Everything a Parent Wants to Know About Financial Aid, but Is Too Overwhelmed to Ask
Getting into college and getting enough money to pay for it is a complex, competitive, constantly changing issue in the 21st Century.
My job is to help you carve a clear, bright path through the tangled mess. This is what I have been doing successfully with parents and students for the last 18 years.
What I am giving to you in these blogs is not simply information (which you can get all over the Internet) but specific, up-to-the-minute that explanations and applications which make all the difference, because you will then know and be able to put into practice the same strategies and use of loopholes that the experts do.
You will be able to apply for college, scholarships and financial aid much more easily and effectively.
First of all, I want to reiterate what I said in my first blog, “Everyone is Eligible for Financial Aid”. Practically nobody can afford the sticker price of 4-year colleges today when it rivals the price of a house–anywhere from $120,000 a year to $300,000–and they are going up 15% each year!
At the same time, I said to not let yourself be fooled by a college’s huge sticker price. Nobody has to pay it.
This is because the real price for college is your EFC, that is, what the feds and the college’s calculate is your Estimated Family Contribution.
Long ago when the federal government set up loans and grants to pay for college, they made a commitment that every one who had financial ‘Need’ would get help to pay for a college education.
This commitment has not changed.
But the concept of financial ‘Need’ has. The first step to never paying sticker price for college is to understand that financial ‘Need’ is a relative term.
Your job as a parent is to find and focus on ways of reducing your EFC.
What is Financial ‘Need’?
If your EFC comes out to be $30,000 a year, you won’t have Need for financial aid at a community college or public university because their costs (today) are below $30,000 on the whole. However, if you pick Loyola Marymount or Ithaca College or Emory University who all have a sticker price over $30,000 you will have some Need, and consequently will be eligible for financial aid.
Your financial Need is based on your EFC and how expensive or inexpensive the college or university you choose is. Thus financial ‘Need’ is relative to your college choice.
This is a very important distinction.
It allows for a multitude of money-saving strategies.
The FAFSA is More Favorable for Most Families
I will go over all of this in another blog, but right now I want you to viscerally understand that the federal financial aid methodology used by the vast majority of colleges and universities is going to help you position your EFC more favorably than the institutional methodology (CSS PROFILE).
If you choose a public university or one of the over 7100 colleges and universities that only use the federal methodology to establish Need (FAFSA; www.fafsa.ed.gov), you will have a lot more wiggle room to lower your EFC and while increasing your apparent financial need.
For instance, the feds allow the Financial Aid Administrator (FAA) to have more discretion in awarding money, so you can actually tell them your story about unusual expenses or situations that are not obvious on the FAFSA.
Additionally, if you make under $50,000 you can use a much simpler version of the FAFSA where your assets are not counted.
If you make under $31,000 you automatically receive the sweetest number a parent has ever seen: $0 on your EFC!
Also, the FASFA does not count equity or sibling assets and its assessment of your child’s assets is lower than the institutional methodology.
The CSS Profile Used by Only 250 of the Priciest College & Universities
If you choose the approximately 250 (and counting) private colleges and universities that use the institutional methodology (CSS PROFILE), you will find yourself under much more financial scrutiny.
This is because years ago, colleges such as Yale, Harvard, Stanford, Princeton, Northwestern, Amherst, USC etc. wanted more detail and control over the financial information they received from families so they could make absolutely sure they were paying their fair share.
Thus, the CSS (College Scholarship Service) financial PROFILE was created (www.profileonline.collegeboard.com).
These select colleges wanted to know if one parent fills out the form, how much the other (custodial) parent made so he or she could be also assessed (thus increasing the amount of your EFC).
They wanted home equity and sibling assets to be counted, as well as student and parent assets, and they wanted a level playing field so rich or poor, everyone’s assets were always a factor in measuring a family’s ability to pay (the FAFSA does not count your assets if you make less than $50,000).
But not only the most select schools in country use the PROFILE, many others, such as Occidental, Whitman, Lewis and Clark, Pitzer do also (college list at collegeboard.com/profile online).
This doesn’t mean you can’t position yourself to get the best possible money from them (and a few of the expensive, prestigious and very popular colleges are reaching out to middle and upper middle class to make college more affordable (and increase your ‘Need’ for financial aid). I will show you how in a later blog.
Bottom line, though, if you make more than $70,000 a year, it is much more difficult to pay for a college or university that uses the PROFILE.
Stay tuned for Blog #3 in this series, “Two Quick Strategies for Reducing College’s Sticker Price”.
Email me a question. Check out my website. Or leave a comment to this blog. I can’t promise I will answer every one but I will carefully read them all. Thanks for listening!