What Bailout? While the rich get richer, the student gets ?????
It amazes me, with all the talk going on about saving houses, getting money to the “middle class”, making sure everyone is getting their fair share, we now have two states who have already started the process of raising rates on the public colleges. There are at least a half-dozen others looking to raise costs in midyear.
This is according to a report in the New York Post, written by Justin Pope
Financial aid isn’t rising fast enough to hold down the net price of college.
It is a must that you know your family’s Expected Family Contribution (EFC) is going to be. Not knowing this will leave your family open to “Shock and Awe”. The question is, would you go for a mortgage or buy a car without knowing your credit score, well it is the same with college. Don’t go in blind, know what they’ll expect from the student and the parents, learn if there are steps you can take that may lower your EFC.
If you would like a Free EFC analysis, drop us a line.
Our Child’s high school is going to have a financial aid night for parents of seniors at the end of January. We will learn how to fill out the FAFSA form. Is there anything else we need to know? What about the CSS Profile?
A. Yes, there’s alot more. If high schools are just going to hold the obligatory “how to complete your FAFSA” seminar in December of January of the student’s senior year then they should stop claiming to be informing parents about the financial aid process.
The result is that parents are missing out on huge amounts of scholarships and grants for which they would have qualified had they only been properly educated earlier on how to get it! They often wind up having no idea how they’re going to pay for college. Every year I meet panic-stricken parents who upon learning what they could have qualified for ask me: “Why didn’t anyone tell us this sooner?”
Schools fall into three categories:
1. They do a fine job at properly educating parents in the sophomore and/or junior years on the financial aid process, emphasizing Expected Family Contribution (EFC). We observe fewer than 2 percent of schools fall into this category!
2. They realize they don’t have the resources so they invite an expert to teach the families all about EFC in the sophomore and junior years. We’ve observed fewer than 10 percent of schools fall into this category.
3. They offer nothing more than a FAFSA workshop in the senior year. These schools (and often districts) often claim to “have it covered.” The sad reality is that nearly 90 percent of high schools fall into this category. These schools often emphasize private scholarships. (The total dollar amount of private scholarships represents only about 1 percent of the total financial aid available!)
I encourage parents to contact their students’ guidance counselors by spring of the sophomore year and ask:
• How can we learn our EFC now?
• Can you explain how we might lower our EFC?
• How should EFC influence our college selection?
Their answers to these questions will reveal how well your school truly “has it covered.”
Q. Our daughter received her final financial aid award letter, and the cost of attendance is $6,000 more than we’ve been told all along. Are colleges allowed to do this?
A. There are two issues here. The first is that many colleges continue to withhold from families an accurate disclosure of what the student’s true cost of attendance (COA) will be until after the student is offered admission.
The second issue is there’s no standardization among college award letters and as a result, some are confusing to say the least. I’ve seen award letters use terms that make it unclear as to what the award even is – a grant or a loan!
Most parents believe that it’s easy to find the cost of any college. Just go to the college website or perhaps call the admissions office. Right?
Wrong! Many colleges fall short of “full disclosure” until the student is well along the process of considering the college’s offer for admission. What is most often disclosed on a website are ‘direct costs,’ tuition and fees, and room and board.
While these components comprise the majority of COA, there are several more indirect costs. These include books, transportation, living expenses, and sometimes additional fees. Depending on the school, location and program, they can be anywhere from $3,000 to $8,000 or even more.
There has been discussion recently about standardizing financial aid award letters. A recent article on the topic claimed, “The letters that colleges send students to notify them about their financial aid awards are cryptic and confusing.”
I agree with Mark Kantrowitz, publisher of Finaid.org, when he said, “It is far better for the profession (of financial aid administration) to develop its own standards and policies than to have people without financial aid experience imposing requirements… But if the profession merely tries to maintain the status quo without adequately addressing the problems, the public’s discontent will simmer on a back burner until eventually it is served up on a platter.”
It’s important to note that some colleges are thorough in their disclosure of COA and in the clarity of their award letters. I would like to see all colleges conform to such standards.
Fact of the week: Less than 20 percent of college students graduate in 4 years.
EFC- Every Family’s Confusion
EFC is a critically important number for parents of college-bound students to understand. Yet most families don’t even learn that it stands for Expected Family Contribution until it’s way too late – too late to understand its financial impact to out-of-pocket college costs and, in some cases, too late to influence it.
EFC is the determining factor for the majority of college financial aid. Total merit scholarship funds are much smaller than need-based aid, and it’s the EFC calculation that demonstrates need.
Most colleges use the Federal Methodology (FM) for determining a family’s EFC. Most public and private colleges use this methodology.
About 275 colleges (mostly private) use the Institutional Methodology (IM). This list of “highly-selective” schools includes the Ivy League, Georgetown, Stanford and USC.
Schools using the FM gather your data via the FAFSA (Free Application for Federal Student Aid). The EFC calculations are determined by the U.S. Department. of Education and the schools have limited subjectivity of a family’s financial aid eligibility beyond the federal rules and regulations. The EFC calculation determines your eligibility for federal and state funds, including: Pell, SEOG and Cal Grants; Stafford, Perkins and PLUS loans; and Federal Work-Study programs.
Schools using the IM gather your data via the CSS/Profile Form. This form is administered by the College Board and unlike the FAFSA, it’s not free.
The IM calculation is often higher than the FM because it assesses home equity along with several other assets not declared on the FAFSA. It’s important to note, however, that home equity assessment is non-uniform among the IM schools. If your student is considering applying to an IM college, I strongly recommend calling a financial aid officer at that school and ask what their policy is regarding home equity assessment.
Every family should learn their EFC in the early stages of the college selection process. Ideally, this should be done in the sophomore or junior year in high school. Go to www.LearnYourEFC.org for a free – and precise – calculation.
Five Surprising Financial Aid Facts
Think you know financial aid? These five facts might surprise you.
1. Most students receive financial aid.
If you’re not going to bother applying for scholarships because you think no one ever wins, you’re wrong. Two-thirds of full-time undergraduate students receive financial aid in the form of grants or scholarships, according to the College Board. The cost of college is rising, but so is the amount of financial aid. Total student aid grew 82 percent from the 1996-1997 school year to the 2006-2007 school year, the College Board reports. FastWeb has more than $3.4 billion worth of scholarship money available in its database, and this number grows daily.
2. One third of students don’t attend their first-choice college due to cost.
Don’t let cost get in the way of completing your degree. Thirty-four percent of first-year students say they were admitted to their first-choice college but did not attend because of cost, according to a report by the Cooperative Institutional Research Program (pdf). While the cost of tuition is certainly a huge concern, there are many ways to cut down on that cost, like filing your FAFSA early, offsetting cost through benefits like federal work-study, and choosing to stay in state to take advantage of tuition breaks.
3. People with bachelor’s degrees make more than people with only high school diplomas. A lot more.
It’s probably not surprising that you can earn more with a bachelor’s degree than you can with only a high school diploma, but the difference in earnings can be staggering. Bachelor’s degree holders make an average of 60 percent more than those with high school diplomas, reports the College Board. Over the course of a lifetime, this adds up to over $800,000 more for bachelor’s degree holders. Remember: You may shell out some serious cash to earn your degree now, but there’s an excellent chance it will pay off later.
4. Not making your student loan payments could cost you a job.
Missing your loan payments for an extended period of time, or defaulting, can have serious consequences. A loan default can damage your credit rating for a minimum of seven years and can prevent you from financing a car, getting a credit card, or passing the credit checks needed for some job opportunities. Make sure you are well informed about how much you are borrowing so you don’t end up in a situation where it is impossible for you to meet your loan payments. Get an estimate of your monthly loan payments and the salary required to manage them with this loan calculator.
5. Millions of dollars in tuition assistance go unclaimed each year.
Nearly a third of eligible students miss out on millions of dollars in education benefits through tax breaks, according to a recent government study. Sure, the tax code can be difficult to make sense of at times, but it could save you money. Talk with a tax professional to see if you can save money through education tax breaks. Learn more at FinAid’s Education Tax Benefits page.
Texting in class
ne of the most fascinating things seen in class today is kids typing away on these minute little technological advancements. To the dismay of teachers and politicians it simply wont go away. I tend to agree with the Kevin Raives that there are times where texing makes sense, and others when not…
I would also like to note, that after being enrolled in both advanced placement and college prep classes, there is a significant difference between the amount of texting that goes on in each class. The majority of honors or AP classes require the students to pay as much attention as possible and leave little time for them to spend on their phones. In contrast, college prep classes allow a slightly larger window for those texting moments and give the students more opportunities for such events.
Financial Aid Bulletin:
What the Bailout Means to You
With bankruptcies left and right, the government bailing out Fannie Mae and Freddie Mac and the markets tumbling, Wall Street is in crisis. But what does it mean for you-the average college Joe/Jane?
Maybe it’s had no affect yet on you personally and you’re hoping to come out unscathed. But chances are it will trickle down eventually. And if you’re in college-or a parent paying for a kid in college– you’ll likely feel it one way or another.
Now, a lot of parents as well as students are cutting back on their college choices. Some are just applying to the local schools or maybe the state but most are not even trying the private schools for fear of them being too expensive. This is a mistake. Never forget that there are strategies too handle the financial aid maze. Remember, make sure your resume is up to par, your essay must stand out if you want to qualify for “free money”. Don’t forget that just because this is senior year, you cannot let your grades fall. Keep pushing yourself until the end.
Analysis of Need-Based Aid & Merit Aid Eligibility
The two basic types of financial aid are:
• Self-help, consisting of interest-subsidized loans and work-study
and
• Gift aid, consisting of grants and scholarships (free money)
The amount and type of financial aid is based on two factors:
• The merit of the student (scholastic, athletic, musical, etc.); and
• The financial need of the student. By far, this is the most important factor is determining financial aid. Most of the financial aid given by the Federal and State governments is based on the financial need of the student. Also, most of the financial given by colleges is need-based.
Example of Need-Based Financial Aid Eligibility
Cost of Attendance (COA) $ 12,000
- Expected Family Contribution (EFC) – 5,000
= Financial Need 7,000
- Resources of the student – 1,000
= Adjusted Financial Need $ 6,000
Cost of Attendance (COA)
- consists of tuition, fees, room and board, books and supplies, personal expenses, cost of computer and transportation to and from college. Each college establishes their own COA.
Expected Family Contribution (EFC)
- is how much the family is expected to contribute to the total cost of college for that year. EFC can be thought of as the family’s “college tax liability”. The EFC is calculated by using the family’s financial data submitted on financial aid application forms. There are two formulas that can be used to calculate the EFC; they are the Federal Methodology formula and the Institutional Methodology formula.
The Federal Methodology (FM)
- is a federal formula used to calculate the Federal EFC. It is used by every accredited college in the United States to determine how much federal money can be disbursed by the college to cover the student’s COA.
The Institutional Methodology Formula (IM)
- is an alternative formula used by some colleges to calculate the Institutional EFC, which is used as a basis for disbursing the college’s own funds. This formula assesses the family home, the family farm, siblings’ assets and other items that the Federal Methodology does not.
College And Retirement – The Perfect Storm
When it comes to the affordability of colleges and universities, there is a perfect storm brewing. There is more money being charged for tuition and less money being given to support higher education from the state and federal governments. With the price of everything going up by the day, colleges and universities have no choice but to raise tuition. As tuition continues to rise, more students must turn to loans as a major source of funding for college. Taking on the responsibility of an $80,000 or $150,000 loan is a deterrent to most lower– to middle– class families already strapped for cash.
However, most people are missing the big picture because their retirement is much more imminent than college costs? Consider these facts:
The youngest baby boomer is now 44
The oldest baby boomer is now 62
The average age of parents with college bound kids is 40-45 years old
If you fast-forward 20 years from today when parents with college bound kids are 60-65 and they want to retire, the majority of older Boomers will be 70-80 years old. Consider this:
Will you still be paying off education loans over the next 20 years?
Will college costs keep you from adequately funding your retirement?
Will Uncle Sam need to tax your 401k at higher rates to cover the older Boomer’s old age benefits?
Will you have enough money to outlast inflation if you live to age 90?
In today’s hard economic times, you need to take care of both College and Retirement.
You Can Pay Less For College
For over 15 years members of our team have helped scores of families save thousands of dollars on college costs. Now as Get Ready 4 College, a nationally recognized needs analysis service, we are trained to maximize your college financial aid.
As your personal college planners and advisors, we:
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will let you know what the government thinks you must pay for college
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will show you strategies to lower that figure
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will help you choose the college that best suits your child’s needs and your pocketbook
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will advise you on scholarship availability
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will fill out and file all government forms for you
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will even negotiate with the schools in an attempt to improve their offer