What about saving for college?

The most important college financial planning strategy a family can employ is to save as much as possible.  The more cash you have on hand, the less you’ll have to rely on financial aid, the less you’re likely to have to borrow, and the more control you’ll have over your student’s college costs.  But where should you put the money?  Should it be in the parents’ name or the student’s name?  Is it worth it to save just so colleges can take the money, while families who don’t save get financial aid?  All are good, fair questions.

The college savings section of finaid.org (I have no connection to it–it's just hands-down the most comprehensive and well respected source of free college financial planning advice) includes advice on deciding how much to save, common myths about saving, the best investment strategies, and the advantages/disadvantages of the most common college savings plans (it even comes right out and explains why the 529 college savings plans are the best).

If you need advice about saving for college, start there.  You’ll be glad you did.

Can applying for financial aid hurt your chances of admission?

If you have any concerns at all about paying for college, you should fill out a FAFSA and apply for need-based financial aid.  Even the colleges themselves will give you the same advice. 

Unfortunately, lots of families worry that the simple act of applying for financial aid is like painting a scarlet dollar sign on a student’s application for admission, that their kid will somehow be punished by the admissions office just because his parents had the audacity to ask to be considered for aid.  Some of those families worry the college will see their student as a potential financial burden (those families would rather hide that financial need, let the kid get admitted, and figure out the money later).  More financially comfortable families sometimes worry they’ll look greedy for asking and that it will carry admissions ramifications. 

Whatever the cause for the concern, it’s totally unnecessary.  Here’s why. 

1. If you receive need-based financial aid from a particular college, it means that you have adequately demonstrated to them and to the government that you would be unable to reasonably afford the tuition without financial assistance.  Even if the college could penalize an applicant because of that need (which they won’t), what difference would it make?  That offer of admission will be meaningless if you can’t afford to pay for it and you never bothered to apply for aid. 

2. On the other hand, if a college decides you don’t qualify for aid, they’ll just decline to offer you any money.  They don’t make value judgments or take punitive measures to punish a family for asking.  Bill Gates could fill out the FAFSA when his kids apply to college, and it would have absolutely no negative bearing on those kids’ chances of admission (the fact that their last name is Gates would make a huge difference, but that’s a different blog entry).  

3. It’s the job of the admissions office to determine who they want in the freshman class based on a host of other things that have nothing to do with finances.  Even at colleges that are not need-blind (where admissions officers are aware of your financial need), finances are far from the forefront of their evaluation.   

Unfortunately, this is one of those concerns that some families have a hard time letting go of to the point that they’ll argue about it…

•    ”But not all colleges are need blind.  Some of them DO know if you’re applying for aid!”
•    “I heard that full-pay families have a better chance of getting in.”
•    “I read that kids who don’t need financial aid get taken off the wait lists first.”

To every one of those concerns, I’d simply ask them:

Can you afford to comfortably send your student to this college without any financial help?

If the answer is “No,” every other possible concern about applying for aid is moot and you should get to work on your FAFSA. 

Do a FAFSA practice test

Senior families, if you want to apply for need based financial aid, you’ll need to fill out the FAFSA (free application for federal student aid), and you’ll need to submit it sometime between January and March (check the deadlines for your chosen colleges).  Unfortunately, you can’t begin filling out the form until it goes live on January 1, 2012.  But you can still get a head start if you’re the get-started-early type.

Here’s a link to a 2012-2013 FAFSA worksheet that will give you a good idea of the types of questions you’ll need to answer on the real form.  This is not the actual FAFSA, and you won’t be able to submit it.  But if a teacher gave her class a take-home practice test to get ready for a chemistry final, students would take it just to get an idea of what they knew and what they’d need to review before the real thing.  This FAFSA worksheet is like your FAFSA practice test.

No financial airbrushing

At the end of a family vacation, we’ve usually got a lot of photos to sort through.  Which ones do you keep?  If you’re like me, you keep the best ones—the photos where you look impressively young, thin and perfectly tanned.  Anything that didn’t capture you in the best light gets deleted.  It’s hard not to be proud when you’re picking which ones to show other people.  

But when you’re applying for financial aid, you should do the opposite.   

The worst thing you can do when you’re applying for financial aid is let pride get in the way of honesty when you’re filling out the forms.  Don’t inflate the amount of money you made last year.  Don’t overestimate the value of your home.  Don’t be afraid to admit that you struggled to pay the unforeseen medical expenses your family faced.  This is no time to be proud.  You’re not making conversation at a cocktail party here—you’re trying to give colleges an accurate, unfiltered view of your financial position so they can determine your financial need.

Don’t do any financial airbrushing to make yourself look better (or worse) than you really do.  Be honest, not proud.

Should you file a FAFSA if you don’t think you’ll qualify?


Every student should file the Fafsa every year, even if they do not expect to qualify for need-based financial aid. The formula is complicated enough that subtle changes from one year to the next can have a big impact on aid eligibility. Also, the Fafsa is a prerequisite for the unsubsidized Stafford and PLUS loans, which may be the least expensive option for students who need to borrow.”

Mark Kantrowitz
Founder of FinAid.org
Answered on The Choice

College essay, interview and financial aid videos are now in the Collegewise store

Videos of my three most popular Collegewise seminars are now available in our online store

  • “How to Write a Great College Essay”
  • “Financial Aid and Scholarships”
  • “College Interviews”

Each video is 1-hour long and sells for $12.99 as a streaming download here.

Seminars have been a Saturday morning tradition since I founded Collegewise in 1999.  We serve up some muffins and coffee—then I spend an hour preaching the Collegewise way and making complicated subjects simpler.  We want everyone to leave feeling more confident about their college planning, and I always encourage them to take the leftover muffins so I don’t eat them myself.

But we thought the seminars might appeal to a wider audience of people who don’t live near one of our offices.  So we brought in a film crew, they set up their lighting and cameras, and I gave our regularly-scheduled seminars to the Collegewise families (who graciously signed release forms to appear on the video).  There’s no scripting here and these aren’t polished infomercials—just me teaching Collegewise families how to write college essays, apply for financial aid, and have memorable college interviews.  It’s what you’d see if you were attending live as part of our Collegewise program (minus the muffins and coffee).  And for families in our counseling programs, you’ll now have free access to the videos to view if you’re unable to attend a seminar. 

Later this month, we’ll also be releasing these videos as hard-copy DVDs for teachers, counselors, non-profits and anyone else who works with students and wants to share them with a class.  But for now, go here to learn more or to purchase your download.  And if you have questions or feedback, feel free to email me at kevinm (at) collegewise (dot) com.  Our Collegewise families have always enjoyed these and I think you will, too.

The Net Price Calculator is here

I wrote a post last month about the then-soon-to-be-available net price calculator, an online tool that estimates your financial aid eligibility, subtracts that from the sticker price of your chosen college, and estimates how much you will need to pay to attend that school next year.  The federal government has mandated that colleges must have the tool available on their websites by October 29, 2011.  But if you don’t want to wait until then, the College Board has it available here.

Introducing the net-price calculator

Soon, it might get a lot easier for families to estimate exactly how much each college will cost–including the financial aid package you may (or may not) receive.  The federal government has mandated that by October 29, colleges and universities must post to their websites a new tool called the "Net Price Calculator."  You input the information financial aid forms ask for (like income and savings).  Then the net price calculator estimates your financial aid eligibility, subtracts that from the sticker price of the college, and tells you how much they estimate you will need to pay next year to send your student to that school.

There's some debate about just how helpful this is going to be, and it's described well in this article on The Choice blog.  And colleges are going to need to use plain-English, non-financial aid-y language to explain to people exactly what this calculator does and doesn’t mean.  In fact, colleges, here's my suggested language.

Use our net-price calculator
How are you supposed to know how much a college you’re applying to will actually cost if financial aid awards aren’t given until your acceptance letter arrives?  This net cost calculator might help.  It’s designed to help you estimate how much it would cost for you to enroll next year with us (you reapply for financial aid each year that you’re in college, so the calculator is only estimating next year’s costs).  It asks you the same types of questions you’ll later be asked on financial aid forms and estimates the amount of need-based financial aid you’ll qualify for based on the information you give us.  The difference between the cost and your aid is the net cost, and the calculator even does that math for you. 

Please don’t take the result as a promise (or a denial) of future financial aid.  We’ll need to ask you for a lot more detailed information when you fill out your official financial aid forms in January, and the result then might be different than what our calculator tells you now.  But we think that giving you a well-calculated estimate is better than giving you no information at all.  So be as accurate as you can when you’re inputting the numbers.  Then talk over the results with your parents and your counselor.  We’re hoping this calculator can help you make more informed decisions about where to apply.  And if you have any questions, please call our financial aid office—we’d be happy to explain anything that’s confusing.