Each month when we conduct our free workshops, "How to Pay
for College Without Going Broke," Pete and I hear this
question in some form or another:
"We were told we make too much money to qualify for
financial aid. Should we bother applying?"
Here's the answer, once and for all:
YES!!
Got it?
Many families assume they make too much money to qualify
for financial aid, but there are many factors that
determine eligibility - not just income. In fact,
according to a recent study, 53% of all eligible families
never apply for aid!
The main reason preventing them from applying is this
misconceived notion that they make too much money. I've
had single moms two steps above the poverty line approach
me at the end of a workshop, concerned that their income
was too high! So if you take nothing else away from this
article, focus on this: even families making healthy, six
figure incomes will qualify for aid at most schools.
EVERY family with a high school senior bound for college
should complete the Free Application for Federal Student
Aid (FAFSA). The data you enter into FAFSA dictates how
much money you are expected to contribute to school. This
number is calculated pursuant to the Department of
Education regulations.
Filling out a FAFSA is painful. You must be extremely
careful - the opportunity for mistakes and pitfalls abound!
Each year, an estimated 78-90% of FAFSAs contain mistakes.
One of the more common gaffes that severely limits or
eliminates deserved aid: listing assets that do not need to
be included.
In February, the Miami Herald printed a letter from a Miami
Beach woman whose son was admitted to an elite, private
school. The family's income was approximately $50,000.
However, after she completed her forms, she learned that
she was expected to contribute more than $30,000 per year.
In contrast, we just structured a college plan for a client
with near-identical finances. Had he done the forms the
same way as the Miami Beach woman, his expected
contribution for college would have been more than
$147,000. After we "fixed" his problem, his magic number
was $3,400 per year.
Did we hide assets in a strange offshore account? Nope.
Did we perform any alchemy or other magic? C'mon. Did we
manipulate things in an illegal, unethical or immoral
manner? Of course not!
All we did was follow the guidelines promulgated by the
Department of Education. These guidelines read like a
phone book. The financial aid formulas consider more than
73 different factors in determining how much aid a family
will qualify for.
Unless you are a specialist in this area, you couldn't
possibly understand these rules of the game. An easy
analogy is tax preparation - sure, you can do your own
taxes, but how likely are you to take advantage of every
benefit due to you compared to if you retained an
experienced CPA? Sure, you can do your own taxes,
plumbing, auto repair, whatever, but you can't possibly do
as good a job as an expert.
OK, I'm off my high horse. I just broke some bad news;
now, here's some WORSE news! Unfortunately, the FAFSA is
not the only financial aid form required.
Many private colleges require you to submit an additional
form, the CSS/PROFILE. Also, many private schools require
their own institutional aid forms. These forms are even
more hateful, more onerous than the FAFSA. My partner,
"College Pete," likens filling out the Profile to a root
canal without Novacaine. How's that for a graphic image?
He's got good reasons for saying this. Here's what he's
talking about:
You must be even more careful completing the profile,
particularly the sections earmarked for the student to
complete. Some common questions for the student to answer:
"How much money do your parents have to pay for your
college education?"
Whoa, Nelly! How many high-schoolers can answer this
question? Do your children know your bank balance?
If the student gives one answer on his form, and you give
another figure on your form, there's trouble in River City.
If the private forms and FAFSA are even slightly
inconsistent, your financial aid application could be
delayed or flat out rejected! And you can't say something
like, "my kid was on drugs when he filled out the form -
please let me change the answer!" Admissions departments
are kind of funny about stuff like that.
Here's the bottom line. You must approach the college
financial aid forms very carefully. Be careful whom you
speak with - high school guidance counselors are typically
too busy to develop any expertise in this area (the average
guidance counselor handles something like 471 students in
Florida). You CPA, money manager or other trusted advisor
may give you advice that might make sense for their
purposes, but may actually reduce the amount of aid that
you'll qualify for!
Do not wait until the last minute to plan how you will pay
for college. Sophomore Year (yes, Sophomore Year!) is the
ideal time to get serious about the planning process.
Speak to a knowledgeable college financial aid expert
sooner, rather than later.
----------------------------------------------------
Andrew Lockwood, J.D. and Peter "College Pete" Ratzan,
M.B.A. own and operate College Planning Specialists of
Florida. For a schedule of their free workshops, or other
information about "How to Pay for College Without Going
Broke" visit their website,
http://www.CollegePlanningAdvice.com or call directly,
954.659.1234.
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