Wednesday Weekly Reader: 13 Key Items to Know About Financial Aid.

This week:  time to catch up with a slew of articles on financial aid. Perhaps, more than you ever wanted to read on the topic…

The Basics.

1.  In her College Solution blog, Lynn O’Shaugnessy warns us, Don’t Believe These 4 Financial Aid Myths. Full story (and myth-busting information) behind the link; 4 Myths here:

  1. I make too much money to qualify for financial aid.
  2. My home equity will kill my chances for financial aid.
  3. I have saved too much in my child’s college fund to qualify for aid.
  4. Completing financial aid forms is a waste of time.
Old Main of Drake University at Des Moines, Io...

Old Main, Drake University. Image via Wikipedia

2.  Noelle Smith, a Broadcast News and Politics major at Drake University in Des Moines, Iowa, wrote a very helpful blog post this summer: Decoding the Alphabet Soup of Financial Aid. [With thanks to Grace at CostofCollege.wordpress.com for the tip.] Terms explained:

  • FAFSA
  • EFC
  • SAR
  • PROFILE
  • PELL
  • STAFFORD

3.  Wendy David-Gaines, blogging at StudentAdvisor.com, lists [and explains] 10 Financial Aid Forms You Can’t Afford to Forget.

  1. FAFSA
  2. State
  3. Institutional
  4. CollegeBoard CSS Profile
  5. CSS Profile Business/Farm Supplement
  6. CSS NonCustodial Profile
  7. Outside Scholarships
  8. College Scholarships
  9. Verification Worksheet
  10. Appeal forms

4.  What comes first? Most identify the FAFSA as the first step in the process (as I have written here). Our financial aid process started with the CollegeBoard Profile (as I just wrote about here), since one of Mod Squad Pete’s Early Admission colleges required the Profile early, too. My College Calendar spells out the beginning of the FAFSA application procedure, with Apply for Student and Parent FAFSA PINs. Both student and parent will need the PIN forever (or so it seems); the same PIN will be used if the student continues with graduate school.

Print the PINs and put them in a folder in your paper filing system.  This will make it easy to find this information later.  If you lose your PIN, you can request that the Department of Education send you a reminder.  A PIN will allow you and your parent to sign the FAFSA electronically, make corrections to your FAFSA information, review your federal student aid records online, and complete your Renewal FAFSA next school year.

The Costs.

5.  Daniel de Vise writes at College Inc. (Washington Post): College sticker shock: Is $55,000 the new $50,000?

Nineteen colleges now charge $55,000 or more in annual tuition, fees and living expenses, according to the latest survey of most expensive colleges from CampusGrotto.

6.  According to the Chicago Tribune, Tuition, board pass $50,000 at 123 U.S. colleges.

The number of colleges and universities with tuition and fees totaling more than $50,000 for a single year rose to 123 for the 2011-2012 year — up from 100 institutions in the previous year. Meanwhile, the national average wage for American workers stands at a little less than $42,000 a year, according to the Social Security Administration.

7.  The Choice blog (New York Times) tells us, Only One in Three Full-Time Students Pay Full Tuition, quoting this Economix blog (also, NYT) post: College is cheaper than you think. Both articles are worth reading. Here’s a clip:

This growing gap between sticker prices and net prices is not a bad thing; it enables colleges (or states) to price discriminate. Because tuition at most public and nonprofit institutions fails to cover per-student expenditures, keeping published prices low would mean providing a blanket subsidy to all students regardless of need.

The trade-off, however, is increased complexity, and often total confusion. Many students and their families consider only published prices when comparing colleges, without taking financial aid into account.

8.  The College Planning Group reminds parents of 7 College Fees You Didn’t Plan On. Key here: “Since most colleges are strapped for cash, many are continually looking for ways to collect additional money from students and their parents.”

The Aid Letter.

9.  Grace at CostofCollege.wordpress.com answers “Why does the EFC come as a shock to many parents?” Three government calculation policies are cited.

These policies mean the EFC is “at best, a very harsh assessment of families’ ability to pay,” says Mark Kantrowitz, publisher of FinAid.org. At worst, he says, it is “somewhat unrealistic…and archaic.”

10.  Rachel Fishman, writing for The Quick & the Dead in And Baby Makes EFC, makes an excellent argument that parents should learn their Expected Family Contribution as soon as they start claiming dependents on their tax returns.

Our system of higher education is complex and the learning curve for access is steep, especially for low-income, first generation students. All families who list a child dependent on their tax return should be provided with an estimate of their Expected Family Contribution (EFC) and some general information about federal financial aid.

11.  The College Solution considers Confusing Financial Aid Awards:  Where’s the Money?

Even when a teenager has received a puny financial aid award, schools don’t necessarily want families to know this.  Some parents will look at a misleading financial aid award and think their child has won scholarships to cover much of the cost of college. What they might have actually received is an award stuffed with loans.

I blame a lot of the confusion on the jargon-laced terminology and unhelpful formatting that many college financial aid offices use. Why do plenty of financial aid offices insist on cranking out misleading financial aid awards? Gosh, could it be that some of these letters are marketing tools meant to obscure the real price of colleges?

12.  Candace Choi wrote for Huffington Post:   College Financial Aid Letters Targeted by Officials. This article introduces the Consumer Financial Protection Bureau’s proposed “simple, one-page financial aid and shopping sheet [that] would help students compare offers and choose the one that’s right for them.” More on that below. Choi also brings up an important point for parents to remember:  the financial aid adviser is employed by the college to leverage the amount of aid the college can offer, not to reduce our students’ debt. 

Making matters worse, critics say schools play an ambiguous role in pushing student loans.

“The first financial adviser that a student runs into is a financial aid officer at the college,” said Anthony Ogorek, a financial adviser in Williamsville, N.Y. “Students needs to understand that these officers don’t have a fiduciary responsibility to them.”

13.  Hope for the future? See the Consumer Financial Protection Bureau’s example of what could be used here. (I wrote about it here.) One sheet, a ‘shopping sheet for financial aid’ provides

  • the cost of attendance,
  • the breakdown of scholarships and grants (free money),
  • the breakdown of subsidized loans and work-study (lower-cost money),
  • and the breakdown of non-subsidized or “parent” loans (higher-cost money).

But wait, there’s more:

  • an estimated monthly cost of repayment plus
  • cost, graduation, retention, and default rate comparisons.

Want this? I do. Imagine getting this amount of clearly-presented data from one college. Now, take that a step further and imagine getting one from every college Pete applied to. We could spread them across the kitchen table and see straightforward info about actual costs and the long-term ramifications of his college choice.

Whew. Since this example is still in the talking stages, I’m thinking we may have to create our own version for each college. Stop me now.

If you’ve read this far (sorry to go so long), please let me know in comments if any of this was useful to you. Also, how are you going to compare financial aid letters?

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10 Comments

Filed under Paying for College

10 responses to “Wednesday Weekly Reader: 13 Key Items to Know About Financial Aid.

  1. Thanks Jane for compiling all this information. The worst part about the whole college process is searching and sifting through the sites to find the BEST information. I love the fact that your blog is a one-stop destination where parents can go through the process with you.

    • Thank you, Suzanne; what a lovely compliment! With every stage of parenting I’ve found it so helpful to seek information from parents who have already gone through that stage (teething, training, picking a preschool, etc.). It only makes sense to me to try to share what we’re learning here — and I learn so much from the readers and commenters, professional consultants and parents, alike. Thanks!

  2. Yes, yes, this is incredibly helpful. We need a consistent form or spreadsheet/tool to help us compare apples to apples across all schools!!!

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