Wednesday’s Parent: 4 strings attached to FREE financial aid

Strings attached to FREE financial aid. Photo by Wendy David-Gaines

Strings attached to FREE financial aid. Photo by Wendy David-Gaines

College-bound families looking for help in paying for college are on the hunt for financial aid but even free money grants and scholarships can have strings attached like loans that must be paid back. Grants and scholarships can come from federal or state governments, colleges, and private outside scholarship sources. Students must be prepared to check out the terms of any awards as carefully as if they are student loans.

FAFSA is the Free Application for Federal Student Aid released every January 1 for the following school year. If your student is attending college for the 2015-2016 school year, now is the time to file FAFSA. Although income and other tax information is required, estimate now and go back to update after submitting tax returns. You may be able to use the IRS Data Retrieval Tool that automatically fills in the numbers from the returns.

When the FAFSA is processed, the federal government applies certain complicated formulas to determine the student and his family’s need for financial aid and the programs they qualify for. The student and the colleges the student selects receive a numerical result called the Expected Family Contribution or EFC. Colleges use this figure and any other financial aid forms they require to calculate awards to admitted students from their own institutional funds. States and private outside scholarship sponsors have their own method of award calculations.

No matter the donor, there can be strings attached to financial aid gifts. Before accepting, students should discover if their awards have conditions and the penalties for failure to meet them. The punitive action may be minor or harsh like forfeiture of future aid or having to pay back financial aid money given.

Here are four string examples:

  1. Make the grade. Students must make Satisfactory Academic Progress (SAP) In order to continue receiving financial aid from many sources including federal and state programs. In other words, students have to make good enough grades. Each school has their own SAP policy so check the college’s website or call the financial aid office to find the minimum GPA (grade point average) that has to be maintained and how often the school will evaluate the student’s progress.
  2. Get enough credit. There is a big difference between college costs for part-time and full-time students and financial aid reflects this. When credits are lost from not completing a class or withdrawal, it could change the student’s attendance status and the eligibility for aid previously awarded.
  3. Keep moving forward. Repeating a class, changing a major, or transferring and losing credits can mess up the momentum toward successfully completing a degree or certificate in the time period that’s acceptable at the college. Financial aid doesn’t last forever. Time limits make college financial aid expire.
  4. Stay put. Some scholarships and grants are awarded based on a student’s interest in an activity or course of study. Dropping out could mean losing the award for no longer playing the tuba in the band, being the quarterback, majoring in physics, being an A-earning student, etc.

Financial aid goes to eligible students only so if student qualifications change, they may no longer be eligible to receive financial aid. Parents can discuss with their student the importance of understanding the strings attached, committing to following them, and dealing with the consequences if they break the strings.

Read Suzanne’s post: “We Won’t Qualify for Financial Aid” 

Read more about financial aid tools and how to make affordable college choices:
Wednesday’s Parent: Formula and tools to calculate college costs
5 financial resolutions the college-bound should make
Money influences college choices from the start


Wednesday’s child may be full of woe but Wednesday’s Parent can substitute action for anxiety. Each Wednesday Suzanne Shaffer and I will provide parent tips to get and keep your student on the college track. It’s never too late or too early to start!

This month Suzanne and I will host Twitter chat #CampusChat at 9pm ET/6pm PT on Wednesday, January 21. Our guest will be financial aid expert Jodi Okun. She is the founder of College Financial Aid Advisors, an Money Expert, host as @JodiOkun of #CollegeCash twitter chat, and the @Discover Student Loans Brand Ambassador. Jodi has helped thousand of families navigate the financial aid process so you don’t want to miss a chance to get her tips and ask questions.

Read Wednesday’s Parent Night on #CampusChat! for some simple instructions to join a Twitter chat.

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from to and vice versa.

College Goal Sunday

Cliché: Help is on the way.    
POCS Reality: College Goal Sunday helps the college-bound file FAFSA for financial aid.    

Attention college-bound: If you need help to fill out your FAFSA for financial aid to help pay for college, College Goal Sunday is coming to your area. The national event is staffed with financial aid volunteers ready to answer your questions and help you complete and submit your 2012-13 Free Application for Federal Student Aid (FAFSA).

Under FAFSA, colleges award eligible students federal grants, student loans and a job through the Federal Work-Study program. States may require FAFSA before students can submit an application for their state financial aid program. Colleges can use other forms or just use FAFSA to determine awards from their own institutional funds. Check with your state and college for FAFSA filing deadlines.

College Goal Sunday is held in 40 states and the District of Columbia. It started in Indiana to help students and families complete financial aid forms, focusing on low-income, first-generation families.

Applicants will need to bring some important information to complete their FAFSA:

  • Social Security Number for yourself, and parents if providing parent info
  • Driver’s license, if any
  • Alien Registration Number if you are not a U.S. citizen
  • W-2 forms
  • 2011 federal tax returns for yourself (and spouse if married), and parents if providing parent info
  • Records of 2011 untaxed income including Social Security benefits, welfare benefits, Temporary Assistance to Needy Families (TANF), veteran benefits for yourself, and parents if providing parent info
  • Bank statements
  • Current business and investment mortgage info, business and farm records, stock and bond investment records, for yourself, and parents if providing parent info
  • FAFSA PIN to use as an electronic signature for yourself, and parents if providing parent info. Apply for one in advance at the U.S. Department of Education PIN Web site.

You can estimate how much financial aid you may receive and your expected family contribution (EFC) to college costs at FAFSA4caster.

To preview the types of questions you will be asked, go to the FAFSA on the WebWorksheet or look at the paper FAFSA

Gather your documents necessary to complete the FAFSA and mark your calendar to attend College Goal Sunday.

POCSmom’s College Prep DIY Insight: If you need money to pay for college, file your FAFSA yourself or with help.

FAFSA help on Twitter

Cliché: Inside information.
POCS Reality: FAFSA help was available on a Department of Education twitter chat.

Financial aid met social media yesterday as applicants entered their tweet questions in 140 characters or less using #AskFAFSA.

Martha Kanter, the Under Secretary of Education, hosted an hour-long twitter chat about the FAFSA (the Free Application for Federal Student Aid) and tweeted the answers.

Here are some of her tweet highlights:

  • There’s NO income cut-off for federal student aid. Everyone should fill out the FAFSA.
  • You can submit a FAFSA before you file your taxes. Select “will file” then use income estimates & correct your FAFSA later.
  • To access your SAR (Student Aid Report) after submitting your FAFSA, login, click View Processed Information & enter your PIN. More details.
  • For information about your state’s financial aid program, check your state’s website
  • In order to receive federal student aid you must be a US citizen or eligible noncitizen. But you should check with your school’s #financialaid office. They can help you explore your options. But you should check with your school’s #financialaid office. They can help you explore your options.
  • If the student answers no to all questions here she’s a dependent student & must provide parent info.
  • Students should file FAFSA every year they want aid because you never know how your circumstances might change or what new financial aid might become available.
  • Federal Pell Grant eligibility is based on many things: income, cost of attendance @ your school & more.
  • The FAFSA is available in Spanish.
  • Grandparents are not considered parents on the FAFSA unless they have legally adopted you.
  • The IRS data retrieval will be available Feb. 1. Change “will file” to “already completed” in your FAFSA.
  • Your answer to the marital status question should reflect your marital status at the time you sign the FAFSA.
  • Federal student aid can be used to cover summer tuition if you have remaining eligibility for the academic year.
  • If you have questions along the way, the FAFSA’s Help section has a lot of great info.

The twitter chat also gave Under Sec. of Ed. Kanter ideas for future consideration such as creating a FAFSA video tutorial in Spanish and adding a FAQ section for the IRS Data Retireval tool.

It also provided an opportunity to give info about the Public Service Loan Forgiveness Program.

Read more:

When should students file FAFSA? File FAFSA ASAP

Why students should file FAFSA? 15 FAFSA FACTS

POCSmom’s College Prep DIY Insight: Who said social media is impersonal? What a wonderful opportunity to get info directly from Under Sec. of Ed. Kanter. Too bad not all questions were answered but  lucky tweeps got their FAFSA help on Twitter.

EFC- What is it, why it’s important, and the catch

Cliché: As I expected.   
POCS Reality: The federal government calculates the student’s expected  family contribution to college costs.


Do you know what your EFC is? Without it, colleges can’t determine eligibility for many financial aid programs.

What is EFC

EFC stands for Expected Family Contribution. That’s the number the federal government calculates by applying a formula to the data submitted by a student on his FAFSA (Free Application for Federal Student Aid).

A student’s EFC is a measure of his family’s financial strength. The higher the number, the more the family can afford to contribute to college costs.

Why EFC is important

Colleges use the EFC to determine financial aid awards based on financial need. EFC is subtracted from the college’s cost of attendance (COA). The resulting number is the student’s financial need. As college costs rise, COA and EFC concern families at all income levels.

The catch

Many colleges do not meet 100% of student need. Colleges may include all forms of financial aid as meeting need. That means student loans that must be paid back or a job from the Federal Work-Study program may be awarded along with free money grants that do not have to be paid back. Out-of-pocket costs are increased when 100% of need is not met or is met by aid that must be paid back or earned. The more free money students receive, the better the financial aid award.

Beyond EFC

Some colleges use other formulas based on other financial aid forms to determine eligibility for institutional aid. States also have different formulas for their state financial aid programs. To maximize eligibility, file all forms the college requires and answer any requests for additional info as early as possible and before deadlines.

Read more: File FAFSA ASAPWhat you need to file a FAFSA

POCSmom’s College Prep DIY Insight: Find out your college’s financial aid polices for meeting student need. When admitted, compare financial aid awards carefully to calculate your out-of-pocket costs. Use POCSmom’s charts that also include costs of borrowing. Students can appeal financial aid awards and demonstrate why they are inadequate, given their special financial circumstances that may not be reflected by their EFC.

What you need to file a FAFSA

Cliché: Pave the way.    
POCS Reality: The college-bound can prepare for financial success.


If you are college-bound, you are going to want to file a FAFSA. After you get your financial aid award, you may even do a happy dance. That’s because filing a FAFSA provides eligible students with grants, loans and a job from the Federal Work-Study program. FAFSA is a pre-requisite for state financial aid programs, many colleges require it for institutional awards and some private outside scholarships want it to verify need.

There are 3 major reasons why families dread filing FAFSA:

  1. It’s complicated Recent changes make filling the FAFSA much easier. If you file online like most do, there are helpful tips and pop-up explanations. There’s a plethora of free info in libraries and online but consider the source before relying on any advice.
  2. It’s time consuming Many of the questions are biographical and should be a snap to answer. For the financial questions, having your documents at your finger tips can provide quick access to answers.
  3. Doubt eligibility Skyrocketing college costs concern families at all income levels and even the affluent can receive financial aid. Some financial aid is based on financial need and some is based on merit (student’s talent- academic, artistic, musical, athletic, leadership abilities). Colleges can give institutional awards to discount their tuition and encourage students they want to attend. However, they may want to see the FAFSA, first.

Now, don’t you want to file your 2012-13 FAFSA? Before you put on your dancing shoes, here’s what you need to get started:


  • Social Security number
  • driver’s license number (if any)
  • 2011 W-2 forms and other records of money earned
  • 2011 federal income tax returns (or estimates based on last year’s)
  • 2011 untaxed income records
  • Business and investment records except for small businesses 
  • Current bank statements and investment records
  • alien registration number (if you are not a U.S.citizen)
  • For online filers (see below filing help) a Federal Student Aid PIN
  • Dependent students need their parents’ info, too

Filing help

  • Call the Federal Student Aid Information Center 1-800-4-FED-AID (1-800-433-3243 hearing-impaired TTY line at 1-800-730-8913.
  • Email the Federal Student Aid Information Center
  • Online filers can get a PIN before or during FAFSA filing to sign and make corrections electronically.
  • Use the FAFSA4caster to estimate your eligibility for federal student aid.
  • For online filers, there’s a FAFSA on the Web Worksheet to preview questions.
  • The IRS Data Retrieval Tool is available beginning February 1, 2012 to online filers who have completed their 2011 IRS tax return. They will be able to use FAFSA on the Web to electronically view their tax information and transfer it into the FAFSA.

Read more: File FAFSA ASAP, 10 Reasons not to file a FAFSA, 15 FAFSA FACTS

Get more: Sign up for POCSmom’s free, new for 2012, monthly College Prep Insights newsletter. January issue is all about getting $$$ for college.

POCSmom’s College Prep DIY Insight: The best FAFSA prep is previewing the questions before filing your FAFSA.

5 financial resolutions the college-bound should make

Cliché: Pave the way.    
POCS Reality: The college-bound can prepare for financial success.


Attention college-bound: Are your finances prepared for what could be the single most expensive purchase you’ll ever make? A college education can cost more than a car, an around-the-world cruise or a house. What’s your higher education financial plan?

An article from Fox Business came up with a plan for college students called Five Financial Resolutions Every College Student Should Make.

Here’s my 5 financial resolutions every college-bound student should make:

  1. Become financially literate Take a look at your finances. Review your assets, income and expenses. How much have you saved? Will your family be helping you financially? What are your projected earnings while attending college? Will you work during college breaks? What bills do you have now and during college? Estimate projected college costs including tuition, fees, room, board, books, supplies, transportation and personal expenses.
  2. Apply for financial aid If you need help to pay for college, ask for it. The federal government offers eligible students free money grants, student loans and a job through the Federal Work-Study program. To apply, file the FAFSA (Free Application for Federal Student Aid). Then check out your state’s financial aid programs. Ask the colleges on your list if there are college grants or scholarships that require any other application forms. Finish up with a search for outside private scholarships from businesses, employers, fraternal organizations, high schools, groups and individuals.
  3. Create a budget Based on your finances and college costs, determine how much you can afford to save and borrow. If you plan on grad school, add in those costs, too. Project future income, lifestyle sought and time to get a job. Then live within your means.
  4. Invest in yourself Think of your position as “student” as a job and earn your education. Go to all classes, do all assignments, keep your grades up and avoid senioritis. If you need extra help, ask your teachers or go for peer tutoring.
  5. Get your money’s worth Choose your college wisely. Compare financial aid awards carefully, review retention and graduation stats and evaluate programs, activities and college location. If you can, take a collegecation (college visit + family vacay) to learn more about the school, internships and other curricular and extracurricular opportunities. Speak with current students, professors and administrators and check out the local community. Where you attend and what you achieve will position you for life after college.

Read more: 10 Reasons not to file a FAFSA.

POCSmom’s College Prep DIY Insight: When it comes to finances, being prepared is key to financial success.

10 Reasons not to file a FAFSA

Cliché:  I don’t need this.    
POCS Reality: The FAFSA is a Free Application for Federal Student Aid for eligible students seeking help to pay for college.


There are billions of dollars in federal financial aid available for eligible students to help pay for college if they ask for it but not everyone wants to submit a FAFSA (Free Application for Federal Student Aid). Despite the urgings to apply for aid from government, college and private advisors, there are those that fail to file.

Here are 5 good reasons why not to file a FAFSA:

  1. You can afford all college costs; you don’t want/need more money.

  2. You don’t qualify for free money.

  3. You don’t want a student loan.

  4. Even if offered, you wouldn’t accept a Federal Work/Study job.

  5. Your college awards merit money to students without regard to financial need.

Here are 5 bad reasons why not to file a FAFSA:

    6.  The FAFSA is too complicated.

  1. You are too busy.

  2. You assume you don’t qualify for need-based aid (but don’t really know).

  3. You want to increase your admission chances (but without aid cannot attend).

  4. Your tax returns aren’t completed yet.

Visit my colleague Suzanne Shaffer (Parents Countdown to College Coach) for 10 Reasons To File a FAFSA. Suzanne is a college prep expert and online college-bound “coach” helping parents navigate the college maze with the proper tools/resources including a FREE parent tips newsletter.

 POCSmom’s College Prep DIY Insight: If you don’t want or need money for college, do not apply for financial aid. If you do want aid, apply as soon as possible because some colleges give out their own funds to the early birds, first. Students may be eligible for funds from their state’s financial aid program but only if they file a FAFSA first. Colleges determine their own formula for distributing institutional funds and some use a need-merit combo requiring a FAFSA. When filing early in January/February, use income estimates and update your FAFSA after your income tax forms are filed. There are billions of dollars of financial aid available. If you don’t ask for financial aid, you better have a good reason not to file a FAFSA.

College prep from 2011 to 2012

Cliché:  Come to the aid.    
POCS Reality:  College prep can help the college-bound get into and pay  for college.


Twas the night before New Years and celebrations abound,

And college apps have been filed by the college-bound.

The essays were written and the recommendations sent,

In hopes a college admission offer is meant.

Visions of getting in danced in each student’s head,

While parents voiced other concerns and said,

“Admission is one thing but what of the cost?”

If we can’t pay for college, all will be lost.”

The Feds heard their cries and came to their aid,

With a Free Application for Federal Student Aid.

File the FAFSA, the FAFSA, the FAFSA’s the one,

For grants, student loans, and work/study programs.

FAFSA soon is released, January 1st is the day,

Get your records together and be prepared to say,

“We filed the FAFSA early to have piece of mind,

College financial aid awards are what we’ll find.


Read more: POCSmom’s website and 2011 (and soon to come 2012) College Prep DIY Insights about how to form a successful college list, getting into college, college costs, college life and life after college.

 POCSmom’s College Prep DIY Insight: As 2011 fades from sight, Happy 2012 to all, and to all a good night!

POCSmom’s College Prep DIY Insight: Marital Status and College Financial Aid Forms

Cliché: The status quo.    
POCS Reality: Financial aid forms ask about marital status.


How does marriage, divorce, or separation impact financial aid forms for college? Marital status determines which parent must supply information including financial data such as income and assets. Sometimes that means stepparents’ info is counted, too.

The government and the colleges analyze information about the dependent student’s family including financial data of parents but whose info is included depends on if parents are married or remarried, widowed, single, divorced, or separated as of the date the form is completed and signed.

All schools require the filing of the Free Application for Federal Student Aid (FAFSA)  before awarding federal aid to students to help pay for college. Some colleges want students and parents to submit additional information before awarding their own money from institutional funds.

The FAFSA wants parental information from:

  1. Both parents if they are living and married to each other
  2. Single or widowed parent
  3. Divorced/separated parent the student lived with more during the past 12 months. If student did not live with one parent more than the other, give answers about the parent who provided more financial support during the past 12 months, or during the most recent year the student actually received support from a parent
  4. Stepparent of remarried parent filling out the FAFSA

Under FAFSA:

  • “Married / Remarried” does not mean living together unless your parents’ state of legal residence recognizes their relationship as a common law marriage.
  • According to the Defense of Marriage Act (1996), “…the word ‘marriage’ means a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers to a person of the opposite sex who is a husband or a wife.” Therefore, same-sex unions are not considered marriages for federal purposes, including the FAFSA4caster.
  • The following people are not considered parents on this form unless they have legally adopted you: grandparents, foster parents, legal guardians, older brothers or sisters, and uncles or aunts.

These parent definition rules apply even if the student is not living with his parents.

There is one exception to the rule. For the two FAFSA questions about parents’ education levels, your parents are considered to be birth or adoptive parents not your stepparent.

POCSmom’s College Prep DIY Insight: Colleges can ask for additional financial aid forms including one from divorced/separated parents not included on the FAFSA to help calculate financial aid awards from college funds.

Prepaid 529 College Plans and Risks

Cliché: You get what you pay for.    
POCS Reality: Investments to help pay for college can be risky and impact financial aid eligibility. 


Investments can be risky- ask anyone on Wall Street or Main Street, but how much of a risk are prepaid 529 college savings plans?

The IRS describes a 529 plan, its 2 types, and advantages:

  • A plan operated by a state or educational institution, with tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training for a designated beneficiary, such as a child or grandchild.
  • There are two basic types: prepaid tuition plans and savings plans. And each state has its own plan. Each is somewhat unique. States are permitted to offer both types. A qualified education institution can only offer a prepaid tuition type 529 plan.
  • Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board. Contributions to a 529 plan, however, are not deductible.

For 529 plans in general, investment performance is down but how does this amplify the risk?

According to Larry M. Elkin, CPA, CFP®, President of Palisades Hudson Financial Group LLC and Palisades Hudson Asset Management, L.P:

Prepaid 529 plans across the country have promised more in tuition benefits than they have the funds to deliver. In some cases, taxpayers are obliged to take up the slack, while in others the colleges themselves may be required to offer discounts to make good on the promised benefits. In still other cases, however, parents and grandparents who thought they bought the right for their offspring to attend college at a prepaid rate are likely to find themselves stuck with a broken pledge and a tuition bill, with no better recourse than to ask state legislators to bail them out.

Here are 2 questions about 2 risks:

  1. Isn’t “bail” as in bailout now considered another 4-letter word? Only a few states pledged to make up the difference if the investment does not keep up with rising college tuition costs.
  2. What if your student doesn’t want to attend a participating college – one that accepts the prepaid credits? A refund is available but, depending on the plan, may be limited to the original contribution, not any gains.

POCSmom’s College Prep DIY Insight: 529 plans are included as an asset on the FAFSA (Free Application for Federal Student Aid) in determining federal financial aid eligibility:

Investments also include qualified educational benefits or education savings accounts (e.g., Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans). For a student who does not report parental information, the accounts owned by the student (and/or the student’s spouse) are reported as student investments in question 41. For a student who must report parental information, the accounts are reported as parental investments in question 89, including all accounts owned by the student and all accounts owned by the parents for any member of the household.

 Parents should carefully research options before investing to save for college. Prepaid College 529 plans impact college financial aid eligibility, tax advantages, and risks.