Tag Archives: financing college

FAFSA, financial aid, financial planning

FAFSA Week: Financial Aid Q &A

September 22, 2020 Suzanne Shaffer 2 Comments

Financial aid can be a confusing part of the college application process. Even if you can afford to pay for college, it’s a good idea to learn what aid is available and apply for it. You aren’t obligated to accept it, but most students qualify for some form of aid and, if it’s available, why not use it?

What is financial aid?

Financial aid is intended to make up the difference between what your family can afford to pay and what college actually costs. With college tuition rising rapidly, more than half of the students currently enrolled in college receive some sort of financial aid to help pay for college. The system is based on the premise that anyone should be able to attend college, regardless of financial circumstances. However, students and their families are expected to contribute to the extent that they are able.

There are two types of aid: need-based, and non need-based. Need-based aid includes grants and scholarships that are issued based on the family’s ability to contribute to education costs. Non-need-based aid is allocated solely based on availability, not need.

There are three main types of financial aid: grants and scholarships, loans and work study.

What is “free” money?

Not all aid is equal and the best aid is the aid you don’t have to pay back. It’s like getting a huge coupon of savings to use for your college education.

What types of education loans are available?

Not all college loans are equal.

There are two types of government-based loans: subsidized and unsubsidized. Subsidized loans have lower interest rates and are awarded based on the student’s financial need with interest deferred until after graduation. Unsubsidized loans are awarded without regard to financial need with interest payments beginning immediately and regular payments due after graduation.

What is work study?

The Federal Work-Study Program provides a method for college students to earn funds to be used toward their education. The program is based on financial need and students must be accepted into the program to qualify which is determined by completing the Free Application for Federal Student Aid or FAFSA.

What is the FAFSA and do I need to file it?

The FAFSA is the Free Application for Federal Student Aid and you should apply if you want any chance to receive federal and state student grants, work study, loans or merit-based aid. If you don’t complete the FAFSA, you can’t apply for student loans. Colleges also use these figures when determining financial aid eligibility for grants and scholarships. Plus, many states use your FAFSA data to determine your eligibility for their aid.

The FAFSA is available on Oct. 1 of every year and you should complete it as close to that date as possible in the fall of your senior year. Aid is dispersed on a first-come, first-served basis. The sooner you apply, the more likely you will receive a portion of the financial aid pie.

What is the EFC?

The Expected Family Contribution (EFC) is how much money your family is expected to contribute to your college education for one year. Typically, the lower your EFC, the more financial aid you will receive. Factors such as family size, number of family members in college, family savings, and current earnings (information you provide on the FAFSA) are used to calculate this figure. Once your FAFSA is processed, you will receive a Student Aid Report (SAR) with your official EFC figure.

You can calculate your EFC by visiting FinAid.org.

What is an award letter and how do you use it?

As the offers of admission arrive from colleges, the financial aid award letters will follow. They can be confusing and vague. Added to the confusion is that every award letter is different, making it hard to easily compare them side by side.

Thankfully, there are tools available and information to help you look at these letters for what they are: the college’s pitch for you 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 you. Money, in this situation, is everything.

If a college wants you to attend, they will back it up with money. No money means their offer is probably based on filling a quota and expecting you will decline to attend. And you should. Who wants to attend a college that doesn’t value you as a student?

FAFSA, financial aid, financial planning, student loans

A Parent’s Guide to Financial aid

July 8, 2020 Suzanne Shaffer

What is financial aid?

There are three main types of financial aid: grants and scholarships, loans and work study.

What is “free” money?

Not all aid is equal and the best aid is the aid you don’t have to pay back. It’s like getting a huge coupon of savings to use for your college education. Here are the types of aid you can receive that you won’t have to pay back after graduation:

Federal Grants – These are grants given by the federal government.
Pell Grant – This grant is given to students with exceptional financial need.
College Grants – These grants are awarded by the individual colleges based on financial need.
State Grants – These grants are given to students who plan to attend college in their own state (and states are strict about residency).
Private Scholarships – There are a multitude of private scholarships available awarded by private organizations and businesses for every type of student.
Institutional Scholarships – These scholarships are given by individual colleges based on the student’s qualifications or financial need.
Federal Scholarships – Scholarships funded by government agencies.
Tuition Waiver – This waiver is offered by colleges to students who meet specific criteria (e.g. child of a POW/MIA)

What types of education loans are available?

Not all college loans are equal.

Stafford Loan – Government based loans that can be either subsidized or unsubsidized.
PLUS (Federal Parent Loans for Undergraduate Students) – This loan is for creditworthy parents and has payments due beginning 60 days after it is disbursed with relatively low interest rates.
Private Loan – Loan offered by private lenders usually with higher interest rates than government loans.
Institutional Loan – A loan in which the school is the lender.

Once you have chosen the loan that best fits your needs, do the research and educate yourself about repayment, interest rates and grace periods.

To learn more about work study, the FAFSA, the EFC and award letters, read the entire article I wrote for TeenLife Online Magazine here.

FAFSA, financial aid

5 Questions to Ask the Financial Aid Office

March 4, 2019 Suzanne Shaffer 1 Comment

Keep these questions in mind as you plan your next college visits and take the time to schedule an appointment with the school’s office of financial aid.

1. What are your financial aid deadlines?

In addition to deadlines for the standard financial aid applications: the Free Application for Federal Financial Aid (FAFSA) and PROFILE, the financial aid application service of the College Board, colleges may also have their own deadlines and forms. Be sure to ask if the school’s financial aid forms are different for need-based and merit-based aid when the deadlines are. Note many schools have declared March 1 as their priority filing date for financial aid. Be sure to confirm each school’s priority filing dates.

2. What is your Cost of Attendance (COA) for the current year?

There are precisely six components to a college student’s complete budget:

Tuition
Fees
Room and Board
College Textbooks and Supplies
Personal expenses
Transportation

Many proposed budgets only include Direct Costs (which are the first three items listed) and typically what you will pay directly to the bursar’s office. However, the U. S. Department of Education requires that colleges fully inform you as to all of the above costs, so find out specifically what those amounts are to establish a complete budget for college expenses.

3. How much of an increase in the COA do you project for next year?

When you ask this question, be sure to request the specifics related to each cost component. Tuition and Room and Board increases are independent of each other. For example, one school may expect an increase of 5 percent in tuition and fees, but a 10 percent increase in Room and Board. This information will help with budgeting but also gives the financial aid officer the impression that you are an informed parent.

4. Are you able to meet 100 percent of financial need?

If they say “No,” find out why, and get details. Is the policy based on “first come, first served?” What’s the average percentage of need the school can meet? What percentage is in the form of grants and how much is in the form of loans? Is there a dollar amount left as a gap (unmet need) for everyone? Do they include Parent Loans (PLUS) in the aid package?

(Note: They shouldn’t do this…those loans are to be used for your EFC-Expected Family Contribution, not for meeting the financial need of the student.)

5. Do you offer Merit Scholarships, and how do you treat private scholarships awarded to the student?

If a Merit Scholarship is being awarded, it normally goes into the financial aid package first, reducing the amount of need-based aid. Find out if a merit award reduces the self-help in the package, or if it replaces other need-based grants. A true Merit Scholarship can go beyond the “need” level, which means that it can lower your EFC.

admissions, parenting

20 Affordable Small Colleges

June 25, 2018 Suzanne Shaffer

affordable small colleges

“Why is college so expensive and how on earth are we going to pay for it?” I bet you’ve said that more than once if you have a college-bound teenager. Most parents struggle, even if they have saved, to juggle their finances to accommodate an expensive college education. Some families resort to taking out parent and student loans to pay for college. But is there a better way?

One way to avoid paying too much for college is to choose an affordable college. Staying within your budget isn’t that difficult. There are thousands of colleges and universities in this country that offer an affordable education. Parents should be bargain hunters and search for those college bargains.

Student Loan Hero has done some research that can help. If your student is open to “searching outside the box” and finding a college that will allow him to graduate debt free, these 20 affordable small colleges should be added to his list of possibilities. According to their research, “The 20 most affordable small colleges have tuition and fees that are all $7,000 or less. This means the most affordable colleges offer savings of $20,750 in tuition and fees compared to average small colleges. Three of the top colleges even have tuition-free initiatives that effectively put these costs at $0.”

College of the Ozarks in Missouri
Berea College in Kentucky
Alice Lloyd College in Kentucky
York College in New York
Dixie State University in Utah
New Mexico Highlands University
New College of Florida
Southern Utah University
College of Coastal Georgia
Cameron University in Oklahoma
Rogers State University in Oklahoma
East Central University in Oklahoma
Emporia State University in Kansas
The University of Texas of the Permian Basin
Southeastern Oklahoma State University
Dickinson State University of North Dakota
University of Science and Arts of Oklahoma
Southwestern Oklahoma State University
University of North Carolina at Pembroke
Northeastern State University in Oklahoma

Keep in mind, of course, that many of these colleges are state schools and the fees for in-state students are less than those for out-of-state. However, many states have reciprocal agreements with other states that allow out-of-state students to receive in-state tuition rates. Check with each college regarding these agreements.

For information on each college, check out CollegeData.com. For more details on the cost of each college and information about their financial aid you can go to Student Loan Hero: Survey: See the 20 Most Affordable Small Colleges in the US.

college costs

Coping With the Crippling Cost of College

April 9, 2018 Suzanne Shaffer

cost of college

College can be cripplingly expensive for many families, particularly those with a low income.

Even if we were to put the tuition fees to one side, you still have the rent, living expenses, travel costs and so on to consider… indeed, the prospect of sending kids to college can be a genuine uphill struggle for many families as tackling cost of college isn’t something all families can manage; however, where there’s a will there’s a way and there’s a lot to be said for adopting a state of resourcefulness at times when a lack of resources could otherwise hold you back.

Firstly, it should be noted that if you’re looking for a more frugal way to facilitate a decent college education, the majority of major universities are now offering distance learning as one of their platforms. These courses can often save a huge amount of money in terms of travel, accommodation and daily living expenses. They also tend to be cheaper tuition fees as the college itself has less overhead to cover in comparison with people physically attending a course.

That said, college isn’t purely about the educational experience in terms of academic understanding; there’s a lot to be said for the diverse social and experiential side of attending college in addition to the connections and networking opportunities they facilitate.

This article looks at how to cope with the crippling cost of college, from a ‘making money to fund college’ perspective, but before we go into that it seems pertinent to talk about the concept of making money particularly when it comes to people entering college and the world of work.

Once upon a time, we were told to work hard at school, get a good job, work our way up through the ranks and then retire with a secure financial future ahead of us. Today, this advice is not only archaic, it’s potentially hazardous to our financial future, as everything has changed since we entered the new digital age of globalisation.

Today, it’s imperative to learn about topics such as personal branding, portfolio careers, side hustles and passive income in order to secure our financial destiny. There’s been a huge social shift in the way we are making money; and it’s important to become more educated in this growing area of concern.

Whilst an academic education remains valuable it’s important students expand their view of education to incorporate money making and personal marketing concepts.

There’s a popular saying that states the “more you earn the more you learn”. This is a sound concept, however, when looking at education from a money making perspective, it should be noted that there are many people that dropout of college and financially surpass their well educated white collar friends by simply selling things on eBay.

With this in mind, it should be noted that learning is not limited to academic education; indeed, if you were to learn how to invest in property these skills are likely to get you much further in life, on a financial basis, than having a generic degree. There are some academic courses that are required to enter a particular profession, and these should be considered, but bear in mind, that oftentimes, you’ll find highly educated white collar workers attending weekend seminars on topics such as real estate investing, amazon trading, and digital marketing that are being led by people that didn’t go to college – they just got out there and did it.

The one thing to bear in mind, when it comes to learning, is to ensure the time and money you put into the course provides a decent return on investment.

Now, let’s take a look at some ways to cope with the crippling cost of college from a money making perspective. The majority of these tips are going to be focused on the student making money, yet as a parent, there is a great way to consider coping with the burdensome cost of rent.

As an example, you could get a housing loan and purchase a four bedroom property, near campus, that you can then rent out to other students and make a profit each month on the loan from the rent paid. This way, you can provide your family with a secure home that is cost neutral and actually goes some way to paying for trips home and so on.

If, however, you feel more inclined to put them to work and have them stand on their own two feet whilst still having enough time and energy to fully focus on their studies, you’ll want to consider these quirky ideas to make additional money whilst studying.

FLIP THRIFT STORE ITEMS ON EBAY

A quite enjoyable way to make money is to treasure hunt around thrift stores and yard sales, looking for items that you know have a strong desire on eBay. Often, people aren’t aware of the value that’s in amongst the vats of items in thrift stores and with a bit of careful research and rummaging around boxes, you can find some incredible high profit deals.

SELL FREE ITEMS

Lots of people have items that are “free to a good home”, presuming you have the means and manpower to come and pick them up.

You could simple use eBay, but If you match this with people putting requests in the ‘want to buy’ sections of newspapers and online listings, such as Craigslist this will be the most efficient and reliable way to ensure you are gathering items that you can sell on; after-all, you don’t want to have to rent out a storage unit just to put things nobody wants in storage.

The most expensive aspect of this set up is having a vehicle large enough to transport the items, but this can pay for itself, if on top of the sale price for the item, you are able to charge a few dollars for delivery to the new customer.

DONATE BLOOD PLASMA

There’s a limit to how much you can make doing this, as there is a restriction to how many times a week you can attend, but typically your time investment would be around three hours per week in order to make $250 to $350 per month.

Understandably, this isn’t everyone’s cup of tea but it’s a rewarding way to make money on the basis your blood plasma is necessary to help fuel life saving operations.

BABYSIT

Babysitting can be a great way to make easy money.

If you’re lucky, in the evening the kids will be asleep most the time which means you’ll get free time in someone’s home to study in a distraction free environment. There’s no greater feeling than being productive with your studies whilst at the same time, making money from doing very little.

MOW LAWNS

Whilst this is clearly restricted to three seasons of the year, if you were to charge $25 per lawn, and mow ten lawns a week (basically a weekend’s work) you’ll make $250 per week – that’s a $1,000 per month.

The best part of this, is that once you get regular customers, you can build up a monthly ‘round’ of appointments that generates a reliable stream of income; and doesn’t require you constantly getting new customers.

ONLINE OPTIONS

Today, you can even make an income online by being paid to browse websites or answer online questionnaires. There are many ways to make money online that simply require an internet connection and a laptop. If you have creative skills in the area of web design, for instance, you could check out freelancer.com and get a variety of gigs direct from employers looking for freelance talent.

In summary, college can be cripplingly expensive but where there’s a will there’s a way and with such a vast plethora of money making opportunities available anything is possible.

financial planning

Finding the Right Financial Strategy for your College-Bound Student

April 26, 2017 Suzanne Shaffer

financial strategy

Parents have tough choices to make deciding on their financial standing when sending their kids to college. How much help should they offer? How do they make sure that their children learn financial responsibility? What is the best financial strategy?

Here are a few possible answers.

Paying for your child’s college is a good idea if you can afford it

Various positions exist on how fair it is to expect parents to pay their children’s tuition. Some experts point to the fact that college isn’t an essential because success is possible without college. Some believe parents should only be expected to pay for essentials. Those in favor of having parents pay point to the unfairness of the high cost of education today, and the terrible financial burden that loans place on a student.

Whichever side of this debate you may stand on, there are a few things to understand. College is a wise choice if the career that your child has in mind does require college. If it does, it is an essential, not a luxury. Ultimately, it is the parents’ choice on whether to provide support or not.

It is also important to understand that supporting a child through college doesn’t amount to coddling or spoiling them. The idea should be to pay as much for your child’s college as you can afford, without putting your own retirement into jeopardy. If you can only pay for tuition but not for board and lodging, that’s what you should pay. Encourage your student to contribute to the cost by working during school, breaks and during the summer.

Give your child a monitored credit card

Letting your kids have a credit card in college can be a risky choice because many have no idea how to use their newfound independence in a responsible way. They may go out and blow everything they have on the card.

A credit card with a low spending limit, however, can be a good idea. It’s when your kids blow their money and scramble to understand what they did wrong, that they begin to learn about how money works.

There are upsides to owning a credit card, too. As long as the card is in your child’s name, they will begin building credit, an important thing for when real life begins four years down the line.

Teach financial responsibility

Heart-to-heart talks about how money works are a part of gaining an understanding of money. You should talk to your child about savings, investing, payday loans, how banks and credit cards can help you with consolidation, how compound interest works and so on.

Talks are important because far too many young people go out into the world with an inadequate understanding of money.

Restraint is important, too

It’s a good idea to encourage financial responsibility by making your kids earn their rewards. While you should pay for your child’s college if you can, everything else like nice clothes and cars should be things they earn.

Finally, once you do have a policy in place, you should stick to it. It doesn’t work to start out with solemn declarations but to always bail your children out when there is trouble. Lessons will never be learned then.

financial aid

Bummed About Your Financial Aid Award Package?

February 25, 2016 Suzanne Shaffer 4 Comments

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.

Wednesdays parent

Wednesday’s Parent: Talking to Your Kids About Financing College

December 3, 2014 Suzanne Shaffer 1 Comment

I’m reposting an article I wrote last year because it’s timely and applies to today’s Wednesday’s Parent topic: finances and college. I hope you find it helpful.

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If you have a college-bound teen you’re well aware of the cost of college–it’s high. In a recent story in Business Week, one graduate confessed she had given up on her student loan debt of $186,000. She is not alone. With the nation struggling under a $1 trillion student debt crisis, stories like hers are nothing uncommon. For the first time ever, the national student loan default rate exceeds the credit card delinquency rate, and so long as student loans remain one of the few types of debt that can’t be discharged in bankruptcy, chances are the situation won’t improve any time soon.

As their parent, it’s up to you to make sure they don’t fall prey to debt that they cannot repay after graduation. Before they ever accept an offer of admission, you need to talk to them about financing college. In my Parents Countdown to College Crash Course I call it “the money talk”.

Following are a few tips to help broach that uncomfortable topic with your college-bound teen:

The cold, hard facts

The first thing you need to discuss is finances: what you are willing to pay and what you expect them to contribute toward college expenses even if it’s just acquiring scholarships. Discuss the ramifications of student debt and talk openly about which colleges would fit into the family’s financial picture. Paint the picture clearly and explain to them this is a large investment and needs to be treated as such: you expect them to do their part and you expect them to study and to graduate.

The difference between wants and needs

This discussion is just as important as discussing the cost of the college education. When a student understands the difference between the two they can make financial decisions based of this criteria. Is it something they need or simply something they want? Don’t assume they know the difference. Most teens believe everything they want is a need. If they learn this lesson before going to college and living on their own, it will save them overdraft fees, past due notices and much heartache when they are controlled by their debt.

The college choice

Be realistic. If their dream college is out of reach financially think long and hard before you apply. This may be their first time to make a choice between what they want and what is best financially. It is a tough pill to swallow now, but they will thank you when they graduate with minimal or zero debt. The college they choose not only needs to be a perfect fit for them socially and academically; it also needs to be a perfect fit financially.

The budget

This is the perfect time to talk to your college-bound teen about creating and sticking to a budget. You may have tuition, room and board covered but there are always added expenses. Budgeting for those added expenses means there won’t be any surprises when the bills come due. Need a list of what those extras might be? Check out this article I wrote for Smart College Visit about the extras beyond tuition.

If you can’t sit them down for a time (we know how hard it is to even share a meal together), do it in segments. Just make sure you do it before they start applying to college. If you don’t, it’s going to be an uncomfortable discussion when they get accepted to their dream college and it’s not affordable for you and your student

Read Wendy’s Post: Formula and Tools to Calculate College Costs

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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

Mom-Approved Tips: Talking to your teens about financing college

September 30, 2013 Suzanne Shaffer

Sign up for my FREE parent tips email and get my FREE Ebook on college financing!

financing college If you have a college-bound teen you’re well aware of the cost of college–it’s high. In a recent story in Business Week, one graduate confessed she had given up on her student loan debt of $186,000. She is not alone. With the nation struggling under a $1 trillion student debt crisis, stories like hers are nothing uncommon. For the first time ever, the national student loan default rate exceeds the credit card delinquency rate, and so long as student loans remain one of the few types of debt that can’t be discharged in bankruptcy, chances are the situation won’t improve any time soon.

As their parent, it’s up to you to make sure they don’t fall prey to debt that they cannot repay after grduation. Before they ever accept an offer of admission, you need to talk to them about financing college. In my Parents Countdown to College Crash Course I call it “the money talk”.

Following are a few tips to help broach that uncomfortable topic with your college-bound teen:

Parenting for College

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