Tag Archives: financial aid

College Application Deadlines: It’s the parents’ turn.

Hello, second semester, senior year. After the last few months discussing college applications, the focus now shifts to financial aid applications. financial aid

Parents often ask whether these applications are worth the time and trouble. My short answer:  Yes. These applications offer the possibility of funding a college education — grants, loans, and scholarships. (A number of colleges use the FAFSA and CSS College Profile along with the student’s file to determine merit awards or scholarships.)

As Michelle Obama recently said to northern Virginia high school students and their parents, “Don’t leave money on the table.”

The applications
FAFSA—Every college, from a local community college to a very selective private college, requires the Free Application for Federal Student Aid. The FAFSA determines a student’s eligibility for any federal aid, whether grants, subsidized loans, or work-study funds. The application is free; the 2014-15 school year version became available January 1, 2014.

CSS Profile—Most private colleges, which award their own funds in addition to federal aid, also require a completed CSS Profile, from the College Board. (These schools often have the strongest needs-based financial aid,) The Profile is not free; it costs $25 to send to one college, and $16 for each additional submission. (According to the College Board, “Students who are from low-income families with limited assets will automatically receive fee waivers.”) The 2014-15 school year form became available in October 2013.

Others—Certain circumstances, such as business or farm ownership, may require additional forms. Some colleges have created their own forms to be completed in place of, or in addition to, the FAFSA and the CSS Profile.

The documents
Financial aid applications are not so different from recipes, when it saves time to gather all the ingredients before you begin to cook. Start with these documents:

  • Most recent signed, completed tax returns
  • Social Security number
  • Driver’s license
  • Current statements from banks, retirement accounts, investment accounts, and any other assets
  • Current income and expense information, such as W-2s, 1099s, 1098s, etc.
  • Any untaxed income records, such as child support, workers’ compensation, etc.
  • Any other documents related to assets or income

The frustrations
The timing—This all sounds straightforward enough, but the timing involved makes it complicated and, yes, a bit frustrating. The FAFSA, CSS Profile, and other financial aid applications request specific information from our tax returns—and often these applications must be submitted—before the returns can be completed.

Providing estimates—The FAFSA and the CSS Profile offer the opportunity to enter estimates for the previous year’s Adjusted Gross Income, itemized deductions, taxes to be paid, etc., then changes can be made after the tax return has been completed. Changes will have to be made because colleges also require the completed tax returns or an online link to verify the application.

Yet, providing estimates presents a bit of a nightmare for households with incomes that vary, such as small business owners, consultants, realtors, farmers, or salespeople. Also, some items may sound simple enough, like a tuition credit, but are not because of frequent changes in the rules.

Early returns—Estimates will only go so far. Some colleges require signed, completed tax returns by February 15.

The quantity—College application year is the most complicated since students are applying for financial aidwith a variety of due dates and submission procedures from the full list of high school senior’s colleges.

So I get frustrated. I complain. I procrastinate. I write blog posts instead of completing the forms. Frustrating though it may be, it is doable, and it’s important to do for a number of reasons.

The why
Many college advisors recommend that every family should complete the FAFSA, at least.

  1. While some families may assume they make too much money to qualify for aid, there is only one way to find out. You have to apply.
  2. Meanwhile, American colleges currently operate within a system of very high Costs of Attendance, which can be whittled down to lower net costs through aid, merit awards, and scholarships. Very expensive private colleges, especially those with healthy endowments, may offer a much lower net cost, indeed one that could be comparable to that of a public university. There’s only one way to discover a family’s net cost for each college.
  3. Many colleges, especially private colleges, use the FAFSA and CSS Profile as a part of their merit awards and scholarships qualifications. One form I just saw included this permission request: “I hereby grant permission for Student Financial Services to release my academic transcript and information about my financial aid to your prospective scholarship donors.”
  4. Even families with high income and asset levels may wish to access unsubsidized Stafford loans, with favorable interest rates and repayment beginning after the student leaves college.
  5. Finally, families who may not quality for aid with one child in college are likely to see a change with two or more in college at the same time.

Now it’s time for me to stop procrastinating and follow my own advice.

This post appeared in slightly different form on True Admissions, the blog of College Admission: From Application To Acceptance.

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After college applications are done: 5 things to do now.

After your student’s (or your) college applications are done–and even if they’re not–January brings a new set of deadlines with it. These tasks need to be done now, or as soon as possible.

1. Request a PIN for the FAFSA (the student and the parent each need one). The student will use the same PIN each year; the parent can use one PIN for more than one child’s FAFSA. The PIN acts as an electronic signature for on-line submission.Screen Shot 2014-01-06 at 9.22.52 PM

2.  Start the FAFSA. Financial aid starts here; every college requires the Free Application for Federal Student Aid. Information you will need on hand:

    • Student Social Security Number
    • Federal income tax returns, W-2s, and other records of income.
    • Bank statements and records of investments.
    • Records of untaxed income.
    • And that PIN to sign electronically.

Make sure you select the correct form (2014-2015) and submit as promptly as possible. (See more about deadlines below.)

3.  Start your tax return. If this process is new to you, now is the time to internalize the financial aid calendar. The FAFSA, the CSS Profile (used by most private colleges), and other college-specific applications require information now (or very soon) from the tax return you have not yet completed. Specifically, financial aid applications for the 2014-2015 college year require 2013 income tax return details in January 2014.

In many instances you are allowed to make estimations for 2013 using the previous year’s returns (and you will be asked to make projections for 2014); however, there’s at least one college on Mod Squad Julie’s list that requires signed, completed 2013 income tax returns by February 15, 2014.

4.  Know your deadlines. Create a spreadsheet with the name of each pending college application. Find and note each college’s financial aid requirements and deadlines. I started looking at one of these for our household on January 1st and learned my first deadline is January 15. Yikes.

Screen shot of our sign in and financial aid spreadsheet.

Screen shot of our sign in and financial aid spreadsheet.

For a fast search:  enter “college.edu” [use your college name] and “financial aid” into Google. For the next college, just change the college name. Most college financial aid sites have a page about how to apply; most of those “how to apply” pages provide specific needs and deadlines.

5.  Track each college’s Student Information System (SIS) instructions. Most colleges acknowledge receipt of applications with instructions on how to sign in to their Student Information System (SIS). Make sure your student follows the instructions, signs in now, and keeps track of the sign-in information. This seems simple enough, but it is even easier to overlook.

The college will post important notifications on the SIS, including:

  • missing application elements,
  • missing financial aid forms, and
  • application decisions.

The college will send an email when decisions are posted, but the college may or may not notify the student of missing information. It’s the student’s responsibility to check the SIS.

6.  Take a deep breath. Actually, I may need that advice more than any of this blog’s readers. Perhaps things were calm in your house in the run-up to the college application deadlines. Maybe it feels like there has been a nice, lazy break between the final submission and now. Or, was your experience anything like ours, with an application submitted early evening on December 31st, followed by perusing financial aid deadlines within twenty-four hours? If that’s the case:  take a deep breath.

Here we are, less than four months away from sending a deposit to a college. I expect this time to simultaneously drag (as Julie awaits decisions) and fly (as I face financial aid deadlines).

Fasten your seat-belts; we’re still in for a long ride.

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Head’s up: Free webinars on how to pay for college.

I don’t often give over this space to promote something. Since I cannot remember if I ever have in the two years I’ve been writing here, this may be a first. All that simply to say, here is a great opportunity for any parents wondering about how college pricing works and how to pay.

Via The Atlantic.

Via The Atlantic.

Two college admissions and finance specialists, Lynn O’Shaughnessy and Michelle Kretzschmar, have joined together to develop a series of free live webinars this summer.

The first, to be held next Sunday, June 2nd at 7 pm EDT, will cover:

  • Why College Sticker Prices are Meaningless. It’s a lot like airline prices or buying a car but not as transparent and no Priceline equivalent.
  • The Real Story Behind College Scholarships. There really aren’t millions of dollars of scholarship money out there that goes unclaimed. But there is money if you know where to look.

You can read more about it on Lynn’s College Solution website and on Michelle’s DIY College Rankings website here. No registration is required, simply go to The College Solution Webinar page.

I’ll be there.

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Three Quick Tips for College Financial Aid

It’s time for me to review financial aid files in preparation for filing our FAFSA next month. If you’re in the same position — or if you’ve fafsa.ed.govnever done this before — here are three quick tips to getting started with college financial aid.

1.  Be Strategic.

From the Wall Street Journal’s, How to Not Blow it with Financial Aid, understand the cost of assets being held in the wrong accounts. Money in the student’s account is allocated toward what your family can pay at a much higher rate than money in the parent’s account. This is logical, sure, as the parents have many more demands on their income and assets than the student. To follow on that logic, make strategic choices about where assets are held. The WSJ article quotes Mark Kantrowitz from finaid.org, an excellent resource.

For one thing, a child’s income and assets count heavily against their potential aid. Every dollar a child has in assets—that includes bank accounts or trust funds—cuts their possible award by 20 cents. Every dollar a child makes in income above $6,130 (the limit for 2013-14 aid) cuts their possible award by 50 cents.

Before the base income year starts, parents should transfer the child’s assets—that includes any money in checking and savings accounts—into a 529 plan, a tax-advantaged savings account for college, says Mr. Kantrowitz.

2.  Be Honest.

Any information families provide as part of their FAFSA will be verified by tax filings with the IRS. This can be done via the FAFSA/IRS direct interface or it will be done by the college requesting copies of past and current tax forms.

Take a look at this recent case, Attorney Disbarred for Submitting Falsified Tax Returns for Financial Aid, shared by Kelly Phillips Erb who blogs about tax at Forbes. The lawyer filed false financial aid forms, then submitted falsified tax returns to the private secondary school in support of the forms. Note:  he did not file the false returns with the IRS, he altered existing returns and give them to the school to back up the financial aid forms. No matter, “He sacrificed his career and his reputation for between $6,000 and $8,000 per year.” This from an attorney who had been a partner in a firm that shared $1.5 million in profits per partner last year.

As the cost of education skyrockets, parents feel trapped to pay for school – and some of them consider lying in order to get financial aid. And yes, financial aid forms require that you submit supporting documentation, usually pay stubs or federal income tax returns. Here’s where folks get into trouble: they lie on their tax returns in order to skew the numbers for financial aid. Sometimes it’s overstating deductions (bad) or omitting income (really bad). Other times, it’s lying about dependents, exemptions and in some instances, marital status (really, really bad). In almost every instance, one lie leads to another because it’s hard to keep up. Just like with Golden.

3.  Be Careful.

This quick read, Ten Common FAFSA Errors Parents Make, can help all of us avoid simple mistakes that might cause disastrous consequences. [Hat tip to Susie Watts for the link.] See the article for a brief paragraph on each mistake, but here’s the list:

  1. Failing to Submit Because of Income (High or Low)
  2. Waiting Too Long to Submit
  3. Submitting Incorrect Info for Divorced Parents
  4. Understating Income
  5. Overstating Assets
  6. Misquoting Real Estate Assets
  7. Misplacing Information
  8. Choosing to File Paper Vs. Electronic
  9. Failing to Consider Each Question Carefully
  10. Forgetting to Save as You Go

Good luck to families working on their taxes and financial aid forms. Good luck to all the high school seniors still working on completing college applications. I can only wish this time next year you are as happy at your selected college as Mod Squad Pete has been at his.

Next up:  2013 brings Mod Squad Julie to the year of SATs, more college visits, and — finally — college applications. Happy New Year!

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2600 or so 4-year colleges in the US; 10 agreed to greater clarity in financial aid letters.

Last week a few colleges met with the White House to discuss financial aid award letters.

English: Al Franken, Senator from Minnesota

Minnesota Senator Al Franken. Image via Wikipedia

Representatives from ten colleges, out of the 2618 traditional four-year colleges in the US, agreed to work on their letters to provide clearer information to prospective students.

That’s a depressingly small number of colleges taking this step, but it’s a start.

Many individuals and agencies have been asking for greater clarity and transparency in financial aid award letters for some time. To name a few…

Kim Clark and Paul Jaegersen developed a website focusing on this issue three years ago, providing real examples and an excellent financial aid glossary. I wrote about it here: Grading Financial Aid Award Letters.

Last fall the Consumer Financial Protection Bureau distributed their proposal for a better format for financial aid information dubbed, Know Before You Owe. See: Homework from the Consumer Financial Protection Bureau.

President Obama announced and supported the Know Before You Owe financial aid shopping sheet. Until his biography became a bestseller both Mr. and Mrs. Obama had significant student loan debt. From the EdWeek article by Caralee Adams, Obama Hopes Initiative Will Better Inform Student Borrowers:

“I promise you, I wish Michelle and I had had that when we were in your shoes,” said Obama, who spoke about their $120,000 in student debt that they paid off over 10 years.

The President further supported this effort in January. From Obama Outlines Details of College Affordability Proposals, written by Caralee Adams:

The administration also would like make the financial aid shopping sheet, announced in October, a requirement for all schools to make it easier for families to compare college financial aid packages.

A couple of weeks ago Minnesota Senator Al Franken and eight co-sponsors introduced legislation, “Understanding The True Cost of College Act,”  to require more clarity in financial aid award letters, requiring colleges to use a standard format to provide easier comparison of offers as well as differentiating between grants and scholarships (“free” money) and loans (repayable). See Senator Introduces Bill for Standard College-Aid Letters.

I think this is all a good thing. I’m, um — you can fill in optimistic, foolish, or naive —  enough to think this is something many people could agree upon. Clarity, transparency, consumer awareness, right? Sure there may be valid concerns about increased regulations. But balance that against ensuring prospective college students understand the details of the financial agreement they are accepting?

Of course, there are other opponents. Namely, the college financial aid officers themselves.

The National Association of Student Financial Aid Administrators, NASFAA, responded to possible legislation with the following, Financial Aid Administrators Advocate Lawmakers to Resist Standardization of Award Letters:

FAAs told lawmakers that improvements to award notifications are of course desirable and a certain level of defined terminology would be welcome, but the regulation of award letters could interfere with an institution’s ability to meet the specific needs of its unique student body.

Instead, NASFAA released their suggestions for improving financial aid award letters, listing ten elements that should appear in a financial aid package. See Consistent and Clear Financial-Aid Award Letters Urged, by Caralee Adams in EdWeek.

While NASFAA recommends standardization of certain award-letter terminology and elements, it acknowledges that there needs to be some flexibility for institutions to customize communication for their own student populations.

The full report, a 15 page pdf, can be found on this page: Improving Award Letters and Consumer Information, on NASFAA’s website. A short video also presents their case; a couple of clips:

Some lawmakers contend that award letters can be difficult to understand and compare.

Our members have the best working knowledge of the student financial aid programs. Their recommendations will help maximize the effectiveness of award letters and also avoid unintended negative consequences of standardization.

I have no arguments with the recommendations made in the report. NASFAA calls for standardization of content, terminology, and definitions. I still want to see a standardized letter required. Our experience with the required net calculator indicates colleges will implement generalized requirements to very different degrees.

What’s your preference? Less regulation, let each college decide… or a standard format from all colleges so students can truly compare?

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Harumph. I looked for clarity in financial aid award letters.

This Spring our family went through our first round with college acceptances and financial aid award letters. I anticipated more structure to the entire process than we experienced.

FAFSA.ed.gov: where it all begins.

I had this preconceived notion that at the beginning of April 2012 Mod Squad Pete would actually receive a number of financial aid award letters on or about the same time he received word of any college acceptances. I saw us lining them up on the kitchen table to look at them all at once. I imagined opening up a new spreadsheet to plug in the numbers for apples to apples comparisons. I guessed that one or two colleges would share more information than the others, to help identify holes of data that needed to be researched.

Our experience wasn’t anywhere near that clean.

We received our best letter first; it was dated March 28th.

At the top of the letter, College 1 spelled out:

  • Student Cost of Attendance [COA]
  • Expected Family Contribution [EFC] from FAFSA
  • Outside Aid (includes scholarships and grants from other organizations or states)
  • Financial Need (COA less EFC less Outside Aid)

In a separate chart, under the heading “Awards”, the college listed scholastic awards, grants and loans. The college made sure the total, including loans, added up to the COA.

Why is this important? Let’s say your student applied to a college and received these numbers in the top of the letter:

  1. COA = $48,750
  2. EFC = $35,000
  3. Outside Aid = $500
  4. Financial Need = $13,250

Then let’s say separately, under Awards, the college lists the following:

  1. Founders’ Merit Scholarship = $2,000
  2. Direct Unsubsidized Loan = $2,000
  3. Parent PLUS Loan = $2,000
  4. Total Awards = $6,000

Maybe it looks good at first glance. However, while the college has identified $13,250 in need (after the family has come up with $35,000), they’ve provided $2,000 in scholarship money, proposed $4,000 in unsubsidized loans, and ignored the further need for $7,250.

The letters from College 2 and College 3 were similar to each other. Both listed the COA in tiny type, made no mention of the EFC, spelled out the offer (including grants, scholarships, and loans) and provided a total for the offer, making no reference to the EFC or comparing it to the COA.

College 4 still needed further information from us in late April when MS Pete took it off his list.

We received his last financial aid award letter (from College 3) on April 26, four days prior to National College Decision Day.

Fortunately, we had discussed the options enough by late April that we knew Pete could make his choice of college based upon his own preferences, rather than the net cost. But what about the student and family who are making the choice based upon the bottom line? What about the family that truly wishes and/or needs to make direct comparison between offers?

Here’s another description of the problem, from Inside Higher Ed, How Standardized Should Financial Award Letters Be:

“The aid is fairly standard, but it is not always displayed in the same way from letter to letter, which I think can be very confusing for all kinds of intelligent people,” said Catherine Ganung, a college counselor at the Taft School, a private high school in Connecticut, who previously worked as a financial aid director at Bates College and Hawaii Pacific University. Her students’ families are often financially savvy — many parents even work in banking — yet are flummoxed by financial aid award letters, she said.

In one case, she said, a student had letters from two private nonprofit colleges offering substantially different financial aid packages — and ended up thinking the one requiring more loans was a better choice than the alternative with lower out-of-pocket costs. “He was so swayed by the persuasiveness,” Ganung said. “It really seemed like, ‘Good news! We were able to meet your needs.’ ”

In other cases, colleges will include PLUS loans, which parents must qualify for, as guaranteed aid, or assume that students will earn their maximum allowed benefit from a work-study job, she said.

A number of people and organizations are paying attention to requiring standardized letters, and a few are opposing it — more on that to come. Our next go-round with financial award letters will be April 2014. Here’s hoping they offer more clarity by then.

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Follow-Up: Time to double-check FAFSA and Profile submissions

I completed our financial aid docs in late February, posted about the process here February 29th, and promptly archived all thoughts about it in the back of my mind.

Until yesterday. I remembered to send questions to the commenter who said, very nicely, I should have completed all the paperwork earlier. In response to my questions, Jim Lundgren of Access College Foundation reminded me of the steps FAFSA requires:

  1. File using estimated tax numbers,
  2. Confirm/correct once tax returns have been completed, and
  3. Link to the IRS Data Retrieval Tool.

Jim made the point that steps two and three could be the same. However, since our accountant had electronic-filing-software-trouble the week our returns were completed, they were filed via paper. I will have to link to the IRS/DRT later (doesn’t take long to pick up the acronyms). Mod Squad Pete’s returns were filed electronically, but I’ll link to both sets at the same time.

With excellent timing, FAFSA also sent the following email to Pete last night. I’m not sure why it says the federal tax filing deadline has passed, but I welcomed the reminder:

FAFSA email

FAFSA email screen shot

Imagine my surprise when I dug through my folders and saw this note attached to the Profile iDOC folder:

CSS Profile iDOC note

For those following along this ridiculously drawn-out saga of financial aid applications (which I think might only be Mod Squad Dad by this point, and he only because he has to), here is the final today’s update:

  • Estimated Profile filed:  Nov 1.
  • Estimated FAFSA filed: Feb 1.
  • Updated Profile filed:  Feb 25
  • Taxes filed:  Feb 27.
  • Returns submitted to colleges requiring Profile:  Feb 27
  • FAFSA updated with real tax return numbers (minor change):  March 13
  • Profile iDOC submission status checked:  March 13
iDOC status screen shot

iDOC status screen shot

There. Done. For now.

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