Wednesday’s Parent: 5 questions to ask about financial aid front loading

Front loading financial aid awards. Photo by Wendy David-Gaines

Front loading financial aid awards. Photo by Wendy David-Gaines

If you think your washing machine is the only front loader, watch out because your college may be taking you to the cleaners. Front loading happens when colleges make their most generous financial aid award offers to applicants as a lure to attend. When students return the following year they may find their school has dropped their previously awarded grants and scholarships. Thousands of dollars may have been lost to the common practice of front loading.

“About half of all colleges front-load their grants, according to financial aid expert Mark Kantrowitz, who analyzed data from the National Center for Education Statistic’s Integrated Postsecondary Education Data System,” according to DailyFinance.

The lesson for parents and their college-bound students is to carefully scrutinize, analyze and question each item in their financial aid awards before bothering to compare one college’s offer to another. It may turn out that freshman year is a best deal at one place but if the total years until graduation are tallied, another choice may be the better bargain. Here are five questions to ask the college financial aid officer:

Is the grant/scholarship renewable and if so for how many years? What you want is the money to continue until the student graduates. Bear in mind it is taking longer, four to six years, for those who graduate to do so. Find out the maximum number of times the award will be made.

What are the strings attached to keeping the grant/scholarship? It’s important to understand the terms of receiving free money awards before acceptance to make sure the student can and will perform them. He may have to keep his grades up, play an instrument, or be a member on a team. Find out the eligibility requirements each year including any additional paperwork necessary to keep them.

If the grant/scholarship is lost, what will replace it? Often student loans are the college’s substitution plan. However, there may be other grants/scholarships available. Ask about them and the application process. Be prepared to continue searching for these and have a college finance Plan B.

Will the college bill increase in following years and if so, by how much? Those renewable grants/scholarships may no longer cover the same portion of college costs if tuition rises. See what if any cost components like tuition/fees and room/board are capped or held at the freshmen level.

Will the grant/scholarship be increased to keep pace with any raised college costs? Be aware most colleges will not match tuition increases or increase free money aid when tuition rates increase. However, the college bill must continue to be paid.

Read Suzanne’s post: It’s Financial Aid Award Season

READ MORE:

Finding and winning scholarships hiding in plain sight

3 Flavors of FREE College Money

Wednesday’s Parent: Cost, loan-fearsome four-letter college words

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

_____________________________

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!

The bonus is on the fourth Wednesday of each month when Suzanne and I will host Twitter chat #CampusChat at 9pm ET/6pm PT. We will feature an expert on a topic of interest for parents of the college-bound.

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 www.pocsmom.com to http://www.parentscountdowntocollegecoach.com/ and vice versa.

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 About.com 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 www.pocsmom.com to http://www.parentscountdowntocollegecoach.com/ and vice versa.

7 Tips to Help Your Child Decrease Their Loan Debt BEFORE Graduation Day

 

Barrister on a Budget by Jenny L. Maxey

Barrister on a Budget by Jenny L. Maxey

Jenny L. Maxey, author of Barrister on a Budget, and I have teamed up to provide some fresh financial suggestions for parents, the college-bound and students continuing with post-graduate studies. Jenny will focus on tips to help your child decrease student loans BEFORE graduation and I will zoom in on fresh ideas for families to do now, plan for the future, and ask others to step it up.

Enjoy Jenny’s guest post:

_____________________________________________

7 Tips to Help Your Child Decrease Their Loan Debt BEFORE Graduation Day

Student debt is becoming a heavy burden, and not just for students.  Parents often co-sign for loans to help their child receive funds or even just to help them get a better interest rate.  The scary thing is that in the current economy, many students are unable to find a job that will allow for cost-of-living in addition to the hefty repayments.  And what happens if the student can’t make the payments?  Well, it can be two-fold.  If you co-sign, you are the one responsible to make the payments.  Plus, your child might move home (if you’re feeling the effects of the empty nest, that’s maybe not a bad thing), which can cause your bills to increase.  You’re likely going to be dipping into your retirement funds (or not saving for retirement at all), and then what happens when you retire?  You and your child are going to be stuck paying that student loan bill.  Even declaring bankruptcy, does not get rid of student loan debt.  So before you or your child sign for another loan, take these steps to better not only your child’s future, but yours as well.

  1. Avoid borrowing loans altogether.  Okay, this might sound obvious, but have you and your child looked for opportunities?  I mean really looked?  Scour the internet, local and state organizations, your employers, and corporations, anything you can do to find scholarships.  Then, apply for all of the ones your child qualifies for.  Yes, this can be time consuming, but you could avoid thousands in debt for not much work.  Joining the military is also an option that many don’t consider.  The military can offer partial and sometimes full tuition assistance among other benefits.  And, as some employers give preference to the military, can be the difference in acquiring a job or not in this market.
  2. Graduate early.  If your child is still in high school, take Advanced Placement (AP) courses.  While the exam to receive the college credit can cost $80 – $120 (plus any fees added by the high school), it can be cheaper than the same course in college.  Be sure to inquire about any financial assistance the high school may provide for these courses.  If your child is currently in college, take the full credit load every semester if the tuition is a flat rate (every school is different, so check the policies).  Also, they should use their summers wisely and do an internship that will give them course credit (and maybe some spending money) as well as experience and references!
  3. Pay attention to loan agreements.  Apply for subsidized loans and other need-based loans that will usually cover part or all of the interest payments while your child is in school.  Shop around for the lowest interest rates. Keep documents organized and be aware of your repayment schedule to avoid late fees.  Know the options to make repayment manageable to avoid fees and default.
  4. Negotiate tuition fees.  Schools have some fees that are negotiable.  Fees that are automatically put into your tuition bill, such as gym membership and athletic tickets, can sometimes be opted out of and removed from the bill.  Check with the financial aid office and discuss these options.
  5. Get a job.  If your child can handle working while in school (make sure they are able to maintain a high GPA to open up employment options upon graduation), then get a job…maybe two.  Colleges offer Resident Advisors (RA) and work study programs that are flexible with school hours and offer benefits – reduced housing expenses and free meals for RAs – or payment to pay for educational expenses.  If they get a job off of campus, they can also use the income to pay for educational expenses, decreasing the amount they may be inclined to borrow.
  6. PAY INTEREST!  This one is a biggie! Most student loans have compound interest, which means, if you don’t pay your interest, it adds on to the total amount owed and the next time you are charged interest, the payment is based on the new total.  This can quickly add up!  The original balance owed will be maintained and your child will pay less over the life of the loan if you or they make the interest payments during school.
  7. Teach them how to budget.  Keep track of spending for a month or a semester and create a budget.  Review the spending and determine what areas can be cut back.  Do they really need the $7 Starbucks coffee or the newest iPhone?  Can they buy used books or eBooks for lower prices?  Have they been flashing their student ID as much as possible to get all the discounts on food, entertainment, and transportation possible?  There are free apps available that can easily keep track of budgeting for you, making it readily accessible at each purchase and keeps you in check or there is always Excel Spreadsheet.

Now hop over to read my 10 $$$ ideas for POCS (Parents of College/college-bound Students)

_____________________________________________

Jenny L. Maxey is the author of Barrister on a Budget:  Investing in Law School…without Breaking the Bank.  Jenny earned a Master’s degree in Public Administration and a J.D., and is licensed to practice law in Ohio.  Although her book is geared toward pre-law and law students, most of the information can be easily applied to any level of higher education.  Barrister on a Budget is available on Amazon.com and Barnes & Noble Nook.  You can find more information and follow her blog on www.jennylmaxey.com.

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.

How college libraries help students graduate

Cliché: Help out.     
POCS Reality: College libraries can help students graduate.

 

You filed your FAFSA, applied for scholarships, and are planning how to pay for college but once you’re in, will you leave with a diploma?

Besides money to pay for college, what major factor helps students graduate? It’s bigger than a breadbox, often taken for granted, and is the campus knowledge keeper. If you answered the college library, you are right and here are 7 reasons why:

1. Free academic resources College libraries store or can obtain information upon request for any topic students are researching. Classics, recently released studies and rare book collections can be viewed for the asking to help students ace their papers and exams. Can’t find want you want? Ask a librarian for help.

2. Study compatible Students seeking a quiet refuge or study group meeting space can often find a comfortable spot in a study carol, comfortable chair or private room. Explore your library for the best spots and policies for reserving rooms.

3. Special events/exhibitions Check your college library’s calendar for art, music, photography and literary collections that are ongoing or upcoming. Speakers, readings, panel discussions, seminars, workshops, performances and special gatherings may be hosted.

4. Bargains Before you shell out big bucks for a book you want to purchase for your home library, browse a book sale.

5. $ search Information about finding and applying for scholarships, internships, jobs and starting your own business can supplement the college Financial Aid or Job Placement Offices’ assistance.

6. Eye candy Inside and outside, libraries can be beautiful structures. Check out the architecture and decor of these 25 most beautiful college libraries and spend some time with yours.

7. Fun Sometimes you just want a break from studying and want to read a good book for fun. Borrow your choice and relax.

POCSmom’s College Prep DIY Insight: It is up to students to take full advantage of college libraries to help them focus on their studies and graduate on time. College libraries are a must see on a collegecation (college visit + family vacay) and ask about the exhibitions/events open to the public.

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.

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!

3 Flavors of FREE College Money

Cliché: A free ride.    
POCS Reality: There are FREE money grants and scholarships to help students pay for college.

 

Did you get FREE money to help pay for college? Money that you don’t have to pay back is the best type of financial aid and there are 3 different flavors:

  1. Plain vanilla grants are free money for college based on financial need. Students demonstrate their need by supplying financial and other information on an application. Grant programs are sponsored by federal and state governments and the colleges. To apply for federal aid, students must fill out a FAFSA. Check with your state higher education agency for its application. Some colleges will use info from the FAFSA to award grants from their own institutional funds, others may require their own supplemental form, and a few hundred also want the CSS Financial Aid PROFILE®.
  2. Cream of the crop scholarships are free money from from the college based on student merit. Students are rewarded for their academic, athletic, artistic, musical or leadership abilities. Colleges may require a special application or just use the admission application to determine awards. Ask your college for program details.
  3. Cool Mint Chip outside scholarships are free money from private sources that students can earn or win. Many are contests that are as varied as their sponsors. For example, there’s a best tweet $1,400 Twitter scholarship (“In 140 characters or less, write a Tweet highlighting how we can use Twitter to improve the world.”), and a $5,000 duct tape scholarship to a prom attending couple “wearing complete prom attire and/or accessories made using duct tape.” Other sponsors include small and large businesses, employers, individuals, high schools, fraternal associations and professional organizations. Outside scholarships require an application and many also want an essay or a project. They may be financial need-based, not consider need at all, or a combo of need and merit.

POCSmom’s College Prep DIY Insight: Watch out for deadlines, follow the application rules, and reapply every year you want money for college. Before accepting, check for strings attached such as maintaining a certain grade point average, playing on the team, or writing a thank you note. You can search online for outside private scholarships but don’t give out your personal numbers (bank account, PINs, Social Security Numbers, credit card numbers). Watch out for scams and don’t pay a fee for free college money.