College Financial Aid Offices won’t tell you about these costly mistakes that are oftentimes overlook.
1. Here’s Your Money (Loans) But You’ll Be Paying It Back For A Long Time
Student Debt is now over 1 Trillion Dollars.Student Debt is greater than American credit card debt!
According to Pew Research, 1 out of 5 households have student debt, average debt is over $26,000.
How long does it take to pay back? 40% of student debt holders are over the age of 40 (source: “Imprimis” Hillsdale College).
There are alternatives to borrowing but certainly when you do borrow you need to borrow smart and repay smart.
2. You Made Errors On Your FAFSA? That’s not our Problem!
The financial aid forms (FAFSA and PROFILE) can be very confusing because many people become overwhelmed with all the questions and terminology. Certainly in the back of everyone’s minds is “Why do they need to know that?”.
Another big mistake is people wait too long to engage in the process. Any time we are pressured into getting something done errors can and often times occur.
It’s important to do an EFC Tune-UP™ or some other method so you familiarize your self with what information is required. If you want to try to lower your EFC number then you should do this when your student is in their sophomore or junior year.
However, even if you waited it is never too late. During College if you lower your EFC number and/or your financial circumstances change you might qualify for additional financial assistance.
3. We Received Your FAFSA Results In April, We don’t have any Money Left!
According to the College Board in 2008-2009 168 Billion Dollars was awarded to undergraduate and graduate students.
Here’s the problem, you have to get in line, sooner than later.
Now part of the problem may be that the FAFSA form shows a deadline of June 30 for the year the student will be a freshman that fall. So filing it in April might seem ok, you certainly did not wait until June.
However, the sooner you file your FAFSA the earlier you get in line for financial aid.
Many parents and understandably so make this mistake. Their taxes are not done yet so they wait until they are completed.
Your FAFSA form should be file as soon as possible after January 1 of the year the student is attending college. Let’s just say you should file before January 20 even though your taxes are not done. Base your information on the previous year and then when you do file, you can update the appropriate numbers.
Ideally you would look at a projected family expected family contribution (“EFC” in the sophomore year of the student as you start to examine colleges.
Regardless if you start on time or late, get started with our EFC Calculator that provides a simple and easy format with 9 basic screens. Added features are explanations for each data point that might require clarification.
Complimentary detailed report provided with your EFC number estimated based upon your data input.
4. We Have Low Tuition Rates and We Don’t Give Much Financial Aid
Most people look at the “sticker price” of colleges and assume the lower price the less they will pay.
Have you ever heard, “Private schools are too expensive so we are only looking at public schools”.
This is the wrong approach. There is percentage referred to as the “Unmet Need” which means the amount of financial aid the school gives compared to the demonstrated need from the financial aid forms. In addition, many “expensive schools” because of their endowments have a much lower unmet need percentage or conversely, they fulfill a much higher percentage of the demonstrated need with financial aid.
In fact approximately 80 schools provide 100% full need met financial awards. However it is important to research these schools to determine what percentage of the full need is in self help financial aid (loans plus work study).
Often times what appears to be a more expensive private school compared to a state school turns out to be less expensive.
5. Your Student Has A $1,000 Rotary Scholarship, That’s Good For Us
Scholarships that students receive away from college reduce their financial aid award. This money is considered a resource in meeting financial need (only “needs based families”) which means you cannot use these monies toward your expected family contribution. If you are a high income family and not attempting to qualify for any financial aid then this does not really apply to you.
For those of you who it does apply, outside scholarships can be valuable if you are going to a college where they give out more loans than grants. In this situation you want to ask the college to reduce the loans first not the “College Free Money” (grants) if in the financial aid award by the amount of the outside scholarship.
6. We’ll Give You Some Money, But We’ll Get You Back
Once you receive your financial aid packages from colleges there are several things you need to do. Your areas of concern are “loans” and “grants / merit aid” awards provided by the school. And your enemies can be “loan acceleration” and “educational inflation” or simply the college raising its prices.
Some types of loans can increase based upon the year of college. You want to ask the school if that is their practice or try to confirm that they won’t do that to you. Most people do not ask because they do not consider this potential problem.
In addition ask the school if they can adjust the grant money (“any type of free money”) for future tuition increases.
If you are reading between the lines it would be easy to raise the loans to cover tuition hikes and also possibly reduce the free money. Over four years this can make a big difference in the actual total cost of the education.
7. Don’t Come to Us and Use the Words “Negotiate | Bargain” Trying to Get More Money
Did you stop by the financial aid office and introduce yourselves on your College visit? What does this have to do with asking for more money? If you established a rapport with the right people it can help the Financial Aid Office to relate with a person versus a total stranger.
When appealing a financial aid award, never use the word “negotiate” or “bargain” when seeing if positive adjustments can be made to your financial aid package. Financial Aid Officers by law can exercise “professional judgment” resulting in additional financial assistance.
A second type of financial aid appeal is to do an institutional appeal where you are asking more assistance from the school where the FAA does not have to follow federal regulations.
There is a diplomatic way in how you approach this situation. In addition part of smart college planning is to apply to competing colleges. Also carefully evaluate your student’s profile compared to the college’s average freshman profile.
When your student is clearly above that average your chances of a favorable outcome improve.
College Planning and College Financial Aid are interwoven with many confusing rules.
Knowledge, evaluation, and strategy execution are important when seeking the best financial aid package for your family.
JimKuhner
How to