If you're the parent of a senior applying to college and you're expecting an end-of-year bonus at work, consider delaying it until the next tax year, if possible. That bonus will be assessed as income when you apply for financial aid, and this is a perfectly legitimate strategy to maximize your aid eligibility.
Free FAFSA webinar
Families of seniors applying to college should submit the FAFSA (Free Application for Federal Student Aid) as soon as possible after January 1, 2014. If you’d like to learn about the process before you fill out the form, Richard Blasen from the U.S. Department of Education will be delivering a free FAFSA webinar on Wednesday, December 11 at 2 p.m. EST. All the information is here.
For grandparents: How to help pay for college
For a grandparent who’s in the fortunate position of being able to help with your grandkids’ college expenses, it’s important to understand how that assistance will affect your grandkids’ eligibility for financial aid. To learn the best ways for grandparents to help with college costs without undue negative impact on financial aid (and do it all completely above board and within the rules), check out this article from Mark Kantrowitz at finaid.org.
“Will applying for aid hurt my chances?”
George Washington University recently revealed that it places hundreds of applicants on the waitlist each year because they cannot afford the tuition. For many families, this just exacerbated their fears that applying for financial aid will somehow hurt their chances of admission. For those families, please see what Kal Chany, author of Paying for College Without Going Broke, has to say in this article (his take: if you need aid, you should always apply for it).
I’ve also addressed this topic here several times, often with some insights from Mark Kantrowitz—a trusted, nationally-recognized financial aid expert. If your family is wrestling with the “Will applying for aid hurt our chances of admission?” question, those past posts are here, here and here.
A faster way to calculate college costs
Several years ago, Congress required each college to post on its website a “Net Price Calculator,” a tool that allows families to enter
financial information and get an estimate of the cost for the upcoming year of college. The calculators aren’t perfect and don’t
represent any guarantees, but they can help some families see that the amount
of financial aid you receive is often determined in part by the price of the
college you select.
The Net Price Calculator usually appears somewhere in the “financial
aid” section of a college’s website, but if you’re looking for a shortcut, you
can link directly by visiting netpricecalculator.com.
Why bother to save? Here’s why
When I give financial aid talks for students and parents, I’m often asked why a family should bother saving for college at all. Once a family sees that the financial aid formulas are based on the ability to pay, families quickly realize that money they’ve saved will actually count against them in the aid formulas, while families who’ve lived beyond their means may in fact qualify for more financial aid. That doesn’t seem like a fair system.
Still, saving for college is your best strategy for three reasons.
1. Money on hand is always a good thing.
The more money you have on hand, the more control you have over college costs. And the less you’ll need to rely on financial aid to help you pay.
2. Not all financial aid is free money.
Yes, families who haven’t saved may qualify for more aid. But a great deal of financial aid comes in the form of loans and work study, not free money. Just because your neighbor tells you his kid got $20,000 a year in financial aid doesn’t necessarily mean that the family got a $20,000 discount off the sticker price.
3. Savings actually have very little impact on your financial aid eligibility.
Financial aid formulas look at two important numbers—income and assets. Income—the money you made during the year before your student plans to attend college—is assessed at up to 47%. But your assets like savings that were built up before that year of income can only be assessed at a maximum of 5.64%.
So while you could be expected to contribute nearly half of what you made last year (income) to help pay for the upcoming year of college, you’ll get to keep about 95% of your savings (assets). Yes, about 400 colleges (mostly private schools) will use their own formulas that can produce a different amount you’re expected to contribute, but refer back to reason #1. Money on hand to pay for college is always a good thing.
If you’d like some advice about how to best save for college, the college savings section of finaid.org is a great place to start.
Financial aid tips for first-generation college students
When I need expert information about paying for college, financial aid, or scholarships, Mark Kantrowitz's answer always seems to be just a Google search away. Here are Mark's financial aid tips for first-generation college students. Worth sharing if you're a counselor working with first-gen students.
On talking with kids about college costs
There’s some good advice in this article about how parents can and should talk to their kids about college costs, and how to use your budget to guide your college choices. But I’ll share it with three important caveats:
1. Don’t necessarily eliminate a broad swath of colleges whose sticker prices are out of your budget. You don’t know your financial aid award until you actually apply and get accepted.
2. Use the net price calculater on colleges’ websites to get an estimate of what your family’s cost will be for each college.
3. Colleges where you have a strong chance of gaining acceptance are more likely to give you money—even beyond what you qualify for—to help you attend.
A good application-related job for parents
Parental involvement with college applications and essays usually does more harm than good; students who are the most successful tend to be those who take ownership of their own college search and application process.
But I don’t feel the same way about applying for financial aid. If a parent is paying the bill for college, I think it’s okay for them to handle the forms and to answer the invasive questions about their personal finances.
Parents, for each college where your student will apply, visit the financial aid section of the school’s website (bookmark each of the sites as you may return to them later) and find the answers to these five questions:
1. What is the cost of attendance?
2. What does the school’s net-price calculator predict your family will have to pay?
3. Which forms need to be filled out (FAFSA, Profile, and/or the school’s own forms)?
4. When do all of the forms need to be completed and sent?
5. Will any other paperwork or documentation be required?
Do this now, keep track of your findings, and prepare your own schedule for when you plan to complete and submit all the necessary forms. You’ll be way ahead of the rest of the sending-to-college crowd.
Homework for parents of juniors
There's a lot going on as juniors close out 11th grade with final exams, AP tests, and spring SAT/ACT exams. While they're busy doing their homework, here's a homework assignment for parents. Visit the websites of the colleges your student is considering, find the "financial aid" section, and use the "net price calculator" to estimate how much that college would cost for your student to attend. The net price calculator does all the financial aid calculations for you.
The number it gives back to you doesn't represent a promise on the price. But it's the most accurate way to get a sense of the future price tag for any college your student is considering. And finding that estimated price now leaves you plenty of time to adjust the college list if necessary.
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