May 29th is (apparently) National College Savings Day, the significance of which is that "5/29" refers to the college savings programs named after section 529 of the Internal Revenue Code. 529 plans are a tax-advantaged investment program designed to encourage saving for college. Parents can designate their beneficiary while retaining ownership of the money, and anyone can contribute to the plan. The best part is that the funds can later be withdrawn tax-free as long as they are used to pay for qualified educational expenses.
Recent surveys show that more than ever before, students are concerned about the dangers of graduating college with too much debt. And while applying to the right colleges and seeking need-based aid are still your best cost-cutting strategies, here’s another. With good planning and hard work, a motivated student could graduate college up to one semester or even a full year earlier than the traditional four-year plan, saving thousands of dollars in college costs. Here are a few ways to accelerate your college progress.
1. Choose a college where AP credits will transfer.
Not all colleges accept all AP credits, but many will allow students to skip required courses with enough AP credits earned. If you’ve taken AP classes and passed the associated exams, find out how many of those credits will actually transfer.
2. Meet regularly with an academic advisor.
A student who wants to graduate early can’t afford to make scheduling mistakes. An academic advisor can be both a guide and an ally. They can recommend appropriate courses, answer questions about potential course availabilities, and even help you get into a required class if you were unsuccessful when registering. Plan to meet with your advisor at least once a semester. And don't wait for them to contact you, especially if you attend a large university.
3. Take summer school at a community college.
You can certainly take summer school at your college, but the tuition at a community college is much cheaper. Ask your academic advisor which course requirements could be satisfied over the summer at a local community college.
4. Make sure you’re really on board with the “graduate early” plan.
Students who plan to graduate early have to give up some luxuries. They won’t have as much freedom for academic exploration. They may not be able to commit to as many outside activities. They may have to give up the chance to study abroad. But if finances are a big concern, it’s much better to accept those terms and still get a college degree, preferably with minimal loans that need to be paid back.
I’m not a big fan of the three-year plan. I think that getting out of college as quickly as possible can make it harder to extract the maximum value from the experience. But it’s an option, one that you might consider if cutting college costs is your highest priority.
It’s sometimes not easy to figure out which college has
offered you the best financial aid award because not all financial aid is
created equal. Awards can be a
combination of free money (scholarships), loans, and work study. To figure out who's giving you the best
offer, you need to consider the total cost of attendance for the college, the
amount of free money, loans and their accompanying interest rates, etc.
After you submit your application for admission, it’s not unusual for colleges to send you a notice that they require more information. When that communication comes from an admissions office, it’s often because your file is still incomplete (a situation I described in this post).
But when you receive a similar request from a college’s financial aid office, it doesn’t necessarily mean you forgot to submit something that was initially required. Many colleges require additional information from some or all applicants, like a copy of your tax return. And the initial filing questions on the standardized forms don’t ask for that information.
Whether the request for additional information comes from a college’s admissions or financial aid office, don’t panic. Just send along the requested information as quickly as possible. And if you have any questions, contact the college’s admissions or financial aid office for clarification.
If you’re an undocumented student (or a counselor who works with this population) and you’re looking for information about financial aid, Finaid.org comes through once again. This section has helpful information about federal and state aid, as well as resources for specific scholarship searches.
Here are ten of the most common questions I get about financial aid and scholarships, and my answers to each.
1. Should we bother to apply if we don’t think we’ll qualify?
Probably, but here’s the litmus test. If a family cannot write a check for the full cost of their student’s college education next year, they should apply for financial aid. Many people who think they won't qualify actually do. And some schools may require students to complete the FAFSA for merit scholarships. You have nothing to lose but the time you spend filling out the forms, which isn’t inconsequential, but it’s less risky than forfeiting available financial aid by not applying.
2. Will applying for financial aid hurt my student’s chances of getting in?
No. First of all, it’s important to remember that just because you apply for aid doesn’t mean you’ll get any. So if you’re in the position of debating whether or not to apply for aid, the chances are that while you may get some aid, it won’t be a large enough amount to ever be held against you. Still, applying for aid has no negative impact at most schools. Many colleges are “need-blind” which means that the admissions officers don’t know whether or not you need aid. And even at schools that are not need-blind, the admissions office wants who they want. They see it as their job to pick the right students for the freshman class, while the financial aid office’s job is to decide whether or not those kids get aid.
3. At what parental income level is it not worth it for a family even to complete a FAFSA?
There is no cut off because there are so many other factors considered (number in the family, student income, assets, number of children in college, cost of attendance, etc.). So again, use the litmus test. If you can't write a check for the entire cost of attendance for the coming year, you should apply for aid. Use one of the previously mentioned calculators and see if you qualify.
4. What if we know we can pay without aid? Can that help our student get in?
It can at some colleges, particularly at less competitive private schools. Most applications will ask if you’re going to be applying for financial aid. Checking “No” tells them that you are full-pay. And if you know you’re capable of paying comfortably without any assistance, you likely wouldn’t have qualified for financial aid anyway.
5. Can a student establish residency at an out-of-state public university and then pay in-state tuition?
In the past, yes. But in recent years, it has become almost impossible unless the entire family moves out of state. If you couldn’t afford, or wouldn’t want to pay for, out-of-state tuition, attending an out-of-state college could be a risky thing to do. Don’t count on getting in-state residence.
6. What if parents are divorced or separated? Which parent’s financial information will be used?
The parent with whom the child resided most during the 12 months prior to completing the aid application is called the “Custodial parent”—that’s the parent who completes the FAFSA. Federal guidelines say that it is the custodial parent whose financial information will be used to determine the parental contribution to college. It’s important to remember that the custodial parent may not necessarily be the parent who was initially awarded custody in the divorce settlement. It is all based on who the kid lived with during the base year.
The aid formula also considers a stepparent who lives with the custodial parent as a natural parent. That means the financial aid formula doesn’t distinguish between biological parents and step-parents—it only cares which parent, or parents, the student lived with most during the first base income year.
Most colleges will never ask to see income or asset information from a non-custodial parent. The FAFSA has no questions about non-custodial parents, and while the PROFILE form asks a few questions, the processor does not take this information into account in providing the EFC. On the other hand, if you receive child support or alimony, it will appear as your income.
7. Can my student declare independence from her parents while she’s in college, and therefore, get more financial aid?
If the college decides that a student is no longer a dependent of his parents, then the college won’t assess the parents’ income and assets at all. But it’s the federal government and the colleges themselves who get to decide who is dependent and who is independent, and it is obviously in their best interest to decide that the student is still dependent. Don’t get your hopes up. Most kids who are considered independent are foster kids, or kids who have been legally declared independent from their parents.
8. Is it possible to negotiate with a financial aid office to get more aid?
Sometimes it is. If it looks like you might not be able to send your student to a school she really wants to attend because of money, or if two similarly ranked colleges offered very dissimilar packages, you might consider calling and asking the financial aid office to reconsider its offer. However, if you can comfortably afford what the college has determined that you must pay, then there is little chance a college will change its aid package. You’re not buying a used car here. Financial aid officers aren’t likely to do anything that feels like haggling. But I’ve seen it work. There are times when making that call can lead to a good outcome, especially if the two schools compete for the same applicants, and if the offers are very different. Approach this like a civil business discussion. Leave your emotions out of it. Be polite and respectful. If there are substantial differences between the two awards, the college will probably ask to see a copy of the other award. Offer to provide any additional documentation that might be helpful. And always thank the person no matter what the outcome.
9. What's the best way to find scholarships?
Having said that, I meet many families who have the impression there is a lot of
money available from outside or private scholarships. These are
little-known awards from private companies, foundations, community
organizations, churches and other benefactors. There is money to be had
from those sources, and they may be worth applying for, but you won’t
likely get a free ride from outside scholarships alone.
The best way to get scholarships is to apply to colleges that may pay. Financial aid offices earmark a certain percentage of money every year just to lure academically appealing students. This practice is called preferential packaging, and it’s not a dirty secret. The better the fit between you and a college, the more likely that school will entice you to attend.
10. Can applying early decision hurt my chances of receiving financial aid?
Yes. Under a binding early decision plan, colleges don’t have as much incentive to entice you with
unsolicited aid because you’re bound to attend if they take you. And if you’re accepted early decision, you give up the chance to compare offers of financial aid from other colleges.
I always advise that families check “yes” to the FAFSA question about whether or not you want
to be considered for loans or work study. You won’t decrease your
chances of getting free grants or scholarships. You can always
decline the loans or work study if you don’t want them. And in addition to these three benefits of accepting a work study award as part of your financial aid package, kids who contribute to their tuition actually get more out of college, according to this study by sociologist Laura Hamilton.
As senior families begin filling out their FAFSA, one of the most common questions I hear is, "The FAFSA only lets us list ten schools. What should we do if our student is applying to more than 10 colleges?"
The answer: Pick 10 schools, submit the FAFSA, then go in later and update it to add more schools using one of these methods.
Senior families who want to apply for need-based financial aid should be filling out their FAFSA this month. If you need help, financial aid expert Mark Kantrowitz is taking—and answering—questions on The Choice blog here.
Kantrowitz also gives away even more great advice in the FAFSA section of his blog.
For seniors applying to college, the Free Application for
Federal Student Aid (FAFSA) should be submitted as soon
as possible after January 1, 2013. But
the FAFSA asks for specific numbers from your 2013
federal income tax return. How do you
complete the FAFSA if your return won’t be completed yet? Use estimated numbers, then log into your FAFSA later when you complete your taxes. Whatever you do, don't wait to file the FAFSA.
Finaid.org’s Mark Kantrowitz gives more detail here.