It’s helpful for students just starting their college search to understand how financial aid works. Without that knowledge, you risk making faulty assumptions about which schools you can and cannot afford, how much aid will be available, and when to apply for it. I always appreciate when a knowledgeable source makes a complex idea easier to understand, and that’s what Sean Ashbury, admissions officer at Tufts, has done with his blog post, “An Admissions Officer’s Guide to Financial Aid.” Just grasping the ten terms he defines so clearly will make you a savvier college shopper.
Many families have heard that the financial aid package they receive from a college may not, in fact, be the school’s final offer–that they can appeal to the financial aid office for a more favorable package. But what’s a lot less clear is exactly how a family should go about making that appeal. What factors are considered? How do you make an effective case? What can you do to improve your chances of getting the package you need to attend the college you want?
Industry-recognized expert Mark Kantrowitz just released a new book, How to Appeal for More College Financial Aid: The Secrets to Negotiating a Better Financial Aid Offer…and Getting More Financial Aid in the First Place! I’ve not yet read the book, but if it’s anything at all like the hundreds of articles, interviews, and other informational resources Kantrowitz has participated in on the topic of college financing, you can expect that it will be full of expert, unbiased advice with no selfish angle other than to help families.
The description of the book makes it clear that it’s not a lesson in negotiation for families who have already received a generous package. The most successful appeals almost always come from a clear, compelling presentation that financial circumstances within the family necessitate more aid for the student to attend that college. And this book promises to help families in that situation make the most compelling case.
If you’d like a quick primer on this topic and Kantrowitz’s approach, here’s a 2015 Washington Post article, “How to Negotiate a better financial aid package.”
Much of the prevailing advice about financial planning for college is easy to follow…provided you’re affluent. Deferring holiday bonuses, redirecting a portion of discretionary spending into savings, or even committing to saving “just $250 a month” is easy to do if you have that money. But it’s a lot harder for families who don’t have those resources and are facing financial pressures far more immediate or even concerning than accumulating college savings for the future.
It would be of little comfort to many families to learn that “Almost 1 in 10 working Americans earning $100,000 or more live paycheck to paycheck,” as referenced in this article, “How to Save for College When You’re Living Paycheck to Paycheck.” But you don’t need to make nearly that much to utilize the article’s tips or to benefit from the encouragement to save, no matter how small the amount.
The encouragement is important, because what’s meager to one person is too much for another. I’ve seen plenty of articles that point out how much you’ll have saved for college by setting aside “just $250 a month.” But this is the first one that lauds efforts to save just $25—or even less—per month. And the action of saving adds up no matter the amount saved.
Parents who’ve dutifully saved in a 529 plan may have seen their balances dip (perhaps alarmingly so) during the recent stock market roller coaster. While many experts recommend you continue investing and wait to withdraw until the market rebounds, what if you have a tuition bill due soon? While there’s no prescription for a miracle savings cure, this article with expert Mark Kantrowitz shares some good information and advice to consider before you make a withdrawal.
Saving money in a 529 plan is just the first financially astute step. You’ve then got to withdraw it—at that right time—and use it for the right expenses for you to reap all of the intended benefits. And trusted source Consumer Reports lays out the steps in this article.
If you’ve submitted your FAFSA and need to make corrections or updates, here’s a good how-to. The earlier you update it, the better chance your schools will use the correct information in determining your aid package, and the less work you’ll need to do contacting schools in the future to submit aid appeals based on new information.
The inimitable Mark Kantrowitz has not only put together a list of more than six dozen colleges in the US that have no-loans financial aid policies for low-income (and some for even middle income) families, he’s also listed the AGI (adjusted gross income) on which the policy is based for each school.
It’s hard to argue with the financial planning of choosing a college you don’t take on debt to attend. And this list is a good place to start if you’re taking that approach. But remember three things: (1) just because a college isn’t on this list doesn’t mean that all of their packages contain loans; (2) you don’t know the specific makeup (grants/scholarships, loans, and work study) of your financial aid package at any college until you actually apply for both admission and aid; (3) you retain the right to refuse the loan portion of any financial aid package you accept.
Many of the best practices to pay for college are fairly easy to comprehend. Save as much as possible (preferably in a 529 plan). Apply for need-based financial aid. Don’t refrain from applying to colleges out of your budget (you might get aid to help), but don’t ultimately attend a school that will put you in more debt than you can pay off.
But the process becomes much more complicated with individual circumstances. Divorce, disability, layoffs—there’s an answer to each scenario, but rarely one that’s found within the discussions of the basics.
Last month, expert Mark Kantrowitz joined Washington Post’s nationally syndicated personal finance columnist Michelle Singletary for a live chat, “Color of Money Live: How to plan college savings.” They answered a variety of questions, almost all of which pertain to topics that while not uncommon still extend beyond the basics. If you’d like to dive into the details, the full transcript is here.
When it comes to applying for financial aid and scholarships, here are two golden rules:
1. Never pay to fill out the FAFSA (the first “F” stands for “Free”). The best way to avoid that mistake is to go straight to the source and complete your FAFSA here, at the office of Federal Student Aid.
2. When applying for outside scholarships, expert Mark Kantrowitz says it both bluntly and best in this article: “If you have to pay money to get money, it’s probably a scam.”
I’ve noticed a lot more family awareness around the potential perils of taking on too much student debt to attend college. That caution is a good thing. But some families use that debt reluctance as an excuse to not apply for financial aid. That’s not good at all.
Filing a FAFSA to apply for need-based financial aid is not the same thing as applying for a loan, and it’s nowhere close to agreeing to take on debt. If you file the FAFSA and qualify for aid, the package you receive from each college might include some loans. But there are three important things to remember:
1. Each college will send you its own financial aid package.
2. That aid package can contain grants (free money that doesn’t need to be paid back) and work study programs in addition to loans.
3. You retain the right to accept pieces of the package and to decline others.
Submitting a FAFSA doesn’t mean you’re agreeing to take on debt. All you’re doing now is raising your hand and availing yourself of possible financial assistance to attend college, none of which will you later be obligated to accept without choice.
The choice about debt and how much—if any—to take on is different for every family. But the choice about whether to apply should be clear. You risk nothing other than time in filing your FAFSA. But you risk the loss of potential aid, including free money, if you don’t file.
The risk of skipping out is missing out.