Is the financial aid offer good for four years?

Consumer Reports just came out with this piece, Having the College Money Talk: 10 key questions every family should discuss. While a good read for any family concerned about college costs, #4 is particularly important for senior families who are or will soon be reviewing their various offers of financial aid:

4. Are Financial Aid Offers Good for Four Years?
In what can seem like a bait and switch, some schools may offer more generous scholarships and grants to freshmen to entice them to enroll, but be aware that this money might not be fully renewable, says Kalman Chany, author of Paying for College Without Going Broke. “You need to know what strings are attached to get it every year,” says Chany. If you receive a merit-based scholarship, ask what the requirements are to qualify each year. You may need to maintain a certain GPA, for example. If you have a generous athletic scholarship, find out whether it continues if you sustain a career-ending injury, and have a contingency plan in case it doesn’t. Even if the amount of grants and scholarships stays the same for all four years, tuition is likely to rise, so the aid will cover less of the cost.

To maintain federal financial aid, you need to file the FAFSA each year. The amount of assistance you are eligible for can change if your financial circumstances change.

The early bird gets the scholarship worms

One of the questions I answered in last week’s Frequently asked college search questions was, I keep hearing that there is a lot of money out there in scholarships. How do we get those?

My answer directed readers to past posts sharing the truth about outside scholarships, and five traits that will improve your chances.

But I left out an important piece of advice—start searching for these outside scholarships (those that come from sources other than the state, federal government, or the colleges themselves) now.

You’ll file your applications for admission and your FAFSA (the starting point for all need-based financial aid) in the fall of your senior year. But by that time, the deadlines for many of these scholarships from companies, foundations, and other sources will have passed. In fact, many scholarships are open to freshmen, sophomores, and juniors to help them secure money to save for college.

The best starting point? Head over to a free, reputable scholarship search engine like Scholarships.com (any online source that charges you just to look for scholarships is a scam). Complete your profile as accurately and completely as possible, then get to searching.

And here are a few more scholarship tips courtesy of expert Mark Kantrowitz.

 

What does your financial aid award really mean?

This year’s applicants could file their FAFSAs on October 1—a full three months earlier than in the past. And while financial aid award letters have traditionally been sent out in mid-March, one of the upshots of the earlier FAFSA filing date is that as admissions decisions are now being released, half to two-thirds of colleges are also including their financial aid decisions, according to estimates by financial aid expert Mark Kantrowitz (the full article is here).

So this seemed like the right time to share a past post on how to interpret your financial aid award letters. Mine is the version for my fellow non-number crunchers, but if you’d like to get a far more detailed (and numerically complex) explanation, here is Kantrowitz’s How to Read Financial Aid Award Letters.

Financial aid is where the fit is

Last week, the counselors in our Collegewise office in Newton, Massachusetts calculated that so far, their seniors had been awarded a total of $776,250 in scholarships for the 2017-18 school year. That doesn’t even include loans or work study. Almost a million dollars of free money that doesn’t have to be paid back. And that’s just for those applicants who applied early action and early decision.

What’s notable here is that like the rest of our Collegewise offices, our Newton counselors don’t offer scholarship services.

Collegewise counselors don’t do scholarship advising or matching. We don’t assist with financial aid paperwork. We don’t run a complex analysis of schools’ records of financial aid generosity. We’re happy to try to answer questions around these areas. And of course, we make sure our Collegewise families know what forms need to be submitted and when to apply for need-based financial aid. But we don’t profess to be financial aid or scholarship experts. So that’s not a service that we sell.

So how did our Newton office do it? They helped their students (1) find the right colleges that fit, (2) apply to a balanced list of schools that include plenty where they have a reasonable chance of admission, and (3) submit compelling applications and essays. A student who does those three things dramatically increases the chances of receiving a generous financial aid package.

Financial aid isn’t just a measurement of cost and what your family can afford to pay. Financial aid offices have a lot of power to offer more generous packages to students they think are right for the school and are more likely to attend. That’s why finding schools that fit, balancing your list, and submitting strong applications is a powerful financial aid strategy.

The mission of the financial aid office is to help those admitted students make up the difference between what they can afford to pay and what the school costs. But the specific aid package you’re offered, and whether or not that package is even more generous than what you’re eligible for, can have a lot to do with how badly the admissions office wants you at that school. A strong student who fits well with that college is more likely to get a generous award package that has more free money, with fewer loans or work study components.

In fact, a particularly desirable student can often receive a scholarship that has absolutely nothing to do with financial need. That’s why every year our Collegewise seniors across the country receive generous—and often unsolicited—offers of financial aid and scholarships from their chosen colleges. It’s not our focus. It’s a byproduct of what we do best.

If you want more financial aid, find the schools where you fit, including those that are most likely to accept you. Then convince them of that fit with your applications and your essays. That strategy is available to any student of any means who rejects the idea of applying to a long list of colleges based on name only and embraces the idea of matchmaking.

As the parents of this year’s juniors start down the path towards applying to college, here are a few past posts to help families take some productive steps now to pay for one of those colleges that eventually says yes.

First, some financial aid strategies for 9th-11th graders.

Here’s some encouragement to talk with your kids about college costs.

And some advice about how to balance your college list.

Finally, a reminder that affordability is part of fit.

Congratulations to our Newton office and to their students. They proved once again that financial aid is where the fit is.

Five traits that will help you win outside scholarships

Outside scholarships are awards from private companies and foundations rather than from the colleges themselves. They typically require separate applications that can also include essays, letters of recommendation, and even interviews. While the majority of money that helps students pay for college comes from filing a FAFSA and applying for need-based financial aid, every extra monetary boost can help. If you’re applying for outside scholarships, here are five traits to demonstrate if you want to increase your odds of winning.

1. Matchmaking
Like choosing colleges where you’re a good fit, the best way to win scholarships is to apply for those you’re most likely to win. Use a free matching site like Scholarships.com (never pay for a scholarship matching service—all that information is available for free). Answer their profile questions as thoroughly as possible to get more accurate matching results. And pay very close attention not just to the eligibility requirements, but also the descriptions of what types of students the organization is looking to honor. For example, a scholarship from the local fire department that’s intended for “a student who’s shown outstanding commitment to their community” is not going to go to someone who participated in just one blood drive. Match your accomplishments, strengths, goals, etc. to the scholarships intended to reward what you have to offer.

2. Passion
I write here often that passion is contagious. An admissions officer—or a scholarship reader—won’t care about what you’re sharing if you don’t care about it yourself. Don’t hide how much you love math, debate, or your church. Don’t restrain yourself from expressing just how much you care about helping the homeless, coaching youth baseball, or restoring old cars. The descriptions of these activities are the “what,” but the feelings behind them are the “why.” And the why—when it’s strong—is where the passion is.

3. Potential
Potential is promise that has not yet been fully realized. And coupled with the appropriate qualifications and passion, it’s an enticing trait for scholarship readers. I’ve written a past post about how to demonstrate potential as you progress through high school. Now that you’re applying for scholarships, use the same post to help you identify examples of potential worth sharing.

4. Ambition
Ambition is the “strong desire to achieve something, typically requiring determination and hard work.” The best way to express that ambition in a scholarship application is to focus not just on what you want to achieve, but also what you’re willing to do, and what you’ve already done to get there. Just saying that you want to be the CEO of a corporation someday is not ambition. But expressing that goal, then describing how you want to learn about business through both a major and internships while in college, then illustrating how many business books you’ve already read as a high school student while also working a part-time job and rising through the ranks to become an assistant manager at a local store–that’s ambition. See the difference?

5. Marketability
Outside scholarship providers want to highlight the students they reward (thereby not-so-subtly announcing that the provider has generously provided a scholarship). Presentation matters. Keep your online presence clean. Have a simple, intelligible outgoing message on your phone. If the application requires an interview, don’t show up in yoga pants and flip-flops. I’m not suggesting that outside scholarships go only to those students who look a certain way. But every little bit helps. So while you should always be yourself, and never apologize for that, there’s nothing wrong with bringing the best authentic version of yourself to the scholarship application process.

FAFSA assistance for first-gen students

Low-income, minority, first-generation college students are statistically less likely to apply for college financial aid even though they often stand to benefit most from doing so. Form Your Future is a campaign designed to reach out not only to the students in this population, but also to volunteers and educators who want to help families complete the FAFSA. Among their many resources are a downloadable guide to the FAFSA, as well as all the necessary materials to host a FAFSA completion event in your community. If you’re a student (or parent) worried about your ability to pay for college and in need of both encouragement and advice, or if you’re someone who advises families, the website is definitely worth visiting.

Paying for college: a primer

The idea of trying to pay for college can be intimidating. The potentially big bills and the seemingly complex system of applying for financial aid and scholarships can be enough to stop some families from taking the productive steps they need to take to help finance their children’s educations. So here’s my primer on the topic. Each of these five recommendations are important, and they’ll take time and some focus to execute properly. But I’ve distilled them into this short list to help readers see that it’s not a 100-item to-do list. A family who, along with their applicant, does just these five things will almost certainly be in a much better financial position to pay for college.

1. Start saving for college as soon as possible, preferably in a 529 savings plan.
The more you manage to save, the less you’ll need to rely on financial aid. And the more control you’ll have in your college destiny.

2. Become a competitive applicant.
A challenging curriculum combined with good grades and test scores can earn you more financial aid, which brings me to…

3. Apply to schools where you have a strong chance of admission, ideally those where you’d be in the top 10% of the class of incoming freshmen.
One of the best ways to get the money you need is to apply to those colleges most likely to pay. Financial aid offices earmark a certain percentage of money every year just to lure academically appealing students. Apply where you’ll appeal.

4. File the FAFSA (Free Application for Federal Student Aid).
The FAFSA is the starting point to apply for financial aid at any college. Some colleges also require additional forms, and those will always be explained on the financial aid section of each college’s website. But failing to file the FAFSA will take you out of the running for most available aid.

5. Apply for outside scholarships.
These are awards from private companies, foundations, community organizations, churches and other benefactors. I intentionally listed this last because while many families believe that scholarships are the best way to pay for college, these awards actually account for about 5% of the aid that’s available. Landing comparatively small awards of a few hundred, or maybe a few thousand, dollars is worth it, especially if paying for college is a big concern. But don’t ignore the other items on the list and hope that scholarships will cover the cost.

Save for retirement, or college?

Saving for college, and saving for retirement. Parents know both are important, and many of us worry that we’re not saving as much as we should for one or both. But if you’ve ever considered doubling down on the retirement stash and then just relying on loans to pay for college, consider this tip for parents from financial aid expert Mark Kantrowitz, as shared in this piece.

“They should not forgo college savings in favor of retirement savings. ‘So long as the interest rate on the [college] loan is higher than the rate paid on [retirement] savings, you’re better off saving for college AND retirement,’ says Kantrowitz. ‘You’ll end up with more money for retirement than if you had just borrowed for college and repaid those loans.’”

More reasons to file your FAFSA

Courtesy of Money Magazine’s 4 Things to Know About the New FAFSA, here’s a well-argued response to any family who resists filing the FAFSA:

“Just submitting a FAFSA will automatically qualify you for a low-cost federal student loan of up to $5,500 for freshman year. The interest rate on undergraduate student loans is currently 3.8% plus about 1% in fees, which works out to an annual percentage rate of roughly 4.1%. The FAFSA is also required for many other kinds of aid, including work/study jobs; federal parent PLUS loans; scholarships from state agencies, private foundations, and colleges; and, in a few cases, merit aid.”

Does the order of colleges listed matter on the FAFSA?

The FAFSA (Free Application for Student Aid) asks applicants to list the colleges to which they’d like their financial aid information sent (much like applicants must ask testing agencies to send official reports to colleges). Many families have wrestled with the question of whether or not the colleges could see where they’d placed them on the list. The concern—and not a totally unsubstantiated one—was that a school listed deep down or even last on your list might see that as a sign that you weren’t all that interested. And they might have been less likely to offer a more generous aid package that could entice you to attend.

Thankfully, the new FAFSA has changed that—colleges can no longer see the list of schools as they appear on the FAFSA. But while the FAFSA is tied to federal aid, the list of colleges on the FAFSA will still be submitted to your home state so they can evaluate your eligibility for state grants. Some of those grants are only available to students who ultimately enroll at one of the state’s institutions. And in those cases, it turns out that some states are a bit finicky about where they must be listed on the FAFSA.

Thankfully, the Department of Education has compiled the information about each state. Check your state’s policy, available here, and list your in-state public universities accordingly.