Overcoming the Hurdles of Financial Aid
by Howard Freedman
Copyright 2019 Financial Aid Consulting. All rights reserved. No portion of this article may be reproduced mechanically, electronically, by photocopying or by any other means without expressed written permission of the author.
Howard can be reached at firstname.lastname@example.org
Working with hundreds of students and their families has enabled me to better understand their varied needs and how to satisfy them. Despite the differences in their academic and financial needs, I have found common characteristics and challenges that besiege families that have gone through the financial aid process. That is why it is so important to understand them and what to do.
F relates to the fear of the unknown forms. Hearing both positive and negative stories from friends, other parents and so on can cause anxiety especially from those who may not have received much financial aid. The forms are straightforward, though families tend to read too much into them. The results are common errors in posting or interpretation that can have a negative impact. Families also may not realize there are many financial aid forms required beyond the FAFSA at some colleges. Forms such as the CSS Profile, Institutional Financial Aid Forms, and Non-Custodial Parent forms and so on may only add to the angst and fear of forms. Take your time, understand what each college needs, tackle the forms on your own or get professional help.
I is for information overload. The good news is that the number of books and financial aid Web sites provides an array of useful financial aid information. The bad is that you don’t have to read every one to get more financial aid. Selectively look for the best Web sites that answer your questions and books available at the library or bookstores that focus on the basics. Pick and choose those with exceptional and real-world situations that may give you a heads up over those competing for limited financial aid resources. Be organized and keep this information in a notebook by college or topic. Remain focused and know where to access this information.
N is for defining what you need. Need is simply the difference between the cost to attend a college less the Expected Family Contribution resulting from the FAFSA. The FAFSA assumes that your family should be able to contribute their Expected Family Contribution, when, in fact, they cannot. Some colleges fully or partially satisfy this need with scholarships, grants, loans and work-study that still leaves families short of funds. Find out how each college can satisfy a family’s needs and if you can afford it.
A is for accuracy. The FAFSA excludes the value of your home and retirement savings that are included in the CSS profile and other forms. Be careful not to overstate or understate the value of your assets. Colleges thoroughly audit your forms and can determine if you did not report certain assets. For example, if you reported $1,000 interest on your income tax return and show no savings that generated the interest, a red flag goes up that may negatively impact your financial aid. On the other hand, it is possible that the money has been spent or just overlooked. Be prepared to have the required back up and explanations if required to do so. Another classic example is when I reviewed a parent’s FAFSA that showed she earned $2,500,035 as a school cafeteria cook. After further review, I realized that the parent reported her $25,000.35 annual income as a whole number $2,500,035 without dropping the pennies. This is how a simple mistake can be so costly.
N is for necessity. If you need to have everything perfect by waiting for your tax returns to be filed or if you wait for the student to be accepted, it only puts the student at the back of the line as the pot of available financial aid is depleted. Colleges ask that you give them your best estimate of income and assets so that they have a baseline on which to review your financial need. In turn, you have the flexibility to update the FAFSA when your tax returns are filed or provide this information to the college directly.
C can be for many things including ongoing and effective communications within the family and with each college to plan to visit colleges and address financial responsibilities. C is also for keeping a calendar of critical dates for financial aid and admission before the student’s senior year, as time will slip away before you know it. C is for the checklist students should prepare to evaluate each college with the same criteria before and during the campus tours.
I is for how income impacts financial aid. Simply stated the more a family earns, the less they should need for financial aid. Two important points are that families should make as much as they can to support their families and needs before trying to earn less to get more financial aid. Conversely, many families with high incomes may be encumbered with high debt, extraordinary expenses, or other factors that are not on the FAFSA. This is the reason that families with high incomes should not give up since they may eligible for need-based or merit-based aid.
A is for alternatives. Many students know that they want to go to college but are unsure of which one, their majors or may not have the grades or test scores to be accepted. Social pressures also force many families to worry about what others who don’t pay the bills may think. Rather than letting these factors get in the way, families should consider 2-year colleges from which a student can transfer, the military, state and local colleges or time off to work and make money and more rational and affordable decisions. This can save parents a bundle of money especially when the student is not ready or may not succeed in a college that may cost $25,000 to $50,000 to attend. Though it is easier said than done, this should not be an emotional or stressful decision if the student just is not ready or you cannot afford a more expensive college.
L is for loan literacy, which takes time to acquire. Many parents are so happy that their child has been accepted to a college of choice, they take the first and often the most convenient loan that can be the most expensive in the long run. Shopping for a loan goes beyond the interest rates. It may include origination and other fees that add to the cost. Each has different repayment options and interest rates for defaulted or late payments. Government student loans such as the Stafford and Perkins do not require co-signers to guaranty repayment. On the other hand, alternative or private loans for the students or require a parent or person with good credit to cosign. Loans are also based on a person’s credit history. Although loans are available for all types of financial situations, poor credit can result in higher interest rates and a lesser amount that can be borrowed.
A is for appeals that can be written for more financial aid. I have written many appeal letters that focused on the facts and showed why the family should be considered for more aid. Since financial aid awards consist of many elements, a student can approve all, some or none of what is offered. Beyond the appeal letter, a positive and non-argumentative attitude will improve your chances of consideration.
I is for investigating all local, collegiate and national scholarship opportunities and networking with others. Beyond academic merit, scholarships can be based on talent, athletic ability, ethnicity, employer programs, affiliations, and so on. Colleges offer scholarships at the college level and or through the student’s major. Always network with others to learn about their successes.
D is for the hardest part — deciding. There are a lot of factors that should be considered before making this life-changing decision. Students should be encouraged to visit the campus, stay overnight and attend classes to check the feel of the school. Consider the college major and if the diploma with that major is worth more than a less expensive college. Once you’ve got the facts to make a more informed decision, you will be delighted to know that you completed your mission of finding the best college and the most affordable price.