JANUARY 2011 E-NEWSLETTER

posted Dec 28, 2010, 7:45 PM by Glenda Durano   [ updated Mar 9, 2011, 12:46 PM ]

THE NUTS AND BOLTS OF FINANCIAL AID

     In-state, out-of-state, public, or private—college and its associated accouterments are expensive, no matter how you slice it.  The average public university now charges $7,605 for tuition for in-state students ($11,990 for out-of-state), and the average bill for a private school is $27, 293 (many of the Ivy Leagues are $48,000+).  Mind you, this does not include room, board, transportation, healthcare or miscellaneous costs that can easily total an additional $12,000 to $15,000 per year.  But, yes, Virginia, there is a Santa Claus…and it’s called “financial aid.” 

    I bring up financial aid at the beginning of the year because this is when many of us are thinking about socking away savings for education.  Additionally, if you are the parent of a rising senior, you need to get on your computer pronto, obtain a FAFSA key code  (at FAFSA.com), and, as soon as you have an idea of what your year-end income will be, start filling out the online FAFSA form.  Regardless of whether or not you think you’ll be eligible for need-based financial aid (i.e., you think your income is too high), you still need to fill out this form for your incoming freshman, even for merit-based scholarships. Also, don’t delay filling out this form simply because you’re not sure of the bottom line.  You always revise the form if needed.  Granted, filling out the FAFSA is a pain, but it could result in significant financial aid.  And, if tax returns send you into a tizzy, there are people who can assist you in this.  (Call me if you need a recommendation.) 

    There are two types of financial aid:  merit-based and need-based.  I focus a lot on merit-based since that’s where the student has ultimate control.  Merit-based aid can be obtained outside or inside an institution.  A student can begin garnering outside, merit-based aid as young as age 12 by participating in speech, essay, art, and video contests or by participating in significant community service and competing for corporate awards.  Many of these opportunities are available on Fastweb.com, but some students prefer having an education consultant do a scholarship search.  Thousands of outside scholarship programs are available, but a student should weigh the effort against the reward when he considers which contests to participate in.  Regular participation in scholarship competitions requires major persistence.  It’s easy to think it’s a waste of time if you don’t win top dollar, but according to finaid.org, the chances of winning an outside scholarship are about 1 in 9—if a student participates actively. (Based on experience, I can say this is accurate.)  Ideally, a student should participate in competitions that hone his abilities or interests—writing, speaking, science, arts, etc.  The second type of merit-based aid is institutional aid.  This is where the big money is.  Whereas most outside scholarships top off at about $25,000 (which isn’t bad), institutional aid is frequently renewable and can include full tuition (or a percentage thereof).  How does a student obtain merit-based institutional aid?  By proving his potential throughout high school—maintaining great grades in a rigorous curriculum, participating in focused activities, and demonstrating significant accomplishments both in and out of school. (This should be obvious by the end of the junior year since the student will apply to universities during fall of his senior year.) Simply put, if a student actively pursues his passions through individual and group activities (individual activities show initiative/group activities demonstrate leadership) and if the student has an excellent overall application (particularly important is the essay) and if the student gets his application in by November 15th, the chances are good that some form of merit-based aid will follow.

     Many universities use the application essay in scholarship selection, but it’s always wise to call the financial aid department to see if there is an additional application for financial aid, as well as a different deadline.  In fact, sometimes, the top scholarships are not listed on a university website, but rather, a student must be recommended by his admissions officer in order to apply directly through the financial aid department.

     Need-based aid is an entirely different animal, and instead of rehashing the information that is already available out there, I’m going to direct you to finaid.org. Finaid.org is an excellent website with up-to-date information. I highly recommend it!  Before I leave you, however, I will point out a few things about need-based aid:

  1. Ivy League schools don’t offer merit-based aid (because everyone is meritorious), therefore, the need-based aid at Ivy Leagues is significant.  A parent can make upwards of $150,000 and still qualify for need-based aid at some Ivy League schools. Realize, too, however, that schools that offer significant need-based aid may also require an additional form called the CSS Profile (a much more detailed form than the FAFSA).
  2. Need-based aid comes through different methods and means.  You do not have to accept every method of aid that you are offered.  For example, if your student is offered $10,000 in grants (which he doesn’t have to pay back), and $10,000 in loans (which he has to pay back with interest), you can accept the grants but refuse the loans.  Always check the details of the loan payback procedures.  Some parents prefer that their students don’t graduate with debt. 
  3. As you are saving money for your child’s education, realize that sometimes, it’s not best if the money is in the student’s name. This has to do with the way that FAFSA calculates the “expected family contribution” (EFC).  Read more about this at finaid.org.
  4. Your need basis will be calculated on your income during your child’s spring junior/fall senior year of high school, so any financial planning that you do needs to be completed by January 1st of your student’s senior year.

     College is a fabulous investment.  It’s not just about education; it’s about your student discovering the path that God has for him.  Yes, it is expensive, but God is our provider, and if God wants your child to attend a particular university, He will work out every detail, including the finances. With all honesty, I can say that through good planning and proper procedures, there is absolutely no reason why anyone should have to pay the full price tag for any school.  Discover how to utilize both merit and need-based aid strategies to bring that cost down to something a little more affordable. 

    For more information, please feel free to contact me through my website at www.competitivecollegecoaching.com.  For weekly encouragement and bits of advice, have my blog delivered to you by email.  Subscribe to thecollegeadvisor.blogspot.com.  

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