whether you have student loans or not, it is essential to maintain a strict budget. Mapping out all of your essential expenses and sources of income will allow you to have a better understanding of how much you can invest or save and how much extra spending money you have. There are also countless apps to help you easily track your budget and spending. Make sure to keep updating your budget as you gain a better understanding of how much money you are spending.

5. Cut Unnecessary Expenses

There are countless ways to waste money in today’s society. In order to stay debt-free as you enter the “real world” you must identify and eliminate these wasteful habits. Some examples of expenses you can cut include eating out, memberships to entertainment services like Spotify or Netflix, and spending money at bars or clubs. Once you take a look into your budget and spending habits, you should be able to choose which expenses are unnecessary and cut them out.

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Today’s guest post is from Molly Day, the creator of StudentLoanDiary.com. Molly created her blog to help her stick to her goals and encourage other people to beat their student loan debt! Molly is working to pay off $30,000 in student loan debt over the next two years!

 

financial aid

Mom-Approved Tips: Art Imitating Life–The Financial Aid Award Letter

 

What’s more scarier and nerve-racking than waiting for the college decision? Opening the financial aid award letter. Families all across the country have been doing this in the last few weeks. Some with excitement…as in this video:

…and some parents are wringing their hands wondering how they will pay for the college that offered their student admission. Sometimes a little levity helps, but even in the hysterical way The Middle addresses it, there are underlying realities that parents must face.

  1. The college decision is first and foremost a financial one–I’ve said it before and I will say it again: have the “money talk” before you apply to colleges. This avoids any disappointment if the college does not offer enough aid to cover your costs.
  2. Even though a college offers admission, it doesn’t mean you will receive financial aid–Colleges use the money to attract the most desirable students. If they don’t consider that your student is desirable, they won’t offer aid or they will gap you.
  3. Families anguish over the high cost of college–College has become increasingly expensive and it’s clear that the decision to attend college is not based on the education alone.
admissions, college guidance, college planning, financial aid, parenting, Wednesdays parent

Wednesday’s Parent: Don’t Be Fooled

 

don't be fooledToday is April Fool’s day. I have to admit, it’s not one of my favorite Hallmark holidays. I’m not much of a prankster and I always disliked being on the receiving end of a prank. None of us do. But colleges, all over the country, are pranking parents and students today. How? With the financial aid award letter. But don’t be fooled.

Colleges don’t back their admission offer up with money–if a college wants your student, they will back it up with a financial “reward”. No award indicates they are counting on your student declining their offer. Read this…

Colleges pack those letters with loans–a prank because every student and parent can get a student loan. Read this…

Colleges misrepresent their true cost on those letter–often leaving out expenses that should be considered and not giving the true cost of attendance. Read this…

Colleges “gap” students–they don’t award enough financial aid to meet the family’s EFC. This leaves a gap in the award and what the family has to pay. Read this…

Colleges consider it an award letter although there’s no award–even if all they offer is a student loan. That’s not an award. That’s not even an olive branch. It’s a slap in the face. Read this…

Be a wise consumer. Don’t be fooled by award letters. Do your due diligence and compare offers, crunch the numbers, and make a wise financial decision. Remember that part of the perfect fit college is the financial aspect. A college who won’t back their offer up with money isn’t a college you should consider.

Don’t be pranked by the colleges. I would never fool you; but Happy April Fools Day!

Read Wendy’s post: How a Joke Helps No Fooling College Prep

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Wednesday’s child may be full of woe but Wednesday’s Parent can substitute action for anxiety. Each Wednesday Wendy and I will provide parent tips to get and keep your student on the college track. It’s never too late or too early to start!

The bonus is on the fourth Wednesday of each month when Wendy and I will host Twitter chat #CampusChat at 9pm ET/6pm PT. We will feature an expert on a topic of interest for parents of the college-bound.

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from parentingforcollege to pocsmom.com and vice versa.

financial aid, Guest Posts

Avoid the Financial Aid Gap

 

financial aid gapIs your child’s financial aid offer enough to meet their financial needs? If not, they may be a victim of “gapping” or “admit/deny”, when a school accepts a student, but does not give a student enough aid to realistically attend.

Is Your Financial Aid Offer Meeting Your Full Need?

Your child has finally received the financial aid offer from their dream school. You are excited for the great experience they could have at this school, but after taking some time to decipher the offer you realize that the money the school is offering has not completely met your need. You are stunned when you calculate the total amount you will owe after factoring in grants and scholarships from the college.

The practice of accepting a student and then not offering them enough financial aid to afford the college is known as “gapping”, or “admit/deny”.

This practice is shockingly common. According to The 2014 Survey of College and University Admissions Directors, over half of college admissions directors practice gapping at their institutions, although it is much more common in private schools. 72% of private college directors and 39% of public college directors say that they use this practice. The majority of private college directors, and about a third of public school directors say the practice both is necessary and ethical.

This is an issue for both need-blind and need-aware colleges. In theory a need-blind college cannot deny a student based on their ability to pay. In practice, however, these colleges know they will receive a greater benefit by accepting more students who have the ability to pay the bulk of their tuition. Instead of rejecting these low-income students outright, they admit them without offering the financial aid they need, which is in effect, a denial.

How to Fill Financial Aid Gap

Families often have a hard time deciphering financial aid offers, and it may not be immediately clear to them that their full financial need has not been met. Unfortunately, many of these students end up taking out massive loans in order to attend a school that is only meeting 75%, 50% or less of that family’s need.

What they should do instead is learn how to interpret financial aid offers, and compare offers between colleges to see who is offering the better deal. To find the true cost of attending a college, you must know your expected family contribution and subtract that number from the total cost of attending (total cost includes tuition, fees, room, board and living expenses).  Unsubsidized loans and Parent Plus loans are available to anyone regardless of need and should not be considered part of your need-based aid.

Colleges also report how much aid they give out, so you can look up a chosen university to see the average aid they award, as well as how many students receive financial assistance. For example, Stanford is more likely to be a pricey school as they only give aid to about 55% of their students.

Gapping is more likely to happen at private schools, and schools that are a reach for the student. There are some schools that are committed to meeting the full need of the students who apply, though these schools may be more difficult to get into, and are often need sensitive or need aware.

The best defense against gapping is to ensure that the student has applied to colleges that are a good fit for them. If a student is attractive to a college, they will be willing to entice the student with a greater share of financial aid dollars.

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About the author: Carly Stockwell is the media director at CollegeFactual.Com, a website that helps students make better decisions about where to go to college.

 

admissions, college guidance, college planning, financial aid

Before the Offers of Admission and Financial Aid Awards Arrive

 

offersCollege acceptances for regular admission will be posted and arriving soon. Just a little later, will come the financial aid award packages. Before you and your student have to make the final college choice and before the financial aid awards arrive, consider these four activities in preparation:

1. Revisit colleges that have offered admission

Early spring is the perfect time to revisit the colleges that have offered admission. If possible, attend an admitted student session, stay on campus overnight, or just revisit to help your student refresh his memory of the setting and the students. While most would advise that you not accept an offer without a visit, some might disagree. Personally, I believe that visiting campus will help cement the decision in your student’s mind.

2. Discuss money

If you haven’t already done so, discuss what you will contribute and what your student will contribute toward the cost of college. This is an important discussion because once the offers of admission arrive and the financial aid package, it’s conceivable that your student’s decision will be based purely on emotions and not take into consideration the financial aspect of the decision.

University Parent has two great articles that address this topic:  The Money Talk Part 1: Setting expectations with your student and The Money Talk Part 2: Put college funding into high gear!

3. Take a look at your 2nd, 3rd and 4th choice colleges

Before the offers (and rejections) arrive, take a look at your student’s 2nd, 3rd and 4th choice colleges. If necessary, revisit them. Re-examine why these colleges made the list and take a closer look at their offerings. This second look might move one of the colleges to the top of the list.

4. Understand the components of the award letter

Before you start receiving those financial aid offers, you should understand what’s in a typical award letter. Thankfully, there are tools available and information to help you look at these letters for what they are: the college’s pitch for your student to accept their offer of admission. You are in control of this process and you hold the cards. It’s your decision to accept or reject their offer based on the amount of aid they are willing to give your student. Money, in this situation, is everything.

financial aid, Wednesdays parent

Wednesday’s Parent: “We Won’t Qualify for Financial Aid”

 

fafsaIf I had a dollar for every time parents said this to me, I would be rich. Surprisingly, most parents believe this fallacy. Believing this, they don’t complete the FAFSA and miss out on all kinds of aid. Just because they were misinformed and unaware of how financial aid works.

Why should you complete the FAFSA?

College is expensive and it’s a chance for you to grab yourself a piece of the financial aid pie.

Why should you complete it by February 1st?

The early bird gets the worm when it comes to financial aid. If you want your piece of the pie, you have to be the first in line. Once financial aid packages are disbursed, the money is gone and that means your student’s financial aid package will be composed of student loans only. If your form is filed and completed once the decision for admission is made it puts your student in a good position to receive some of those funds.

What can the FAFSA do for you and your college-bound teen?

There could be federal, state and college funds available. If you don’t complete the FAFSA, you won’t be able to get any of them. Even if your family income is high and you might not qualify for federal aid in the form of grants, your student might be eligible for state scholarships and merit-aid awards from the college. Additionally, any federally subsidized loans, including parent loans, require you to complete the FAFSA.

What should you do if you haven’t filed your taxes before FAFSA filing?

It’s simple. Use last year’s tax figures and update once you file. Don’t wait to file the FAFSA until after you file your taxes.

Why do some people tell you that you won’t qualify for financial aid?

The easy answer is they are misinformed. Remember there are all kinds of financial aid. While not everyone will qualify for federal grants, most students receive some form of financial aid. If you don’t apply your student will not be one of them.

Read Wendy’s post: 4 Strings Attached to Free Financial Aid

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This month Wendy and I will host Twitter chat #CampusChat at 9pm ET/6pm PT on Wednesday, January 21. Our guest will be financial aid expert Jodi Okun. She is the founder of College Financial Aid Advisors, an About.com Expert, Paying for College, and the @Discover Student Loans Brand Ambassador. Jodi has worked for over 10 years in the financial aid industry and helped thousands of families navigate the financial aid process. Don’t miss a chance to get her tips and ask questions.

Read Wednesday’s Parent Night on #CampusChat for some simple instructions to join a Twitter chat.

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from parentingforcollege to pocsmom.com and vice versa.