Should You Hire a Professional?
Without a doubt, figuring out how to pay for college can be a pretty stressful experience. You might be considering a financial aid consultant to help you through the college cost maze. Financial aid consultants provide advice and services to make the financial aid process a little easier. But before you choose a consultant, there are some things you should consider.
When to Use a Financial Aid Consultant
Financial aid consultants can take the frustration out of filling out forms, but not everyone needs one. Use these tips to decide whether you really need an expert or whether you can solve your problems on your own.
Do get a financial aid consultant if you don’t have the time to fill out the FAFSA, are unfamiliar with financial terms or have special circumstances that make the FAFSA hard to complete. Applying for financial aid can be complicated, so if you’re pressed for time or are confused, an advisor can assist you. The advisor should also help you with the CSS/Profile.
Don’t get a financial aid advisor if you have the time or have a straightforward income situation.
Even if you find you need more assistance, don’t rush to hire a private consultant. Basic questions may be easily answered by any number of free services available to you. Start by checking at your school or local library to see if they offer free workshops on filling out the FAFSA. If you have specific questions, call the free Federal Student Aid hotline at 1-800-4-FED-AID (1-800-433-3243 or TTY 1-800-730-8913).
Don’t Get Taken for a Ride
If you choose to hire a financial aid consultant, find a qualified professional. To avoid getting stuck with a bad consultant,
- Call your campus financial aid office for their input. They probably won’t recommend a consultant, but they will tell you if they’ve had trouble with any consultant in particular.
- Consider the consultant’s qualifications. A consultant who has worked in a university financial aid office or is a Registered Financial Consultant will have more expertise than someone without that specialized training.
- “Find out how long they’ve been in the industry,” “Experience matters – you want to be sure you use the services of someone with breadth of knowledge and experience, especially with something as complex as financial aid administration.”
- Never use a consultant who encourages you to do something unethical. If you lie about your assets, you’ll end up paying a big fine – or in jail.
Be aware that some consultants charge reasonable fees ranging from $500 to $2000, while others charge anywhere from $2500 to $30,000. Advisors who charge big amounts will usually “promise” you the world and don’t deliver. The FAFSA is a free application. A financial aid consultant can charge a fee for helping you fill out the FAFSA, but you don’t have to use their services to apply for federal student aid. If you are just looking for help filling out the FAFSA, you should pay no more than $125.
Figuring out financial aid can be a headache, so it’s nice to know there’s help. But before you choose a financial aid consultant, get the facts and find out what they will do for you and your student.
The Frustration of Today’s College-Bound Families
Do you have a high school sophomore or junior who plans to look at colleges in the near future? If so, you may want to take the time to read the following e-mail that was sent to the staff at the college planning website Getready4college.com.
“I realize now that I did it all wrong. I bought a small house I could afford, I worked hard and went to school nights so I could get a degree and make more money. I drove older model cars. I made my mortgage payments on-time and acquired equity in my home. I put money away for my retirement. and I was completely honest and forthcoming on my financial aid forms for my daughter. And for all that I’m told that after 12 years of working hard and getting my daughter into five of the top colleges in this country (including 2 Ivies), she gets ZERO dollars to attend the schools she got accepted to. We are not rich. My wife and I make just about $125,000 per year combined, so we take home only $90,000 or so a year. So now I am supposed to donate one-half of my take-home pay ($45,000+) so my daughter can go to college? Or let her enter life with $180,000 in loans? I actually had a financial aid officer at a major Catholic college just outside Boston tell me I could take a home equity loan, or stop my 401k contributions. And meanwhile, derelicts who sat around saving nothing, not working to better themselves, not paying their mortgages, and just accumulating debt and bad habits, end up getting a free ride. Our college system is BROKEN. We are on the verge of returning back to the days when only the very rich and the occasional sponsored poor family could go to college. Our top colleges have abandoned the middle class.”
This is the typical frustration that many high school seniors and their families went through this year. Do you have a high school sophomore or junior? If so, the above story may soon be your own! Don’t let this happen to you! There are many ways to deal with colleges on their price, but you have to know the procedures and guidelines to be successful. Contact our office as soon as possible to see if we can help you avoid being “abandoned” by the colleges you choose.
College Aid Offices Told By Department of Education To Give More Help
The Department of Education issued a statement to college financial aid officers around the country urging them to give more help to students from families suffering from the recession. The following is an excerpt from the statement:
“I am writing to remind you of the authority you, as a financial aid administrator, have under the law (section 479A of the Higher Education Act) to make adjustments, on the basis of adequate documentation, and on a case-by-case basis, to address circumstances not reflected in a student’s original Free Application for Federal Student Aid (FAFSA). This authority is particularly important for families who may be struggling during these difficult economic times. Simply stated, most of these families do not know about their right to request that you adjust one or more of the components that determine their eligibility for financial aid. I would ask you to reach out to your students (and prospective students), particularly those who seem to have hit a rough patch, to make sure that they know there may be ways that you can help.”
However, college officials warned that while they want to give more help to people who’ve recently lost their jobs, there still isn’t enough money to give every student what he or she feels is needed.
Six Missteps in Learning
Many of the problems people face with regard to their education can be narrowed down to concerns about how to approach their learning needs. Based on my interactions with non-traditional students, here are my picks for the top six career-learning missteps.
No Career Goal in Mind
Some people ask if they should go into business, architecture, IT or some other field. What they are really asking is: Is this field secure and lucrative? But they haven’t said anything about their desires and strengths, and while they may have enough interest in the field to suggest it, they haven’t researched the career possibilities.
Not Considering Your Interests
When considering a field, look into the careers available and be honest with yourself about your interests. You should do a thorough examination of your work style, the subjects that interest you, the restrictions and demands of various careers, your lifestyle expectations and the long-term health of the industry you are choosing. Identifying a career goal provides focus and will inform your choice of educational options.
What’s Hot? Not!
If you employ a jump-on-the-bandwagon approach to career planning, be prepared to hate your next job within a year. Taking a job for a time because you have to pay the mortgage is perfectly understandable, but if you have to spend time and money to get a degree, certification or license for that job, stop and think. It makes no sense to invest money and energy in a career path you’ll want to abandon in a year.
Not Using Your Network
Career and education choices are big decisions, but you’re not the first person to make them. Many people — people you know or can talk with — have had to make similar decisions. Take advantage of their knowledge and experience:
- Current and Former Colleagues: If you seek to advance your current career, you are literally surrounded by experts.
- Your College: If you earned a degree, you may have also earned a lifetime supply of advice and contacts. Investigate your school’s alumni and career services via the Web or phone. Search for information on other alumni in particular fields of interest, or ask about talking to a career counselor.
- Your Professional Associations: If you don’t belong to one, join one. Go to meetings and talk to the people in your field of choice. They have probably encountered the choices you face.
- Your Personal Contacts: Are you an admin assistant who longs to become a chef? Email everyone you know and ask if they know a chef. Don’t be surprised if your best friend’s aunt’s next-door neighbor is head chef at some hot restaurant. Be sure to follow up.
- You’re Prospective Education Provider: These folks are biased, of course, but use admissions department resources to find out about programs and their success in preparing professionals for the workforce.
Too Narrow a Focus
Some people are so focused on getting a specific credential or degree to add to their resume that they fail to consider longer-term education needs. Do some research to find out what you don’t know and what you will next need to learn?
Seeing Only a Piece
With so many different learning experiences available, it can be hard to make comparisons. When comparing a traditional degree to an online degree, for example, list the components: course requirements, time commitment, resources available, costs, and reputation and lifestyle implications. Know all your needs and what you are paying for before choosing.
Making education decisions is always difficult. But don’t scrimp on the research that should go into the decision. Avoiding these six missteps will save you time and money, and help you secure the most productive and interesting education possible.
The New “Reverse Transfer” Student
Due to the present economy, there seems to be a new trend beginning in college admissions. Instead of the normal flow of students who move from two-year institutions to four-year institutions; more and more students are becoming “reverse transfers”, or students who leave four-year universities to attend a community or junior college.
For instance, Cuyahoga Community College in Cleveland, Ohio had an 11 percent increase in the number of “reverse transfer” students so far this year. These students came from a variety of public and private institutions around Ohio. Last year, 86% of the “reverse transfers” to CCC came from public institutions, while 14% came from private institutions.
However, this “reverse transfer” phenomenon is not just a regional trend. The recession has led to surge in community college enrollments this year. Nationally, the American Association of Community Colleges publicized that over 30% of all two-year students previously attended a four-year institution. They expect the number of “reserve transfers” to continue to rise as the economy worsens.
The current economy has created havoc in many family’s college decision-making process. Don’t second-guess your ultimate college choice based on price! Please call us first! We have helped many families dramatically lower their actual cost of college, especially at private colleges.
College Bits And Pieces
- On Monday, the nation’s largest student-loan provider, Sallie Mae, will begin requiring borrowers who take out its private loans to make interest payments while they are still in college and repay their loans in 15 years or less, rather than the typical term of 15 to 25 years. The company’s goal is to reduce the costs of borrowing, thereby lowering the risk of default, and making private loans more attractive to investors.
- In a national address on Tuesday, March 10, President Barack Obama called for the simplification of a financial aid application. “Never has a college degree been more important. And never has it been more expensive,” Obama said. “We will simplify federal college assistance forms so it doesn’t take a Ph.D. to apply for financial aid.” However, according to many college financial aid directors, this “simplification” process will take several years to complete.
- Applications for federal financial aid are up way up this year. The National Association of Student Financial Aid Administrators reports that it has already processed 3 million FAFSA forms for the upcoming 2009-10 school year, a 20 percent jump from a year ago in the same time period. Federal direct-lending volume also increased to $20.2 billion, up $7.1 billion over a year ago.
- Harvard University will reduce about 15 percent the amount it draws from its endowment to fund operations during the next two years, resulting in a $52 million cut next year to the budget. Harvard’s endowment, the largest of any school in the U.S., fell 22 percent, or $8 billion, from July 1 through Oct. 31, 2008 putting the fund on course to have its worst performance in at least four decades. “Our strong sense is that an eventual recovery will take longer, and that we must therefore begin to accommodate a new economic reality for the university,” said John Longbrake, Harvard University’s spokesman.
Tax Primer: The Basics of Filing
If you’ve never filed taxes, it can seem pretty intimidating. But it’s really not as bad as you think. Arm yourself with some basic information before reporting to Uncle Sam.
Learn the Language
Before you dive in, master some of the terms you need to read IRS documents:
Earned income – Salaries, wages, tips and professional fees, including taxable scholarships and fellowship grants.
Unearned income – Investment-type income like interest on your savings account, dividends and capital gains, as well as unemployment compensation.
Gross income – All income you received in the form of money, goods, property and services that is not exempt from taxes.
Exemptions - A predetermined amount of money you can deduct from your taxable income for basic living expenses. You, as an individual, may be an exemption, and dependent children (which you probably are to your parents) qualify as exemptions.
Standard deduction – A set amount of money that the federal government gives you if you meet certain stipulations. It differs according to marital status.
Itemized deductions - There are six main categories of expenses that can be deducted: medical and dental, taxes, interest, charitable contributions, and casualty and theft losses. Itemized deductions reduce the amount of tax you owe.
W-2 Forms - Wage-income forms that you receive from employers in order to prepare your taxes.
Filing status - Whether you are single, married or head of household. There are several sub-categories within each of these as well.
Deciding Whether (and What) to File
Depending on your gross income, you may or may not be required to file. For example, in 2000, all individuals under 65 with a minimum gross income of $7,200 were required to file. Even if your parents (or someone else) can claim you as a dependent, you may be required to file if you meet certain income conditions.
When determining your income, be sure to include all taxable income you receive. If your scholarships are not taxable, you need not include them in your income. (Non-taxable scholarships carry no service requirements and are used to cover education-related expenses).
But if your scholarship money is paid in exchange for teaching, research or other services, it is taxable – even if you don’t receive a W-2. This includes work-study income and pay you receive as a teaching or residential assistant.
“Students really need to know that even though they might not be required to file, they may have some withholding taxes from a job,” says an Internal Revenue agent in Kansas City, MO. As a student, your income probably won’t reach filing minimums, but you’re still having taxes withheld by the federal government. “If you file, you’ll likely get that money back,” he says. And if you don’t, then the government will gladly keep it.
Choosing a Form
To file your taxes, you need to fill out one of three basic forms:
- 1040EZ: The simplest tax form; consists of a single page. Requires a taxable income of less than $50,000 and interest income of less than $400. Restricted to singles and couples with no dependents. Cannot itemize deductions or deduct IRA contributions.
- 1040A: A more complicated form, allows more flexibility in income sources (including pensions, IRA dividends and retirement benefits). Also requires a taxable income of less than $50,000. Cannot itemize deductions but can deduct IRA contributions.
- 1040: The most complicated form sometimes called the “long” form; required if income is more than $50,000. Can itemize deductions to adjust income.
For most students, the Form 1040EZ will suffice. If you’re not sure and want to include more sources of income and deductions, you can always file one of the more complicated forms. If you itemize your deductions, you’ll also have to complete Schedule A of your 1040.
Itemizing Deductions
The federal government allows you to deduct certain specified expenses from gross income. The result is a lower tax base – and less tax that you have to pay. You’ll need to fill out the 1040 if you want to itemize deductions.
You should itemize your deductions if they total more than your standard deduction (the standard amount you deduct from gross income on the 1040EZ and 1040A forms). However, certain people must itemize even if their deductions are less than the standard deduction. For example, you must itemize if you are married, but filing separately and your spouse is itemizing; or if you are a nonresident or dual-status alien.
When to Pay
The deadline for taxes is April 15 after the year for which taxes will be filed. You can get an automatic four-month extension, but this is not an extension for paying. It’s only an extension to file. If you know you’re going to owe taxes, you still have to pay by April 15.
Getting Help
The IRS now has a 24-hour, 7-day toll-free number to help answer questions during the tax crunch period. The number is 800-829-1040. You can also call this number to get the location of the nearest IRS office. You can get free tax assistance at any IRS office. It’s probably a good idea to make an appointment, the IRS advises. Also, look for help online at www.irs.gov.
Learn the basics for how to file, and come next April, you can file your taxes with ease.
Health Insurance for Grads
College graduation is upon you. You’re probably worried about getting a job and finding a new apartment, but have you thought about health insurance? You may find yourself suddenly uninsured once you get your diploma.
New college graduates are among the least likely groups to have health insurance, according to the (NCHC). Most students are no longer covered by their parents’ insurance after they graduate. Roughly 40 percent of new graduates do not have insurance, according to a survey. Don’t count on receiving health insurance once you get settled into a new job either. Not all employers offer coverage. The percentage of employers offering health insurance has dropped, with 61 percent of employers offering their employees health insurance in 2006, down from 66 percent in 2000, as reported by the .
University Health Plans – If you have a that was started before entering your fall semester, you may be able to retain your coverage until the end of the August after graduation. These programs are run by the students’ health centers or in partnership with private insurers. Some alumni associations, such as the George Mason Alumni Association, offer plans to members, but these are usually limited to short-term coverage. Some policies, like those at, partner schools with insurance providers. Charges vary depending on the policy and factors like deductibles and co-payments. Students living in Massachusetts, New York, New Jersey and Vermont can participate in alumni insurance plans, however, short-term health insurance is not available.
Permanent Health Insurance – If you want insurance coverage beyond the time limits usually set with short-term health insurance plans, you can purchase permanent health insurance. Permanent health insurance is the most expensive option, but may be a good choice if you plan on being self-employed. When considering various plans, take note of coverage’s, co-payments, deductibles, and limitations on drugs and access to specialists. What is the maximum you’ll be covered for? Are there restrictions on the physicians you can use? You can compare various plans at.
Your Student wants Some Credit
Going to college means managing your own money—and credit card companies know it. Students are bombarded with applications for credit cards. Before you send away for plastic, ask yourself: Do you really need a credit card?
The Pros
A credit card can cover a few expenses while you wait for cash from your financial aid plan, part-time job or parents.
If your car breaks down while you’re traveling to campus, a credit card can be a lifesaver. Booking travel arrangements, like airfare home for the holidays, also becomes easier with credit.
Moreover, the credit card “loan” you get may be interest-free for nearly a month, since most banks allow cardholders a grace period to pay the balance.
A credit card also serves as a form of identification, even if you don’t use it for charging things. And if you always pay the balance on time you establish a good credit record, which is critical for making future large purchases
The Cons
But let’s look at the downside: A credit card can sometimes make shopping a little too easy. Large balances can build up quickly. You may suddenly find it takes all your extra cash just to make the minimum payments.
Credit cards can be a very expensive means of borrowing. If you put $500 worth of books on a credit card charging 18 percent interest, made monthly payments of $20 and charged nothing else to that card, it would take two years and seven months to pay off that debt. In the end, $500 in books would cost you $619.50. Online debt calculators can show you the numbers for your own circumstances.
Tips for Good Credit
So as you sort through the applications that cram your college mailbox, here are a few tips:
- Carry only one card. This will keep you from “maxing out” several cards at high interest rates.
- Read the fine print. Look for cards with no annual fee. Some cards charge fees for services you don’t need.
- Beware of cash advances. Virtually every credit card charges a cash advance transaction fee—usually $5 or two percent. Your repayments will probably be figured at a higher rate of interest as well.
- Check out annual percentage rates. They can vary from single digits to more than 20 percent (especially for cash advances). Some lenders charge a fixed rate; others follow the prime lending rate. Study the applications or run an online search to make sure you’re getting the best deal.
- Look for a generous “grace period.” That refers to the amount of time a lender allows before charging you interest on the balance due.
- Get a card with a low credit limit. A card with a limit of only $500 to $1,000 will help you control your spending.
To keep your credit clear, set limits on how much you charge and pay the balance on time. By setting spending limits, you can enjoy the benefits of credit while steering clear of debt.
The Verification Process
In the last two newsletters we discussed the Free Application for Federal Student Aid (FAFSA) and the Student Aid Report (SAR). Once the government calculates your family’s Expected Family Contribution (EFC), it will then be displayed on a Student Aid Report (SAR). Once the colleges receive their copy of the SAR, they may decide to do a verification (audit) of the financial information provided by your family. Verification is a simple process for families and if your financial aid application is selected for verification, the school will require you to submit additional documentation, such as signed copies of your IRS tax returns, W-2 and 1099 forms. The federal government selects 30% of the FAFSAs for verification. Some private colleges will select as many as 100% of the FAFSAs for verification.
The Financial Aid Award Letter
Once the verification process is completed, each college will begin the process of issuing financial aid award letters to all deserving students. This includes many high income families whose students will attend higher-priced private colleges. Private colleges often provide tuition discounts to reward good students from high income families.
The family should compare the financial aid package from each college. Do not look just at the total amount of aid, but conduct a bottom-line analysis of the net out-of-pocket cost of attending each school. Different schools, for example, may have different costs for room and board.
Depending on the type of college (private vs. public), you can appeal your award letter after finding out what your financial aid package entails. Private schools have institutional grant money that can be negotiated, but state schools are funded by the state and have less flexibility. Unfortunately, even private college financial aid packages can fall short of what you anticipate. You may also receive an award from a second-choice school that is more generous than the one from your first-choice school. But a school’s first financial aid offer doesn’t have to be its last. Improving your aid award is possible.
If you are appealing an award package, you should be able to demonstrate that there is a legitimate need for additional aid. For example, you may have had a change in employment or an unusual family circumstance, since completing your initial financial aid application. Since May is the standard time to notify colleges of your decision, you’ll need to take some swift action.
As financial aid offers turn up in your mailbox, you must first do three things if you want to try for an improved aid package:
1. Understand the Components – First, you have to fully grasp what each school is offering you. Although, the financial aid award letter varies in format from school to school, it should contain the following items:
- Your cost of college
- Your family’s expected financial contribution (EFC)
- Your family’s need (the cost of college minus your EFC)
- A listing of each aid source and dollar amount
- A date by which you must return the award letter
- Information on “appealing” any detail in the award letter
2. Compare Packages – Next, compare your aid packages carefully. They can be as different as night and day. Consider the amount you have to pay out of your pocket now and how much you’ll eventually have to repay in the future. In other words, be wary of how much of the award is in the form of loans.
3. Respond to the Award Letter – Don’t delay in responding to this award letter just because you’re still waiting to hear from other schools. If you don’t reply on time, the aid package can be revoked. Responding to an award letter does not commit you to attending the school(s); it merely safeguards your award. In responding, you have three choices – you can accept the award in its entirety, you can accept some components and reject others, or you can reject the offer entirely and request a revision in the composition of the package.
If you’ve decided to ask for additional aid, you will need to persuade the financial aid administrator (FAA) of the college. Be sure to contact the FAA as early as possible because the school’s extra discretionary aid runs out fast. Present your case in a well-thought-out and diplomatic manner. If you have a legitimate argument, you should support it with documentation.
Time is of the essence and an improper award letter appeal could cost you thousands of dollars. Contact our office as soon as your receive your award letter and we’ll help you develop an appeal strategy, prior to discussing your appeal with the FAA.
The author of this newsletter is Chuck Reilly.
If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.
The Confusing Student Aid Report (SAR)
The Student Aid Report (SAR) is a confusing government-type report that summarizes the information that you provided on the FAFSA financial aid form. The following are some guidelines involving the SAR.
Your SAR will usually contain your Expected Family Contribution (EFC), the number used in determining your eligibility for federal student aid. Your EFC will appear in the upper right-hand portion of a paper SAR and at (or near) the top of an electronic SAR. If there is an asterisk positioned next to the EFC figure on the SAR, then the data you submitted has been selected for verification (audit). If you do not have an EFC number on your SAR, then more information may be needed from you to process your data.
If you provided an e-mail address when you applied for aid, you will receive your SAR by e-mail 3-5 days after your FAFSA has been processed. This e-mail will contain a secure link so you can access your SAR online. If you did not provide an e-mail address when you applied for aid, then you will receive a paper SAR by mail in 7-10 days after your FAFSA has been processed. Regardless of whether you applied online, or by paper, your financial data will automatically be sent electronically to the schools you listed on the FAFSA.
Once you receive the SAR, review it carefully to make sure it’s accurate and complete. The school(s) you’ve selected to receive your SAR will use this information to determine if you’re eligible for federal – and possibly nonfederal – student financial aid funds.
If you need to make corrections to your SAR, you can make them online using your PIN number. Go to http://www.fafsa.ed.gov and select “Make Corrections to a Processed FAFSA.” If you received a paper SAR, make any necessary corrections on that SAR and mail it to:
Federal Student Aid Programs
PO Box 4038
Washington, DC 52243-4038
If you do not receive your SAR, call the federal processor at 1-800-4-FED-AID.
Once your SAR is accurate and complete and you are eligible for federal student financial aid, each school will send you an Award Letter.
U.S. News & World Report Ranks Colleges For 2009
Each year the popular magazine U.S. News & World Report ranks the top colleges in various categories. Here are the latest rankings for the categories Best College Value, Best Merit Aid Awards, Most Selective Colleges, and Best Retention Rates.
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Best College Values |
|
|
|
|
|
|
|
Percent Of Students |
Average Discount |
|
College |
Receiving Grants |
From Total Cost |
|
Harvard University |
51% |
68% |
|
Princeton University |
53% |
66% |
|
Yale University |
42% |
64% |
|
MIT |
61% |
59% |
|
Stanford |
42% |
63% |
|
Calif Institute of Tech |
52% |
56% |
|
Dartmouth |
50% |
60% |
|
Columbia |
46% |
60% |
|
U of North Carolina |
35% |
50% |
|
Rice University |
34% |
53% |
|
|
Best Merit Aid Awards |
|
|
|
|
|
Percent Of Students |
|
College |
Receiving Merit Aid |
|
Cooper Union |
100% |
|
Anderson University |
95% |
|
Sierra Nevada |
93% |
|
University of Mobile AL |
73% |
|
Avila University |
63% |
|
Dillard University |
56% |
|
New College of Florida |
54% |
|
University of Florida |
52% |
|
Denison University |
51% |
|
Hampden-Sydney College |
50% |
|
Ouachita Baptist University |
50% |
|
Seton Hall University |
49% |
|
University of Nevada/Reno |
48% |
|
Trinity University |
47% |
|
DePauw University |
46% |
|
University of Michigan |
45% |
|
Longy School of Music |
45% |
|
Louisiana College |
45% |
|
Kalamazoo College |
45% |
|
Westminster College Fulton |
43% |
|
|
Most Selective Colleges |
|
|
|
|
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Colleges With |
|
College |
Lowest Acceptance Rates |
|
Curtis Institute of Music |
4.80% |
|
Juilliard School of Music |
7.70% |
|
Harvard University |
9.20% |
|
Princeton University |
9.70% |
|
Yale University |
9.90% |
|
Stanford University |
10.30% |
|
Columbia University |
10.60% |
|
Cooper Union |
10.70% |
|
United States Naval Academy |
11.80% |
|
College of the Ozarks |
11.80% |
|
MIT |
12.50% |
|
Brown University |
14.00% |
|
National-Louis University |
14.30% |
|
U.S. Military Academy |
15.00% |
|
Dartmouth College |
15.30% |
|
University of Pennsylvania |
16.00% |
|
Claremont McKenna College |
16.20% |
|
Pomona College |
16.30% |
|
Calif Institute of Technology |
16.90% |
|
Washington University |
17.30% |
|
|
Best Retention Rates |
|
|
|
|
|
Colleges With |
|
College |
Highest Retention Rates |
|
Yale University |
98.50% |
|
MIT |
98.00% |
|
Stanford University |
98.00% |
|
Princeton University |
98.00% |
|
University of Pennsylvania |
98.00% |
|
Dartmouth College |
98.00% |
|
Calif Institute of Technology |
97.80% |
|
Columbia University |
97.80% |
|
University of Notre Dame |
97.50% |
|
Notre Dame |
97.20% |
|
Brown University |
97.00% |
|
Harvard University |
97.00% |
|
University of Chicago Chicago |
97.00% |
|
Northwestern University |
97.00% |
|
Rice University |
97.00% |
|
U of California – Los Angeles |
97.00% |
|
Washington University |
96.80% |
|
Georgetown University |
96.80% |
|
U of California – Berkeley |
96.50% |
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University of Virginia |
96.50% |
The author of this newsletter is Chuck Reilly.
If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact our office.
Dropping out is Not an Option
As if there weren’t enough reasons not to drop out of school, the Department of Education has provided yet another. Students who drop out of college are required to pay back a portion of their federal-aid funds such as the Pell Grant.
Even though many educators and college officials feel that students may be reluctant to accept financial aid and attend college if they fear having to owe money, the government feels that students should have to “earn” their financial aid.
What percentage of his or her aid a student has “earned,” and what percentage they may potentially owe, is based on a refund-calculation formula.
And You Thought Trigonometry Was Difficult
The Department of Education’s formula for figuring out how much a dropout owes is as follows: students must pay back 50 percent of a percentage (based on when during the semester the student drops out) of aid not used for classes.
A hypothetical case:
Brandon receives a $2000 Pell Grant for the semester and uses $1000 for tuition. Brandon drops out one-fourth of the way through the semester. Under the new rule, he has only “earned” 25 percent of his grant. The college is required to return all of Brandon’s “unearned” aid that went toward tuition (75 percent, or $750). He is personally required to pay back 50 percent of his unearned aid that didn’t go toward tuition. Because he dropped out one-fourth of the way through the semester, he earned $250 of his $1000. Fifty percent of the remaining amount ($750) is $375, which is what Brandon owes.
Complicated? You bet.
If you’re concerned about whether you may owe money in the future, the Department of Education has provided universities with software and worksheets to help calculate how much money students may owe.
Why Is This Rule in Effect?
In an introduction to the new regulations, the Department of Education explains:
“Aid is awarded to a student under the assumption that the student will attend an institution for the entire period for which the assistance is awarded. When a student ceases academic attendance prior to the end of that period, the student may no longer be eligible for the full amount of funds that the student was originally scheduled to receive.”
Why the Opposition?
Those in opposition to the rule feel that it will primarily affect low-income students, the group most dependent on federal aid. Many financial aid administrators feel that the government shouldn’t penalize poor students for dropping out of college, and nor should lower-income students have to “punch a clock” in order to receive their grant money.
Another fear is that if a student has difficulty repaying their aid money, they’ll be left with tarnished credit and a near-impossible chance of ever re-entering college.
For better or for worse, the rule will remain in effect for the foreseeable future. Now more than ever, the best advice to a discouraged student may be, “stay in school.” It might just help them avoid student debt.