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Is there a list of colleges that meet 100% of a family’s financial need?

Fortunately, there is! U.S. News does a great job every year in tracking these colleges. According to U.S. News:

“In a 2012 U.S. News survey, 1,164 colleges reported the average percentage of financial need they met for their incoming undergrad students in fall 2011.

64 of those institutions, including both National Universities and National Liberal Arts Colleges, reported meeting 100 percent, on average, of their admitted students’ financial need.

A college that meets full financial need won’t necessarily cover every dollar a family owes, but they will use some form of financial aid to cover the gap between total costs (including tuition, room and board, books, travel, and other expenses) and expected family contribution (EFC).

EFC Can Vary From College To College

The calculation of an EFC can vary by institution, as schools may use their own formulas including indicators such as household income, assets, and family size to help determine what they think a family can reasonably pay for college. Schools can also use the federal EFC, calculated from a student’s Free Application for Federal Student Aid (FAFSA).

Once an institution has determined an EFC, the means they use to fill outstanding financial need can vary. While some schools on the list below may make up the difference with scholarships and grants, others may offer subsidized student loans or work-study opportunities. Still others may use a combination of the former (which students won’t have to pay back) and the latter (which will ultimately cost the student either money or time and effort).

Some institutions, such as Grinnell College, have reported meeting full financial need for years, while others, including the University of Notre Dame, are on the list now after not making the cut last year. Only schools that are defined by U.S. News as National Universities or National Liberal Arts Colleges were considered for this report.


These colleges claimed to have met 100 percent, on average, of the financial need of their admitted full-time undergraduate students in fall 2011:

School name State U.S. News rank & category
Amherst College MA 2, National Liberal Arts Colleges
Amridge University AL RNP*, National Liberal Arts Colleges
Austin College TX 63, National Liberal Arts Colleges
Barnard College NY 28, National Liberal Arts Colleges
Bates College ME 22, National Liberal Arts Colleges
Boston College MA 31, National Universities
Bowdoin College ME 6, National Liberal Arts Colleges
Brown University RI 15, National Universities
Bryn Athyn College of the New Church PA RNP*, National Liberal Arts Colleges
Bryn Mawr College PA 26, National Liberal Arts Colleges
California Institute of Technology CA 10, National Universities
Carleton College MN 8, National Liberal Arts Colleges
Carroll University WI 43, Regional Universities (Midwest)
Claremont McKenna College CA 10, National Liberal Arts Colleges
Colby College ME 18, National Liberal Arts Colleges
Colgate University NY 18, National Liberal Arts Colleges
College of the Holy Cross MA 32, National Liberal Arts Colleges
Columbia University NY 4, National Universities
Concordia College AL RNP*, Regional Colleges (South)
Cornell University NY 15, National Universities
Dartmouth College NH 10, National Universities
Davidson College NC 12, National Liberal Arts Colleges
Duke University NC 8, National Universities
Emory University GA 20, National Universities
Franklin W. Olin College of Engineering MA Unranked
Georgetown University DC 21, National Universities
Gettysburg College PA 46, National Liberal Arts Colleges
Grinnell College IA 22, National Liberal Arts Colleges
Hamilton College NY 16, National Liberal Arts Colleges
Harvard University MA 1, National Universities
Harvey Mudd College CA 12, National Liberal Arts Colleges
Haverford College PA 10, National Liberal Arts Colleges
Macalester College MN 24, National Liberal Arts Colleges
Massachusetts Institute of Technology MA 6, National Universities
Middlebury College VT 4, National Liberal Arts Colleges
Mount Holyoke College MA 32, National Liberal Arts Colleges
Northwestern University IL 12, National Universities
Oberlin College OH 26, National Liberal Arts Colleges
Occidental College CA 39, National Liberal Arts Colleges
Pitzer College CA 43, National Liberal Arts Colleges
Pomona College CA 4, National Liberal Arts Colleges
Princeton University NJ 1, National Universities
Rice University TX 17, National Universities
Scripps College CA 24, National Liberal Arts Colleges
Smith College MA 18, National Liberal Arts Colleges
St. Olaf College MN 55, National Liberal Arts Colleges
Stanford University CA 6, National Universities
Swarthmore College PA 3, National Liberal Arts Colleges
Thomas Aquinas College CA 82, National Liberal Arts Colleges
Trinity College CT 38, National Liberal Arts Colleges
Tufts University MA 28, National Universities
University of Chicago IL 4, National Universities
University of North Carolina—Chapel Hill NC 30, National Universities
University of Notre Dame IN 17, National Universities
University of Pennsylvania PA 8, National Universities
University of Richmond VA 28, National Liberal Arts Colleges
University of Virginia VA 24, National Universities
Vanderbilt University TN 17, National Universities
Vassar College NY 10, National Liberal Arts Colleges
Washington University in St. Louis MO 14, National Universities
Wellesley College MA 6, National Liberal Arts Colleges
Wesleyan University CT 17, National Liberal Arts Colleges
Williams College MA 1, National Liberal Arts Colleges
Yale University CT 3, National Universities

* RNP = Rank Not Published

According to U.S. News, the financial need data above is correct as of Feb. 11, 2013. For complete financial aid data, full rankings, and much more, access the U.S. News College Compass.”


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What happens if my daughter applies Early Decision, gets accepted, and we can’t afford the college due to a lack of financial aid being offered?

It’s very unfortunate (and rare) that families actually back out of an Early Decision (ED) offer, but it does happen. Applying ED is a serious commitment. It is indeed a binding agreement. You’re agreeing that, if accepted, your child WILL attend. And by implication you’re agreeing to accept the financial aid package, if any, forthcoming.

The Common Application instructions for ED state:

“If you are accepted under an Early Decision plan, you must promptly withdraw the applications submitted to other colleges and universities and make no additional applications to any other university in any country. If you are an Early Decision candidate and are seeking financial aid, you need not withdraw other applications until you have received notification about financial aid from the admitting Early Decision institution.”

The Wiggle-Room

Now there IS a bit of wiggle-room in the instructions as indicated by this:

Should a student who applies for financial aid not be offered an award that makes attendance possible, the student may decline the offer of admission and be released from the Early Decision commitment. The institution must notify the applicant of the decision within a reasonable and clearly stated period of time after the Early Decision deadline.

So if you find yourself in this position, you should REQUEST being “released” from your commitment. And by all means get the release notification in writing/email.

How To Avoid This Situation

There are 2 things you can do to avoid back-peddling from an ED commitment:

  1. Most highly-selective (private) colleges have a decent Net Price Calculator online to give you a ballpark idea of the financial aid you can expect. Start here to get a rough idea of what an average financial aid award would look like for your family’s profile.(Beware that not all Net Price Calculators are created equal! Some of the ones used… especially by certain public institutions, it seems… are ridiculously inaccurate, so don’t rely on the Net Price Calculator results in their entirety.)
  2. If you cannot comfortably “write the check” for the total cost of college for an ED application, then you should request an Early Read from the Financial Aid Office. Different schools have different procedures for this activity. The results of this should be reliable and give you a reasonable idea of how affordable the school is for your family.

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I attended a Financial Aid Workshop and they said that 90% of FAFSA forms are filled out incorrectly each year. Is this true?

NO, this is not true. Actually, it’s a gross understatement… to be accurate, it’s a flat-out lie!

This claim is often stated by self-proclaimed College Funding “experts” whose ethics and/or knowledge-base are lacking. Through the years it’s become a trademark of permanent life insurance salesmen who resort to unscrupulous, fear-based selling tactics.

This particular lie often lays the foundation for unsuspecting moms and dads to engage with these “College Funding” impersonators. It most often results with a family mortgaging their home and/or cashing out their investments in order to purchase a universal or whole-life insurance policy.

Next time you hear someone make this claim, ask for their verifiable SOURCE (which does not exist, I guarantee you!)… then politely stand up and leave the room… as quickly as you can.


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I heard that we should move all of our daughter’s money out of her name. Do you agree?

ABSOLUTELY NOT!

You need to FIRST learn your EFC (Expected Family Contribution). If your EFC Due to Parent Income is anywhere near the total Cost of Attendance of the schools your family is considering, then moving assets will NOT improve your daughter’s financial aid situation at all.

While on rare occasions there are effective strategies to restructure children’s assets, consider such action only with extreme caution! Beware of any College Funding “expert” who advises you carte blanche to move money out of your child’s account regardless of your EFC in order to improve financial aid eligibility… and ESPECIALLY if they’re suggesting any kind of permanent life insurance (most often, universal life).


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I’m divorced from my son’s mother. Which one of us should file the FAFSA?

According to federal law, whoever maintains the majority of PHYSICAL custody files the FAFSA. If you share custody 50/50 right down the middle, then whichever parent contributed more to the support of your son files. Don’t make the common mistake that whoever claims the child on their federal income tax return is necessarily the one who files the FAFSA form.


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I heard that you can negotiate any award from a college and probably get more money. True?

We recommend NEVER using the word “negotiate” in the presence of a college Financial Aid Officer. To some it approaches the status of being “offensive”. However, there is a process of requesting additional financial aid, and this is called the APPEAL process. You can appeal in the event of “special circumstances”, which include excessive medical expenses, financial hardship not revealed on financial aid forms, and recent changes in marital status. Under certain conditions and at some colleges, you can submit a “competitive appeal”. But refrain from the use of the word “negotiate” in all cases.


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We were told by a College Funding expert to move most of our liquid assets into an insurance policy in order to get financial aid. Do you agree?

I flat-out disagree with this “strategy”. While there are RARE occasions that this may incrementally help financial aid, most of the time the primary purpose is to line the pockets of the college funding “expert” with a hefty commission. Consult a reputable Financial Advisor before you consider moving significant amounts of money into a permanent life insurance policy. (And you may want to research Dave Ramsey’s perspective on permanent vs term life insurance.)


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Should students take both the SAT and ACT … or just one or the other?

Not all of the experts agree on this one, but our opinion is that… with FEW exceptions… ALL juniors should take BOTH the SAT and ACT tests, at least once. While there are several good “predictive” tests resulting in a recommended choice… SAT or ACT… there’s absolutely no downside to taking them both.

Many students are surprised when they get back their ACT scores and they’re far better than their SAT. In order to accomplish this, however, the student must intentionally plan their SAT/ACT testing SCHEDULE by late in their 1st-semester junior year. Ideally, ALL testing is completed by the June sitting… SAT, ACT, and Subject Tests.


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Home equity affects my son’s financial aid? What’s the calculation?

Home equity is asked about ONLY on the CSS Profile Form, not the FAFSA. But the actual assessment of your home equity can vary dramatically from school to school. There are 3 methodologies used by Profile schools in assessing your home equity.

METHODOLOGY #1: 5% Assessment

The nominal assessment on College Board’s CSS Profile form for home equity is 5%. So if you have $200K of equity, the NOMINAL assessment would result in an additional $10K of EFC. OUCH!

METHODOLOGY #2: Cap The Equity

Many schools are now “capping” the assessment of your home equity as a function of your AGI (Adjusted Gross Income). Common cap multipliers are 1.2 and 1.5. So if, for example, your AGI is $100K and the school is using the 1.2 multiplier, then your home equity would be “capped” at $120K, regardless of how much equity really exists in your home. The EFC assessment due to home equity no higher than 5% of the $120K, or $6K. If your home equity is actually less than the $120K, then the actual equity would be assessed. But if your home equity was greater (even far greater) than $120K, then the capped $120K would be used in the 5% calculation.

METHODOLOGY #3: NO Assessment

This, of course, is everyone’s favorite! But only a few Profile schools are NOT assessing home equity at all. Princeton and Harvard began this policy a number of years ago.

SUMMARY

Needless to say, if your student is applying to a Profile school (or several Profile schools) and you’re hoping to receive some need-based financial aid, you need to understand the schools’ policies regarding home equity EFC assessment. You should contact the Profile schools’ Financial Aid Offices and ask them the direct question, “How do you assess home equity relative to the EFC assessment?”


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I heard about a seminar where some guy’s going to reveal all the “secrets” of getting lots of free money, regardless of how much money you make. Sounds fishy to me.

Beware of the word “secrets” whenever you’re being lured into a Financial Aid seminar/workshop. Far more times than not, “secrets” is a code word for “shady character”.


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FINANCIAL AID

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What’s meant by the term “Profile School”?

Only about 10%-ish of 4-year colleges require the CSS Profile Form in order for them to assess eligibility for need-based financial aid. These colleges are referred to as Profile Schools, or Profile Colleges.

Most colleges use the FAFSA form to calculate a student’s EFC (Expected Family Contribution). This calculation is used to assess eligibility for federal and state financial aid as well as institutional aid (i.e., money from the college’s own endowment funds).

Profile Colleges use the FAFSA for federal and state financial aid eligibility, but they use the CSS Profile Form for institutional aid assessment. The Profile Form is much more comprehensive in its questioning than is the FAFSA. For example, the Profile Form asks about such things as home equity, business assets (regardless of the size of the biz), retirement funds, and younger children’s assets, whereas the FAFSA does not.

Even if your student applies to only one Profile School AND your income and assets make you eligible for need-based financial aid, you should complete the CSS Profile Form.

Click here for a list of all the Profile Schools


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My son will be entering college this fall and all we were awarded was federal loans. Where can we find some of that “free money” we heard so much about?

I’m sorry to be the bearer of bad news, but unless there are some compelling “special circumstances” regarding your family’s finances or some exceptional level of hardship, it’s unlikely that any significant “free money” is available. Forecasting the out-of-pocket costs for colleges before applying is the key to avoiding this common problem. Once a student has accepted the offer for admission, with few exceptions the free money that comes through from the school doesn’t change much from the initial award.


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I heard it’s a waste of time filling out the FAFSA form if you earn more than $100,000. Is that true?

This is such a common misconception and is absolutely… FALSE! Some families earning well beyond $100K qualify for significant need-based financial aid! To be sure, you should learn your EFC (Expected Family Contribution) early… which means well before the FAFSA form is due in January/February of your student’s senior year in high school.

By the way, when families have more than one child in college at the same time, each student’s need-based financial aid eligibility can increase dramatically. It depends on the colleges they’re attending, of course, but having 2 in college causes a split of your total EFC, nearly right down the middle.


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Do you ever have to pay a grant back?

No… by definition a grant is “free money”. It’s also referred to as “gift aid”.

Grants typically refer to need-based free money and are offered primarily by 3 entities:

  • The federal government
  • The state governments
  • Private colleges

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Our daughter recently inherited an IRA from a trust. Will this affect her financial aid eligibility?

EFC is calculated through a number of algorithms, but the 4 basic components that affect EFC are:

  • Parent Income
  • Parent Assets
  • Student Income
  • Student Assets

Your daughter’s inheritance will not fall into the “Student Income” component. However, depending on how the asset is currently structured in her name… this may affect her EFC. If the assets still reside in an IRA, then these are undeclared assets on the FAFSA. However, if they are in a non-retirement fund, then (with few exceptions) they will indeed be declared on the FAFSA and will be assessed at the rate of 20% (even higher, 25%… on the CSS Profile form).

Even if these assets are assessed, the impact on her financial aid may or may not be affected, depending on 2 key parameters:

  • The EFC “sub-calculations” due to the other 3 components (Parent Income/Assets and Student Income).
  • The college(s) under consideration

It’s important to know not only your total EFC but also the sub-calculations of all 4 contributors to your EFC. And it’s equally important to understand the financial aid policies of all the colleges under consideration.


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My daughter will turn 24 next year in February and will be entering college the following September. Will she qualify as an independent student?

I have GREAT news for you… YES, your daughter will indeed be an independent student, and your income as a parent will not be declared on the FAFSA form! If a student turns 24 (or older) ANYtime throughout the year for a given FAFSA form, then they qualify for “Independent Student” status. So, for example, for the 2014-2015 FAFSA form/college year, if the student turns 24 (or older) anytime throughout calendar year 2014, they are independent. Likewise, for the 2015-2016 FAFSA form, if they turn 24 (or older) anytime throughout 2015, they are independent.

And so on, and so on…


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I heard that if we stop claiming our daughter as an exemption on our taxes, she will qualify for more financial aid. Is this true?

NO… this is absolutely not trueand is a common misconception. Until your daughter turns 24 (or gets married or has a baby or enters the military), she is considered a DEPENDENT student in the eyes of the government and the colleges. Sorry to be the bearer of bad news.

From a financial aid perspective, this means that parent income and assets must be declared on the financial aid forms.


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Does EFC equate to affordability?

Families often confuse the meaning of their EFC (Expected Family Contribution) calculation as derived from the FAFSA form. The federal government… as well as the colleges… are NOT saying that your EFC represents what you can comfortably afford/write the check for.

Rather, they’re saying that based on the federal algorithms (properly called the Federal Methodology), it’s what they expect you to pay (minimally), notwithstanding merit scholarships. Realize that they have defined the phrase to be EXPECTED Family Contribution, not AFFORDABLE Family Contribution.

Adding to the confusion of this term (EFC) is the fact that very few colleges limit a family’s out-of-pocket costs to the EFC calculation! We see many cases where a family has an EFC in the $15K-ish range, yet their “Financial Aid Award” package consists of nothing but loans in excess of $30K, even $40K in some instances.


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Why am I expected to pay far more than my “expected” family contribution at my son’s public college?

I don’t know who came up with the term Expected Family Contribution (EFC), but it is indeed extremely misleading! The EFC used by your son’s public college is the calculation resulting from the information you provided on the federal FAFSA form.

Of the roughly 2500 undergraduate colleges in America, there’s currently only 64 that have a policy to limit a family’s out-of-pocket college costs to the EFC. Most families pay more… some, much more… towards college than they are lead to believe based on their EFC.

Expected Family Contribution is a horribly inaccurate phrase at best. Unless your child is attending one of the 64 colleges mentioned above, you should view your EFC as a “gauge” of sorts used by the colleges to assess his/her eligibility for need-based financial aid but not the amount of money you’ll pay for college.

Click here to view the 64 colleges that limit your out-of-pocket costs to your EFC


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Is there a list of colleges that meet 100% of a family’s financial need?

Fortunately, there is! U.S. News does a great job every year in tracking these colleges. According to U.S. News:

“In a 2012 U.S. News survey, 1,164 colleges reported the average percentage of financial need they met for their incoming undergrad students in fall 2011.

64 of those institutions, including both National Universities and National Liberal Arts Colleges, reported meeting 100 percent, on average, of their admitted students’ financial need.

A college that meets full financial need won’t necessarily cover every dollar a family owes, but they will use some form of financial aid to cover the gap between total costs (including tuition, room and board, books, travel, and other expenses) and expected family contribution (EFC).

EFC Can Vary From College To College

The calculation of an EFC can vary by institution, as schools may use their own formulas including indicators such as household income, assets, and family size to help determine what they think a family can reasonably pay for college. Schools can also use the federal EFC, calculated from a student’s Free Application for Federal Student Aid (FAFSA).

Once an institution has determined an EFC, the means they use to fill outstanding financial need can vary. While some schools on the list below may make up the difference with scholarships and grants, others may offer subsidized student loans or work-study opportunities. Still others may use a combination of the former (which students won’t have to pay back) and the latter (which will ultimately cost the student either money or time and effort).

Some institutions, such as Grinnell College, have reported meeting full financial need for years, while others, including the University of Notre Dame, are on the list now after not making the cut last year. Only schools that are defined by U.S. News as National Universities or National Liberal Arts Colleges were considered for this report.


These colleges claimed to have met 100 percent, on average, of the financial need of their admitted full-time undergraduate students in fall 2011:

School name State U.S. News rank & category
Amherst College MA 2, National Liberal Arts Colleges
Amridge University AL RNP*, National Liberal Arts Colleges
Austin College TX 63, National Liberal Arts Colleges
Barnard College NY 28, National Liberal Arts Colleges
Bates College ME 22, National Liberal Arts Colleges
Boston College MA 31, National Universities
Bowdoin College ME 6, National Liberal Arts Colleges
Brown University RI 15, National Universities
Bryn Athyn College of the New Church PA RNP*, National Liberal Arts Colleges
Bryn Mawr College PA 26, National Liberal Arts Colleges
California Institute of Technology CA 10, National Universities
Carleton College MN 8, National Liberal Arts Colleges
Carroll University WI 43, Regional Universities (Midwest)
Claremont McKenna College CA 10, National Liberal Arts Colleges
Colby College ME 18, National Liberal Arts Colleges
Colgate University NY 18, National Liberal Arts Colleges
College of the Holy Cross MA 32, National Liberal Arts Colleges
Columbia University NY 4, National Universities
Concordia College AL RNP*, Regional Colleges (South)
Cornell University NY 15, National Universities
Dartmouth College NH 10, National Universities
Davidson College NC 12, National Liberal Arts Colleges
Duke University NC 8, National Universities
Emory University GA 20, National Universities
Franklin W. Olin College of Engineering MA Unranked
Georgetown University DC 21, National Universities
Gettysburg College PA 46, National Liberal Arts Colleges
Grinnell College IA 22, National Liberal Arts Colleges
Hamilton College NY 16, National Liberal Arts Colleges
Harvard University MA 1, National Universities
Harvey Mudd College CA 12, National Liberal Arts Colleges
Haverford College PA 10, National Liberal Arts Colleges
Macalester College MN 24, National Liberal Arts Colleges
Massachusetts Institute of Technology MA 6, National Universities
Middlebury College VT 4, National Liberal Arts Colleges
Mount Holyoke College MA 32, National Liberal Arts Colleges
Northwestern University IL 12, National Universities
Oberlin College OH 26, National Liberal Arts Colleges
Occidental College CA 39, National Liberal Arts Colleges
Pitzer College CA 43, National Liberal Arts Colleges
Pomona College CA 4, National Liberal Arts Colleges
Princeton University NJ 1, National Universities
Rice University TX 17, National Universities
Scripps College CA 24, National Liberal Arts Colleges
Smith College MA 18, National Liberal Arts Colleges
St. Olaf College MN 55, National Liberal Arts Colleges
Stanford University CA 6, National Universities
Swarthmore College PA 3, National Liberal Arts Colleges
Thomas Aquinas College CA 82, National Liberal Arts Colleges
Trinity College CT 38, National Liberal Arts Colleges
Tufts University MA 28, National Universities
University of Chicago IL 4, National Universities
University of North Carolina—Chapel Hill NC 30, National Universities
University of Notre Dame IN 17, National Universities
University of Pennsylvania PA 8, National Universities
University of Richmond VA 28, National Liberal Arts Colleges
University of Virginia VA 24, National Universities
Vanderbilt University TN 17, National Universities
Vassar College NY 10, National Liberal Arts Colleges
Washington University in St. Louis MO 14, National Universities
Wellesley College MA 6, National Liberal Arts Colleges
Wesleyan University CT 17, National Liberal Arts Colleges
Williams College MA 1, National Liberal Arts Colleges
Yale University CT 3, National Universities

* RNP = Rank Not Published

According to U.S. News, the financial need data above is correct as of Feb. 11, 2013. For complete financial aid data, full rankings, and much more, access the U.S. News College Compass.”


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I heard that a discussion or inquiry of college merit scholarships should be held with the Admissions Office, not Financial Aid. Is this true?

Yes, this is indeed true. The Financial Aid Office of a college handles need-based financial aid, but the Admissions Office administers all merit-based financial aid.


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What’s the Asset Protection Allowance?

The Asset Protection Allowance is a “behind-the-scenes” FAFSA calculation. This varies from family to family and is largely a function of the age of the older parent. It’s approximately $1000 for every year of age of the older parent.

Here’s how it works: Let’s say the older of the two parents is dad… and he’s 50. The Asset Protection Allowance will be in the vicinity of $50K. If the assets claimed on the FAFSA are less than or equal to the Asset Protection Allowance ($50K for our example), then there is no assessment against the family’s assets relative to the EFC (Expected Family Contribution) computation.

Everything above and beyond the Asset Protection Allowance, however, is assessed up to a max of 5.64%. So if the declared assets for this family is $150K (cash, savings, checking, and investments), we subtract the Asset Protection Allowance  ($50K) from our asset declaration ($150K), resulting in a difference of $100K.

This amount ($100K) is assessed at 5.64%, or $5640, and this is the Parent Contribution Due to Assets. The total EFC calculation is the sum of 4 components:

  • Parent Contribution Due to Income
  • Parent Contribution Due to Assets
  • Student Contribution Due to Income
  • Student Contribution Due to Assets

It’s important to know not only your family’s EFC well before your student’s senior year of high school but to also understand how these 4 components contribute to the total calculation.


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Who qualifies for the Cal Grant?

The Cal Grant is for California students attending California colleges. There are 3 criteria in order to be eligible for the Cal Grant:

  • Income less than the income ceiling (which varies as a function of family size)
  • Assets less than the asset ceiling (not counting home equity or retirement accounts)
  • Student GPA of 3.00 (this GPA is a special calculation and is not found on the student’s transcript)

There’s an article on our blog with more details, including the income and asset ceilings.

Click here to read our blog post on the Cal Grant


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Our son is in the process of signing his promissory note for the $5500 unsubsidized Stafford loan. What would you advise as an alternative?

If you live within a reasonable driving distance, have you considered having your son commute? Very few colleges offer room & board for less than $5500. It’s often double this amount or more. This in and of itself would allow you to avoid this student loan.

Another alternative that’s growing immensely in popularity is taking a “gap year”… this would involve your son delaying his college entry as a freshman for a year, providing him a year to work in his area of interest, almost like an internship program.

He should be able to earn well in excess of $5500. This would also give your family an opportunity to save more and possibly even adjust your expenses a bit. We encourage you to do everything you possibly can to avoid student loans.


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I heard that shacking up as opposed to getting married can improve my daughter’s financial aid eligibility because we don’t have to claim my boyfriend’s income. Is that true?

Actually, that did indeed used to be true. However, starting in the 2014-2015 college year, the reference to the student’s parents is changing from the traditional Father and Mother to the new Parent One and Parent Two.

And part of this change includes live-in partner arrangements. Shackin’ up will no longer remain a federally protected status. This means that your boyfriend’s income will now be included, even though you’re living together and not married.


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Does receiving the American Opportunity Tax Credit affect a student’s financial aid eligibility?

The FAFSA form asks if the student or parents receive the American Opportunity Tax Credit. This in and of itself will not disqualify the student from receiving federal or state financial aid.

However, more and more colleges are looking at the tax credit as what they refer to as an outside resource, and depending on the individual colleges’ policies, receiving the tax credit could cause the college to reduce the amount of institutional aid they offer out of their own pockets.


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Is there any impact to my daughter’s financial aid eligibility if I use some of my IRA funds to pay for college?

The withdrawals from IRAs used for qualified higher education expenses may be penalty-free, BUT… the withdrawals can indeed have some adverse financial aid ramifications. IRA withdrawals are considered taxable income and can reduce financial aid eligibility of the student by as much as 47% of the increase in AGI caused by the taxable IRA withdrawal.

This scenario is especially the case for families with low-to-moderate EFC’s (Expected Family Contributions). And this is not applicable for merit-based scholarships. We’re referring only to need-based financial aid.

GetCollegeFunding does not encourage moms and dads to borrow against retirement accounts to pay for college.


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Can a student pursuing a graduate degree be eligible for a federal Pell Grant?

No, federal Pell Grants are available for undergraduate degrees ONLY for those students with an EFC of around $5000 or less.


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Where do I find the CSS Profile Form?

The CSS Profile Form is found on College Board’s website, www.CollegeBoard.com. Unlike the FAFSA form, this form is NOT free. It costs $9 to register and $16 for each college to which you submit the Profile Form.


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Our son has an irrevocable trust and is the designated beneficiary. Does this affect financial aid eligibility?

I’m sorry to be the bearer of bad news on this one, but the account value of the trust must be declared on financial aid forms as a student asset. The FAFSA form assesses this at the rate of 20%, while the CSS Profile form assesses at 25%. This applies even if the trust funds can’t be accessed until after college graduation… let’s say, age 25.

So, as an example, if the trust is valued at $100K, the FAFSA form would assess this asset at $20K, and this would be added to your son’s EFC (Expected Family Contribution), thereby decreasing his need-based financial aid eligibility by $20K. OUCH!

It’s important to note that a handful of colleges… led by Princeton University, one of THE most generous colleges in the nation… assesses student assets at the PARENT asset rate of only 5%. So the same $100K in the above example would have only a $5K impact to financial aid at such a college.


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Where does financial aid enter into planning for zero-debt college?

After you’ve determined what you can pay for college without borrowing, then comes the research. You need to assess your student’s NEED- and MERIT-based financial aid eligibility. I can’t over-emphasize that this is the most difficult part in assessing what your out-of-pocket costs would be for your child’s choice colleges. It’s one of our organization’s specialties.

Colleges’ policies regarding need-based grants and merit-based scholarships vary all over the map. AND it depends on just how desirable your child is at his/her colleges of choice. I encourage you to begin researching BOTH of these elements, and if it gets a bit overwhelming, don’t panic! Rather… call us for help.


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How is FAFSA effected with more than one student in college?

It can be advantageous for some families when more than one child is in college. The EFC (Expected FAMILY Contribution) is divided by the number of kids in college for the given school year, and the resultant EFC is the number used for the individual student’s need-based financial aid eligibility.

Here’s an example: Let’s say that a family’s contribution (EFC) with only one child in college is $40K. But the following year there are two in college. Assuming each child’s income and assets are negligible (and/or similar), each student would have an EFC of about $20K! Remember… the EFC represents the “family” contribution. This makes them EACH eligible for an additional $20K of need-based financial aid!

Depending on the COA (Cost-of-Attendance) of the colleges they’re attending and the colleges’ financial aid policies, the students could receive significantly more free money (grants) due to this.


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I read that college statistics for financial aid are readily available but I don’t understand how to interpret them. Can you help with this?

College Financial Aid Statistics can indeed be confusing, and many families think they understand them only to find out too late they made some bad assumptions. We have College Financial Aid Stats for just about every college in the U.S., and interpreting  these stats and explaining them in an understandable and practical manner is one our specialities.

These stats are important IF you’re a need-based family, meaning your EFC (Expected Family Contribution) is significantly less than the COA (Cost-of-Attendance) of the colleges under consideration. Understanding the stats is paramount to accurately forecasting the amount of need-based financial aid a family should expect… at least on average.

Perhaps the most mis-interpreted financial aid statistic is Average Percent Need Met. Moms and Dads miss one of the most important elements of this stat… that being “AVERAGE”. Here’s an example:

Let’s say a college publishes its Average Percent Need Met statistic as 90%. First of all, this is highly favorable! (We like to see numbers greater than 75%.) 90% Need Met on Average means that for every student whose need is met 100% (and yes, there could indeed be some), correspondingly there is a student whose need has been met only to the tune of 80%.

Hmmm… so how does THAT work, you might ask? Well, the more “desirable” a student is within the incoming freshman applicant pool, the higher the Percent Need Met will tend to be. For a student in the top 5% of the applicant pool (academically) who demonstrated financial need (via their EFC), he/she will likely receive a higher percent need met than a student whose squeezes into the admit pool but was in the lowest 5%.

The exception to this would be the schools that have a stated policy of meeting 100% need for ALL admitted students. These would be schools like Princeton, Stanford, and The Claremont Colleges.


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I’m totally confused on this EFC calculation. Where can I get some help?

There’s a document that explains in detail how EFC (Expected Family Contribution) is calculated every year. If you’d like to study the tables and charts and read all about EFC, here’s a link to the document:

EFC Formula, 2013-2014

If you want some hand-holding on this, we’re experts on EFC. Contact us at GetCollegeFunding and ask for Tom. Whether you dig into this yourself or seek the help of a professional, it’s imperative that you:

  • Know your EFC calculation
  • Understand the 4 sub-calculations that make up your total EFC
  • Understand the significance of your EFC at your student’s colleges of choice

To learn your EFC… go to: www.EFC.guru


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What are “campus-based funds”?

Campus-based funds are funds provided by the federal government to colleges. The distinguishing factor of campus-based funds is this:

The colleges decide… based on their financial aid policies… who gets the money.

There are 3 main campus-based funds:

  1. SEOG grant funds (Supplemental Education Opportunity Grant)
  2. Perkins loan funds (Student loan, always subsidized)
  3. Federal Work-Study (A job, typically on campus)

These campus-based funds are most often available only to students who have demonstrated “need” by filing a FAFSA form, resulting in an EFC substantially below the COA (Cost-of-Attendance) of the college.

In contrast to campus-based funds are the federal “entitlement funds”. The most popular entitlement funds are:

  1. Pell Grant
  2. Subsidized Stafford Loan
  3. Unsubsidized Stafford Loan

Entitlement funds are not based on individual college policies but simply meeting the requirements set forth by the federal government. Based on the information provided on the FAFSA form, entitlement funds are automatically provided by the Department of Education to the college on behalf of the student.


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Is there an EFC threshold for private colleges costing less than the publics?

GREAT question! There’s not an actual hard threshold per se, but since California is our home base, I’ll provide an analysis for this locale that should provide some insight as to how this works.

I tell CA families all the time that if their EFC is less than “$25K-ish” (this is a soft number), then they should seriously consider private colleges as an option, especially if their student has a solid academic achievement. Here’s why:

Let’s say a CA family has a $25K EFC (per the FAFSA). This family would likely have an income somewhere in the vicinity of $125K or so. With few exceptions, they will receive NO free money from a public college in CA… either at a Cal State or a UC campus. This means they’re writing a check for somewhere between $20K and $36K, totally out-of-pocket.

If their student attended any number of private colleges (in or out of CA) their need would be, let’s say, $55K – $25K = $30K. So the student is eligible for up to $30K of need-based financial aid. Couple this with even a modest merit-based scholarship, and this family could realize out-of-pocket costs lower than their EFC of $25K.

And remember… the likelihood of the student graduating from a private college in 4 years is high. From a public college in CA? Extremely unlikely to accomplish this! We see this scenario play out frequently! The end result is that many families can spend less money sending their student to a high-dollar private college for less money out-of-pocket than a public institution.

(Results will vary of course from state-to-state and from student-to-student.)


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Are student assets assessed the same as parent assets?

No, they are not. Student assets are assessed at a much higher rate than parents assets.

For the FAFSA form, student assets are assessed at the rate of 20% (versus the max rate of 5.64% for Parent Assets). And for the CSS Profile form, student assets are assessed at the rate of 25% (OUCH!). This is in comparison to the max rate of 5.00% for Parent Assets.


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How heavily are parent assets assessed in the EFC calculation?

For the FAFSA form (which utilizes the Federal Methodology, or FM) assets are assessed at a maximum rate of 5.64%. This is after the Asset Protection Allowance has been deducted from your total assets declared on the FAFSA. (The Asset Protection Allowance is a whole topic in and of itself.)

For the CSS Profile form (which utilizes the Instituional Methodology, or IM) assets are assessed at a maximum rate of 5.00% (after an allowance as well).


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How is EFC calculated?

The simplified answer is this:

There are 4 sub-computations that, when added together, comprise your student’s EFC (Expected Family Contribution). The 4 computations are:

  1. Parent Contribution Due to Income
  2. Parent Contribution Due to Assets
  3. Student Contribution Due to Income
  4. Student Contribution Due to Assets

Click here to use our FREE EFC Calculator

About half of all the financial aid awarded each year is determined by the EFC calculation. It’s REALLY important to know not only your EFC but also understand its “breakout”… the 4 sub-computations mentioned above.


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How many types of financial aid forms are there? I’ve only heard of the FAFSA.

Financial Aid Forms fall into 3 categories:

The individual college websites will indicate which of these is necessary. Some colleges require only the FAFSA, while others require the FAFSA and the Profile, and yet others, all 3.

These forms are necessary ONLY if you qualify for need-based financial aid. They are not necessary for merit-based scholarships. Many parents are told that everyone needs to complete the FAFSA form, and this is simply incorrect… IF their EFC is higher than the Cost-of-Attendance of all the colleges being applied to.

For many public colleges, the only “financial aid” offered some families is in the form of loans… the student Stafford loan and the parent PLUS loan. GetCollegeFunding strongly advises AGAINST these loans.


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What’s the purpose of filing financial aid forms?

This is actually a really good question. Families think all kinds of erroneous things regarding the actual PURPOSE of filling out and submitting the FAFSA form as well as the CSS Profile form for those schools that “require” it.

The sole purpose of these forms is to create an EFC (Expected Family Contribution) calculation. This number is then used by colleges (and the government) to assess eligible “need” and ultimately need-based financial aid awards.


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How much do you pay for college if your EFC is higher than the total cost of the college?

When EFC (Expected Family Contribution) is greater than the total COA (Cost-Of-Attendance) of the college, then your out-of-pocket costs are limited to the COA. The EFC computation in this case is nothing more than a “gauge”… indicating that you will not receive a dime of need-based money.


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Who gets all the merit scholarship money?

There’s no “one-size-fits-all” answer to this question, but fundamentally, the lion’s share of merit-based scholarships offered by colleges go to the top 25%-ish students, based on any number of parameters, but primarily academics and talent.


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How much can a student expect to receive for a work-study?

The Average… about $2000

Work-study programs tend to vary between $1000 on the low end and $4000 on the high end… with $2000-ish being the most common award value.

They’re Considered Financial Aid?

It’s a bit goofy (in our opinion) that work-study programs are categorized “financial aid”, but they are. I suppose the case could be made that since work studies are typically subsidized by the federal government… this would dictate that they fall into the “financial aid” category.

But let’s face it… a work-study is a job. The student works (for a modest/low wage) and receives a pay check (or in some cases a credit applied to their college account). Outside the walls of higher education, we call this… a JOB.

No Guarantees

It’s important to note that federal work-study programs fall into the campus-based funds arena, meaning they are funded by the government but awarded by the college/campus. These are NOT entitlements. The school decides who receives them and who does not.

Work studies are ONLY awarded to students who have demonstrated “need” by submitting the FAFSA form… with the resultant EFC Calculation being sufficiently lower than the college’s total costs. And because work studies aren’t entitlements, funds DO run out. Just because a work-study is offered on an official Financial Aid Award letter… does NOT guarantee a job will be available. This is a case of “first come, first served”.

What If Your Child Doesn’t Receive One?

Don’t worry if your child doesn’t receive a work-study program offer as part of their Financial Aid Award. In most cases there are plenty of jobs available on (and off) campus for the ambitious/enterprising college student. And in some cases, they may actually earn more money than the federal government is willing to pay through a work-study!


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Is it true that there’s lots of financial aid for every student?

No, this is NOT accurate. Financial aid varies dramatically from student to student, as well as from college to college. An understanding of the “system” is mandatory in order to forecast with any level of accuracy “who gets what”. Every family should understand student’s need-based eligibility as a function of their EFC (Expected Family Contribution) computation as well as merit-based eligibility as a function of student achievement.

Eligibility varies from college to college for the same student and from student to student for the same college! Therein lies the confusion facing families and the requirement to research and understand the policies of each college under consideration.

The government (and many colleges) have successfully convinced families that Student Loans and Parent Loans should somehow be considered “financial aid”.

This is ludicrous and a misrepresentation in our opinion! Beware when colleges (and Uncle Sam) tell you there’s PLENTY of financial aid for every student. What they’re OFTEN referring to is loans. Always reply with the clarifying question, “How much of the ‘financial aid’ you’re referring to is FREE money?” More and more parents (and students) are agreeing with us and rejecting the notion that loans should be considered as financial aid.


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Our son is just now preparing to enter college at the age of 25. Does our income as parents need to be declared?

No it does NOT. When a student is 24 years of age, they are declared an “independent student”. Only their income appears on the FAFSA and/or CSS Profile form. Mom and Dad… you’re in the clear!


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What’s the “base year”?

This is a financial aid term that applies to both the FAFSA and CSS Profile forms. The base year is the year whose income must be declared on these financial aid forms. It’s the calendar/tax year BEFORE the student enters college as a freshman. So if you have a student who will enter college in the fall of 2016, your base year is calendar/tax year 2015.


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What does FAFSA stand for?

FAFSA stands for Free Application for Federal Student Aid. This term is a little confusing, however, because it’s used for MORE than “federal student aid”. States use the data provided on this form for state grant programs and most colleges (around 90%) use it in awarding their institutional need-based aid as well.

You can find the FAFSA form online at www.fafsa.gov. The new form comes out every January 1st. There’s always TWO years of FAFSA forms available… one for the current college year, and one for the previous year. Be sure you fill out the correct one. (This is the source of a common error.) As an example, if your student is attending college for the 2014-2015 schools year, be sure NOT to fill out the 2013-2014.

If you need help with completing your FAFSA, contact us! It’s one of our many specialties…


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Do we include our small business assets on the FAFSA?

Only if your business employs more than 100. Many families erroneously include small biz assets on their FAFSA, increasing needlessly their EFC (Expected Family Contribution) and often preventing them from receiving what would have been a generous need-based financial aid award.


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Our son’s grandmother has a 529 plan with our son as the designated beneficiary. Where do we claim this asset on the FAFSA?

You DON’T! This is neither a parent or a student asset. Since Grandma owns the 529, its her asset. If she were for any reason to change the beneficiary at any time (which she has the legal authority to do), it wouldn’t be fair for this asset to affect your son’s financial aid.

Grandma or Grandpa owning a 529 Plan is an excellent means of saving and paying for college! And the asset doesn’t impact the FAFSA form… SWEET!


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My daughter lives with me but my ex-husband claims her on his income tax return. Which parent files the FAFSA?

In this case, you’re the parent who provides YOUR financial information (income & assets) and signs the FAFSA. Whichever parent has the primary/majority PHYSICAL custody should fill out the FAFSA. It’s a common error to assume that whichever parent claims the child as an exemption should file, but this is entirely incorrect.


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I don’t want my son to sign up for Selective Service. Is this a problem for getting financial aid?

It certainly is. I assume what generated this question was that you saw this on the FAFSA form. If a young man turns 18 and has NOT signed up for Selective Service, federal student aid is withheld.


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Is there any reason to fill out the FAFSA if we know our EFC is too high to qualify for any grants?

If you’ve used the Department of Ed’s FAFSA4caster or our free online EFC Calculator or some other tool such that you KNOW beyond any uncertainty that your EFC is higher than the Cost of Attendance of the colleges under consideration, then there’s only one reason you would even consider filling out and submitting the FAFSA form.

That reason would be that you want to receive federal loans… specifically, the student Stafford loan and/or the parent PLUS loan. Personally, we advise against both. We’ve seen far too many heartbreaking situations from families all across the country that regret ever signing up for these things. (One of our corporate tenets here at GetCollegeFunding is “Debt-FREE College”.)

Even with the Congressional passage of HR-911, the “Bipartisan Student Loan Certainty Act of 2013”, in the summer of 2013, the potential interest rates you could be faced with (based on the caps) are ridiculous. The interest rates are adjusted annually, based on the 10-year Treasury Note… and the interest caps are as follow:

  • 8.25% for undergraduate student Stafford loans
  • 9.50% for graduate student Stafford loans
  • 10.5% for parent PLUS loans and Grad PLUS loans

(These rates are higher than the rates students and parents were so upset about BEFORE the passage of HR-911!)

If, however, you want either or both of these loans, although your EFC precludes your student from receiving any free need-based grants or federal work-study, the FAFSA must be filed in order to receive the loans.


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Our EFC is $15K and UCLA costs about $34K. Why did we receive nothing but loans?

In California, unless you receive a Cal Grant, it’s rare to get any “free money”. The student Stafford loan and the parent PLUS loan is the most common “Financial Aid Award” from CSU and Univ of CA.


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I keep hearing that private universities that cost 2 to 3 times as much as public colleges are somehow more affordable. How does that work?

Unless you qualify for federal and/or state funds, most families receive little to nothing from public colleges. Many private colleges, on the other hand, offer need-based financial aid resulting from your EFC calculation. Private schools offer much more merit scholarships as well.


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Is it true that if we emancipate our son before he leaves for college that he’ll get a lot of grants from the government?

A common MIS-conception is that this is easy AND effective. In reality, it’s NOT a strategy that results in more financial aid to the student. The government and the colleges consider a student to be “dependent” until they’re 24 years of age. As such, parent income and assets must be declared on the FAFSA and CSS Profile Forms.

And a quick side-note: It’s also a mis-conception that a college student claiming themselves as an exemption on their income tax return automatically classifies them as an independent student, thereby exempting mom and dad’s income and assets from the financial aid forms. This is not the case.


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I heard that you can negotiate any award from a college and probably get more money. True?

We recommend NEVER using the word “negotiate” in the presence of a college Financial Aid Officer. To some it approaches the status of being “offensive”. However, there is a process of requesting additional financial aid, and this is called the APPEAL process. You can appeal in the event of “special circumstances”, which include excessive medical expenses, financial hardship not revealed on financial aid forms, and recent changes in marital status. Under certain conditions and at some colleges, you can submit a “competitive appeal”. But refrain from the use of the word “negotiate” in all cases.


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We were told by a College Funding expert to move most of our liquid assets into an insurance policy in order to get financial aid. Do you agree?

I flat-out disagree with this “strategy”. While there are RARE occasions that this may incrementally help financial aid, most of the time the primary purpose is to line the pockets of the college funding “expert” with a hefty commission. Consult a reputable Financial Advisor before you consider moving significant amounts of money into a permanent life insurance policy. (And you may want to research Dave Ramsey’s perspective on permanent vs term life insurance.)


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Is it true that increasing 401(k) contributions will increase our financial aid?

Nope, this will NOT increase your financial aid one penny. This is one of the most common mistakes we see families make year-to-year. While it’s true that 401(k) contributions will decrease your AGI and therefore your EFC (Expected Family Contribution), any contributions to qualified retirement plans… 401(k), 403(b), even IRA’s… are added back on the financial aid forms, so it’s a “net-zero” effect. This often results in less cash liquidity for mom and dad when the college bill comes.


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I didn’t think retirement funds were used in assessing financial aid eligibility, but now I see that the Profile form asks about all of our retirement. How does that work?

Many parents are surprised when they see the inquiry as to their retirement funds on the CSS Profile Form, especially when they were told at Financial Aid Night that retirement funds are NOT declared. Most financial aid nights focus on one thing… the FAFSA form. While it’s true the FAFSA doesn’t ask about retirement funds, the CSS Profile Form DOES… and in detail! Now… the EFC (Expected Family Contribution) does NOT have an assessment against these retirement funds, but the Profile schools want to have an accurate picture of your entire financial “profile”.

I’m always surprised when families get upset with colleges using the Profile form, because they find it so “invasive”. Say WHAT? They’re asking the college for FREE money. All the Profile schools are trying to accomplish is to assess the family’s TRUE financial need. After all, it’s the college’s own money they’re awarding, based on an assessment of need. While many wealthy families receive federal aid due to the “weak” questioning on the FAFSA form… NOT so on the CSS Profile Form.


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Why are loans considered financial aid?

What a FABULOUS question! Many moms and dads are shocked when they learn this. Some colleges boast at “meeting 100% need”, with the financial aid “award” being nothin’ more than a big old “debt award”!

There’s 2 basic categories of student loans: subsidized and UN-subsidized. There’s somewhat of a case to be made… weak as it may be… that the subsidized loans are financial aid, because these loans are interest-free to the student as long as the student is enrolled at least half-time in a college. The fact that “someone else” (typically the government/tax-payers) is paying the interest lends itself to categorizing this type of loan as financial aid. BUT… it’s still a loan that must be paid back after graduation, and with some level of interest.

Now for the 2nd category of loans… unsubsidized. While the government and many colleges consider these too to be “financial aid”, I just cannot agree. Granted… the payments are deferred ’til after graduation, BUT these loans begin accruing interest the day the funds are disbursed to the college. And the federal Stafford loan (the most common/de facto standard) could creep up to the capped interest rate of 8.25%!

GetCollegeFunding strongly advises against these loans.


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What assets DON’T have to be declared on the FAFSA?

There are only a few assets that are NOT to be declared on the FAFSA form. They are:

  • Home Equity… this means your residence. Any rental property or 2nd-home equity must be declared.
  • Retirement Funds… this includes 401(k), 403(b), IRA’s (all types), and non-qualified annuity funds (all types)
  • Business Assets… if your business has 100 or fewer employees, your biz assets are NOT to be declared. Greater than 100, you must declare them.

Your net worth (according to the FAFSA form) for financial aid considerations is determined by 2 lines on the FAFSA:

  • Cash, savings, checking
  • Investments (stocks, bonds, mutual funds, 529 plans, etc.)

Because home equity, retirement funds, and business assets are NOT declared on the FAFSA form, it’s not uncommon for high net-worth, NON-W-2 wage-earning families to qualify for federal funds, including the Pell Grant and subsidized Stafford loans (your tax dollars at work, hmmm…)

(NOTE: The CSS Profile Form is much better at determining true, legitimate “need”, resulting in some families avoiding colleges altogether that use it and limiting their kids’ applications to FAFSA schools only.)


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I thought I was told that home equity doesn’t count for financial aid. Why is it asked for on the Profile form?

You’ll often hear this at “Financial Aid Night” at your local high school. Most Financial Aid Nights are discussing ONLY the federal FAFSA form… and it’s true that home equity is NOT to be declared on the FAFSA form. But that is NOT the case for schools requiring the CSS Profile Form. They ask 4 questions regarding your primary residential home:

  • Year your purchased your home
  • Purchase price
  • Current market value
  • Current debt on your home

Different Profile schools assess your home equity in different manners. It’s important that you understand HOW your student’s profile schools of interest assess home equity. This is an excellent question for the Financial Aid Office.


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Home equity affects my son’s financial aid? What’s the calculation?

Home equity is asked about ONLY on the CSS Profile Form, not the FAFSA. But the actual assessment of your home equity can vary dramatically from school to school. There are 3 methodologies used by Profile schools in assessing your home equity.

METHODOLOGY #1: 5% Assessment

The nominal assessment on College Board’s CSS Profile form for home equity is 5%. So if you have $200K of equity, the NOMINAL assessment would result in an additional $10K of EFC. OUCH!

METHODOLOGY #2: Cap The Equity

Many schools are now “capping” the assessment of your home equity as a function of your AGI (Adjusted Gross Income). Common cap multipliers are 1.2 and 1.5. So if, for example, your AGI is $100K and the school is using the 1.2 multiplier, then your home equity would be “capped” at $120K, regardless of how much equity really exists in your home. The EFC assessment due to home equity no higher than 5% of the $120K, or $6K. If your home equity is actually less than the $120K, then the actual equity would be assessed. But if your home equity was greater (even far greater) than $120K, then the capped $120K would be used in the 5% calculation.

METHODOLOGY #3: NO Assessment

This, of course, is everyone’s favorite! But only a few Profile schools are NOT assessing home equity at all. Princeton and Harvard began this policy a number of years ago.

SUMMARY

Needless to say, if your student is applying to a Profile school (or several Profile schools) and you’re hoping to receive some need-based financial aid, you need to understand the schools’ policies regarding home equity EFC assessment. You should contact the Profile schools’ Financial Aid Offices and ask them the direct question, “How do you assess home equity relative to the EFC assessment?”


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I heard that my neighbor’s kid received a full-ride from Princeton for football. I didn’t think this was possible at an Ivy League school.

Hmmm, no disrespect to your neighbor, but this is impossible. The 8 Ivy League colleges agreed many years ago to not offer ANY… and they do mean ANY… merit-based scholarships of ANY kind. We hear this same thing occasionally as well… regarding Princeton, Yale, Harvard, etc. The reality is that any free money your neighbor’s son received was based solely on financial NEED… guaranteed.

Princeton, by the way, is one of THE most generous colleges in the nation. They have an internal policy of guaranteeing 100% of a family’s need… by way of a work-study program (typically, $2000 to $2500) and the rest a Princeton Grant! Princeton was the first college to implement a “No-Loan Policy”, meaning that NONE of the financial need would be met through loans.


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I heard that billions of dollars of financial aid aren’t awarded because it’s not applied for. True?

Nope, FALSE! This is one of the many ploys that unscrupulous College Funding “experts” throw out at every seminar/workshop they conduct. They want you to think that if you hire them, you’ll get your fair share of these BILLIONS of dollars. Run the other way!


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I heard that there’s ways for families to send their kids to an expensive school for less money than it would cost for a J.C. Is this legit?

Nope, not legit, sorry. Now it’s true that I could define a family profile… academically for the student, financially for mom and dad… whereby this claim would indeed be valid. But it’s for an infinitesimal segment of the population. Unscrupulous College Funding “experts” make this claim all the time! I’ve seen it in our own local newspaper in print. They would lead you to believe that this applies to EVERYone… just attend their seminar and learn the “secrets”. My advice? RUN the other way.


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I heard that no matter how much money you make, there’s plenty of financial aid for everybody. How do we get some of this free money?

This is another claim that is mythical at best. For extremely wealthy families, NO college in America will offer a dime of need-based money. Couple that with a complete under-achiever, and there are no “merit”-based scholarships either. Free money is NOT available for everyone. There are many “moving parts”, and for the combination of HIGH net-worth and LOW achievement, the likelihood is minimal to non-existent.


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I heard that we should move all the money out of our son’s account before his base year. Is that necessary?

Ah yes, the ol’ “You’ve got to move that money in order to get financial aid” line. While I can’t say this isn’t beneficial to a LIMITED number of families, this is by no means a directive that should be followed by everyone.

Before you even consider restructuring your family’s assets (parent or student), you must learn your EFC (Expected Family Contribution). Then, drilling down a little deeper, you must learn how much of your EFC is due to Parent Income. We have free software that calculates your EFC. You can access it by clicking here.

Beware of any college funding “expert” who recommends “repositioning” assets into a permanent life insurance policy. These folks tend to LOVE universal life insurance. It’s no coincidence that selling such policies produces large… and I do mean, LARGE… commissions for these “experts”. While the service fee for their “college planning” or “college funding” program may be as low as $995, they’re often collecting $10,000 to $20,000 (or more) in commissions(Surprised?)

If your EFC Due to Parent Income is anywhere close to the cost of the colleges your son/daughter is considering, there’s no need to even think about “moving money” ANYWHERE as a strategy to get more free money.

Here’s an excellent article by Kim Clark, writing for CNN Money. There are FINALLY people going to prison for their shady “College Planning” practices… it’s about time!


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I heard about a seminar where some guy’s going to reveal all the “secrets” of getting lots of free money, regardless of how much money you make. Sounds fishy to me.

Beware of the word “secrets” whenever you’re being lured into a Financial Aid seminar/workshop. Far more times than not, “secrets” is a code word for “shady character”.


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What about athletic scholarships?

Athletic scholarships are highly misunderstood… and over-rated in many cases. First of all, only a small number of exceptionally talented high school athletes have even a CHANCE of being recruited into a Division 1 college. And for those fortunate ones who are, the vast majority will find only a partial scholarship being offered them. Most often it doesn’t come even close to paying for tuition… not to mention room & board, books, and living expenses.

Another important point unknown to many is that in the event of injury that prevents the student from performing, the athletic scholarship is taken away. It is NOT a 4-year guarantee, unlike merit scholarships based on continued academic achievement. Many families are disappointed when they learn of the limited funds their student athlete will receive… after a tremendous investment of time, money, energy, and loyalty.


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THE FAFSA FORM

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What’s meant by the term “Profile School”?

Only about 10%-ish of 4-year colleges require the CSS Profile Form in order for them to assess eligibility for need-based financial aid. These colleges are referred to as Profile Schools, or Profile Colleges.

Most colleges use the FAFSA form to calculate a student’s EFC (Expected Family Contribution). This calculation is used to assess eligibility for federal and state financial aid as well as institutional aid (i.e., money from the college’s own endowment funds).

Profile Colleges use the FAFSA for federal and state financial aid eligibility, but they use the CSS Profile Form for institutional aid assessment. The Profile Form is much more comprehensive in its questioning than is the FAFSA. For example, the Profile Form asks about such things as home equity, business assets (regardless of the size of the biz), retirement funds, and younger children’s assets, whereas the FAFSA does not.

Even if your student applies to only one Profile School AND your income and assets make you eligible for need-based financial aid, you should complete the CSS Profile Form.

Click here for a list of all the Profile Schools


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How is deferred compensation treated on the FAFSA form?

There are different types of deferred compensation (deferred comp) income.  In order for the income to be non-taxable (at this time) AND not declared on the FAFSA form, a non-qualified deferred compensation agreement must be in place and the deferment must be subject to what is called FORFEITURE. What this means is that the deferment of income must be put at risk of loss and the future payments must be in the form of a promise to pay at some point in the future. The wage-earner does not have ANY ownership of the funds or control over the future payments.

The risks of this type of arrangement are obvious. The paying/owing party could go bankrupt… or not live up to the agreement… and may not be able to pay as promised. But this is the arrangement that MUST be in place in order for NON-declaration on the FAFSA form of the deferred comp. If the wage-earner has control or ownership of the funds, the income… deferred as it may be… must be declared on the FAFSA.


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I heard it’s a waste of time filling out the FAFSA form if you earn more than $100,000. Is that true?

This is such a common misconception and is absolutely… FALSE! Some families earning well beyond $100K qualify for significant need-based financial aid! To be sure, you should learn your EFC (Expected Family Contribution) early… which means well before the FAFSA form is due in January/February of your student’s senior year in high school.

By the way, when families have more than one child in college at the same time, each student’s need-based financial aid eligibility can increase dramatically. It depends on the colleges they’re attending, of course, but having 2 in college causes a split of your total EFC, nearly right down the middle.


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What’s the Asset Protection Allowance for the student?

Unfortunately, it’s ZERO (dollars). The FAFSA form calculates the Asset Protection Allowance for the parents, and it amounts to approximately $1000 for every year of age of the older parent.

So parents are offered effectively an exclusion of sorts. As an example, for a married couple with the older parent being 50 years old, the first $50K-ish of their assets are not assessed in the EFC calculation.

For students, since there is effectively a $0 Asset Protection Allowance, every dollar in their name is assessed. For FAFSA schools, the assessment is 20% of the total asset value and for Profile schools, it’s 25%… OUCH! Again, with NO exclusion.


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My daughter will turn 24 next year in February and will be entering college the following September. Will she qualify as an independent student?

I have GREAT news for you… YES, your daughter will indeed be an independent student, and your income as a parent will not be declared on the FAFSA form! If a student turns 24 (or older) ANYtime throughout the year for a given FAFSA form, then they qualify for “Independent Student” status. So, for example, for the 2014-2015 FAFSA form/college year, if the student turns 24 (or older) anytime throughout calendar year 2014, they are independent. Likewise, for the 2015-2016 FAFSA form, if they turn 24 (or older) anytime throughout 2015, they are independent.

And so on, and so on…


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Does existing student loan debt impact future EFC calculations for families?

There’s nowhere on the FAFSA or CSS Profile forms to enter any type of “deduction” for student (or parent) loan debt. However, depending on the specifics, some families are able to take advantage of tax credits and deductions.

Tax credits, of course, reduce tax liability and translate dollar-for-dollar to more cash flow for college. Also, there’s a “Student Loan Interest Deduction” on the 1040 Form. Since this is positioned “above the line”, any such qualified deduction reduces Adjusted Gross Income (AGI), resulting in a reduced EFC.

If you’ve taken out higher education loans and have future FAFSA filings, you should plan on discussing this important topic with your tax professional.


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Does EFC equate to affordability?

Families often confuse the meaning of their EFC (Expected Family Contribution) calculation as derived from the FAFSA form. The federal government… as well as the colleges… are NOT saying that your EFC represents what you can comfortably afford/write the check for.

Rather, they’re saying that based on the federal algorithms (properly called the Federal Methodology), it’s what they expect you to pay (minimally), notwithstanding merit scholarships. Realize that they have defined the phrase to be EXPECTED Family Contribution, not AFFORDABLE Family Contribution.

Adding to the confusion of this term (EFC) is the fact that very few colleges limit a family’s out-of-pocket costs to the EFC calculation! We see many cases where a family has an EFC in the $15K-ish range, yet their “Financial Aid Award” package consists of nothing but loans in excess of $30K, even $40K in some instances.


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Why am I expected to pay far more than my “expected” family contribution at my son’s public college?

I don’t know who came up with the term Expected Family Contribution (EFC), but it is indeed extremely misleading! The EFC used by your son’s public college is the calculation resulting from the information you provided on the federal FAFSA form.

Of the roughly 2500 undergraduate colleges in America, there’s currently only 64 that have a policy to limit a family’s out-of-pocket college costs to the EFC. Most families pay more… some, much more… towards college than they are lead to believe based on their EFC.

Expected Family Contribution is a horribly inaccurate phrase at best. Unless your child is attending one of the 64 colleges mentioned above, you should view your EFC as a “gauge” of sorts used by the colleges to assess his/her eligibility for need-based financial aid but not the amount of money you’ll pay for college.

Click here to view the 64 colleges that limit your out-of-pocket costs to your EFC


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What’s the Asset Protection Allowance?

The Asset Protection Allowance is a “behind-the-scenes” FAFSA calculation. This varies from family to family and is largely a function of the age of the older parent. It’s approximately $1000 for every year of age of the older parent.

Here’s how it works: Let’s say the older of the two parents is dad… and he’s 50. The Asset Protection Allowance will be in the vicinity of $50K. If the assets claimed on the FAFSA are less than or equal to the Asset Protection Allowance ($50K for our example), then there is no assessment against the family’s assets relative to the EFC (Expected Family Contribution) computation.

Everything above and beyond the Asset Protection Allowance, however, is assessed up to a max of 5.64%. So if the declared assets for this family is $150K (cash, savings, checking, and investments), we subtract the Asset Protection Allowance  ($50K) from our asset declaration ($150K), resulting in a difference of $100K.

This amount ($100K) is assessed at 5.64%, or $5640, and this is the Parent Contribution Due to Assets. The total EFC calculation is the sum of 4 components:

  • Parent Contribution Due to Income
  • Parent Contribution Due to Assets
  • Student Contribution Due to Income
  • Student Contribution Due to Assets

It’s important to know not only your family’s EFC well before your student’s senior year of high school but to also understand how these 4 components contribute to the total calculation.


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If a family’s EFC exceeds the total cost of all the colleges the student is considering, is there any reason to fill out the FAFSA?

I need to ask a question in order to answer this… and here’s the question:

Do you plan on taking out ANY federal loans to help pay for college, including the student Stafford loan or the parent PLUS loan?

If the answer to this question about loans is a hardy “NO” (and we hope this is the case!),
then there is NO reason to fill out the FAFSA or the CSS Profile form. And let me clarify that a family must know with no uncertainty that their EFC is indeed higher than the COA (Cost-of-Attendance) of all the colleges under consideration.

If the answer to the question about loans is “YES” (and again, we hope this is NOT the case!),
then YES, the FAFSA form must be completed and submitted to the Department of Education.

In either case there will be no need-based financial aid offered by the federal or state governments or any of the colleges. Any free money will come exclusively from merit-based achievement.


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How soon can we see the 2016-2017 FAFSA?

The 2016-2017 FAFSA form will be released January 1st, 2016 at www.fafsa.gov. Contrary to popular belief, it is NOT necessary to submit it within the first few days of its release in order to receive the most financial aid.


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I heard that you can hide money in an annuity right up to the moment of submitting the FAFSA. Is this true?

Hmm, first of all I don’t like the term (or concept of) “hiding money”. Now on the other hand, I embrace the concept of intentionally and strategically strategizing for Financial Aid… every bit as well as for income tax.

You should never restructure your assets for the sole purpose of “looking poor”. If restructuring into an annuity is encouraged by your Financial Adviser and ultimately improves your family’s financial profile AND results in lowering your EFC a bit… then that’s GREAT! But it should never be the sole motivator.

On another note, NEVER let a college funding “expert” convince you to move money into a permanent life insurance policy in order to qualify for financial aid… NEVER! This practice has been going on for years and most of the time, the real motive is to line the pockets of the sales guy with a substantial commission.

What They DIDN’T Tell You…

Here’s an important point that those hungry to reposition your assets will likely NOT tell you: If the repositioning occurs well into the base year or even into January/February of your child’s senior year (when the FAFSA is due), all of the interest earned from the asset will be exposed on your income tax return as well as the FAFSA.

Even the most junior Financial Aid Officers are trained to look for the anomaly of “Interest Earned vs. Non-Declared Assets”. It’s a red flag and is seldom missed by most college Financial Aid Officers.

For legitimate annuities set up well before your student’s base year even begins, this will NOT be an issue and could very well be a bona fide financial planning strategy endorsed by your Financial Advisor.

When someone is encouraging you to move money into an annuity… and ESPECIALLY a permanent life insurance policy… BE CAREFUL! Always run this by a true College Funding/Financial Aid professional to assure your best interests are at heart.


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When I Google “FAFSA” all kinds of websites come up. Where do I find the actual FAFSA form?

The online FAFSA form resides at www.fafsa.gov. You’ll see 2 years-worth of FAFSA forms on the site… the form for this year’s college term and another for last year’s. So, for example, if someone goes to the website in the year 2015, there will be the 2015-2016 FAFSA as well as the 2014-2015 FAFSA. It’s a common mistake to start “early” and complete the wrong form.


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Our son has an irrevocable trust and is the designated beneficiary. Does this affect financial aid eligibility?

I’m sorry to be the bearer of bad news on this one, but the account value of the trust must be declared on financial aid forms as a student asset. The FAFSA form assesses this at the rate of 20%, while the CSS Profile form assesses at 25%. This applies even if the trust funds can’t be accessed until after college graduation… let’s say, age 25.

So, as an example, if the trust is valued at $100K, the FAFSA form would assess this asset at $20K, and this would be added to your son’s EFC (Expected Family Contribution), thereby decreasing his need-based financial aid eligibility by $20K. OUCH!

It’s important to note that a handful of colleges… led by Princeton University, one of THE most generous colleges in the nation… assesses student assets at the PARENT asset rate of only 5%. So the same $100K in the above example would have only a $5K impact to financial aid at such a college.


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How is FAFSA effected with more than one student in college?

It can be advantageous for some families when more than one child is in college. The EFC (Expected FAMILY Contribution) is divided by the number of kids in college for the given school year, and the resultant EFC is the number used for the individual student’s need-based financial aid eligibility.

Here’s an example: Let’s say that a family’s contribution (EFC) with only one child in college is $40K. But the following year there are two in college. Assuming each child’s income and assets are negligible (and/or similar), each student would have an EFC of about $20K! Remember… the EFC represents the “family” contribution. This makes them EACH eligible for an additional $20K of need-based financial aid!

Depending on the COA (Cost-of-Attendance) of the colleges they’re attending and the colleges’ financial aid policies, the students could receive significantly more free money (grants) due to this.


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What are “campus-based funds”?

Campus-based funds are funds provided by the federal government to colleges. The distinguishing factor of campus-based funds is this:

The colleges decide… based on their financial aid policies… who gets the money.

There are 3 main campus-based funds:

  1. SEOG grant funds (Supplemental Education Opportunity Grant)
  2. Perkins loan funds (Student loan, always subsidized)
  3. Federal Work-Study (A job, typically on campus)

These campus-based funds are most often available only to students who have demonstrated “need” by filing a FAFSA form, resulting in an EFC substantially below the COA (Cost-of-Attendance) of the college.

In contrast to campus-based funds are the federal “entitlement funds”. The most popular entitlement funds are:

  1. Pell Grant
  2. Subsidized Stafford Loan
  3. Unsubsidized Stafford Loan

Entitlement funds are not based on individual college policies but simply meeting the requirements set forth by the federal government. Based on the information provided on the FAFSA form, entitlement funds are automatically provided by the Department of Education to the college on behalf of the student.


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How much money can my daughter earn before her income hurts her financial aid?

This number is called the student’s “Income Protection Allowance” and is subject to change year-to-year. For the 2015-2016 FAFSA form, the number is $6310. Here’s the significance of this important allowance:

Let’s say your daughter’s total income in 2014 was $10K. Subtracting $6310 from the $10K income we have $3690. The income assessment is 50% of this amount! So when we take 50% of $3690, the “EFC Due to Student Income” is $1845. This means that because of your daughter’s $10K earnings, she would be eligible for $1845 LESS need-based financial aid than someone who didn’t work at all.

The moral of the story is… according to the government, the student who doesn’t work is “entitled” to more money from the government than a student who does. And the same goes for parents. Without getting into the politics of it all, it would appear that the government encourages students and parents to minimize their income so that they can receive “entitlements” from the government. Hmmm…

And for the “dreamers” here in my home state of CA? Well, they get FREE tuition… an “entitlement” amounting to over $50K at a Univ of CA institution.


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I’m separated but still filing jointly with my son’s dad. How does this situation work with the FAFSA?

This gets just a tad messy, but it’s workable. Here’s what you need to do: File the FAFSA with ONLY your income and assets listed. When the colleges compare your FAFSA with your tax records, it will generate a flag. They’ll contact you, and you can then explain your situation. They’ll see on the FAFSA (as well as the CSS Profile form, if applicable) that you are separated, and they’ll understand what you’ve done with your income and assets declaration on the form(s).


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My daughter lives with me, but my ex-husband claims her on his taxes. He files the FAFSA, right?

Wrong… whichever parent has PHYSICAL custody of the student the majority of the base year fills out the FAFSA. In your case, that’s you, regardless of the fact that you’re not claiming your daughter as an exemption on your taxes. This is a common mistake.


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I normally file for an income tax extension. Will that be a problem for my son’s financial aid offering?

Unfortunately, the answer is YES. That is, if you are referring to need-based financial aid. Schools requiring the FAFSA and/or CSS Profile form will NOT make your son a formal (final) financial aid offer until your income tax return has been filed with the IRS. Some schools will give you an estimate based on your estimated numbers, but nothing formal. And remember, need-based money can “run dry” from colleges own funds, so this could result in a lack of financial aid that would otherwise have been offered.


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Are student assets assessed the same as parent assets?

No, they are not. Student assets are assessed at a much higher rate than parents assets.

For the FAFSA form, student assets are assessed at the rate of 20% (versus the max rate of 5.64% for Parent Assets). And for the CSS Profile form, student assets are assessed at the rate of 25% (OUCH!). This is in comparison to the max rate of 5.00% for Parent Assets.


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How heavily are parent assets assessed in the EFC calculation?

For the FAFSA form (which utilizes the Federal Methodology, or FM) assets are assessed at a maximum rate of 5.64%. This is after the Asset Protection Allowance has been deducted from your total assets declared on the FAFSA. (The Asset Protection Allowance is a whole topic in and of itself.)

For the CSS Profile form (which utilizes the Instituional Methodology, or IM) assets are assessed at a maximum rate of 5.00% (after an allowance as well).


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Is the same FAFSA EFC provided to all colleges listed on the FAFSA?

Yes indeed… the Department of Education submits the same information to ALL the colleges listed on your FAFSA, including the raw data and the EFC calculation. It’s important to realize, however, that this is NOT the case for the CSS Profile form.

If your student is applying to colleges that require the Profile form, click here to learn more about the vastly different process involving EFC at these schools.


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Who administers the FAFSA form?

The Department of Education administers the FAFSA form. When you submit the FAFSA, it goes to the Dept of Ed who distributes your data and resultant EFC (Expected Family Contribution) to all the colleges listed on the FAFSA. The Dept of Ed is effectively the conduit between you and the colleges. You don’t/can’t submit the FAFSA directly to a college.


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Our son is just now preparing to enter college at the age of 25. Does our income as parents need to be declared?

No it does NOT. When a student is 24 years of age, they are declared an “independent student”. Only their income appears on the FAFSA and/or CSS Profile form. Mom and Dad… you’re in the clear!


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What’s the “base year”?

This is a financial aid term that applies to both the FAFSA and CSS Profile forms. The base year is the year whose income must be declared on these financial aid forms. It’s the calendar/tax year BEFORE the student enters college as a freshman. So if you have a student who will enter college in the fall of 2016, your base year is calendar/tax year 2015.


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What does FAFSA stand for?

FAFSA stands for Free Application for Federal Student Aid. This term is a little confusing, however, because it’s used for MORE than “federal student aid”. States use the data provided on this form for state grant programs and most colleges (around 90%) use it in awarding their institutional need-based aid as well.

You can find the FAFSA form online at www.fafsa.gov. The new form comes out every January 1st. There’s always TWO years of FAFSA forms available… one for the current college year, and one for the previous year. Be sure you fill out the correct one. (This is the source of a common error.) As an example, if your student is attending college for the 2014-2015 schools year, be sure NOT to fill out the 2013-2014.

If you need help with completing your FAFSA, contact us! It’s one of our many specialties…


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Do we include our small business assets on the FAFSA?

Only if your business employs more than 100. Many families erroneously include small biz assets on their FAFSA, increasing needlessly their EFC (Expected Family Contribution) and often preventing them from receiving what would have been a generous need-based financial aid award.


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Our son’s grandmother has a 529 plan with our son as the designated beneficiary. Where do we claim this asset on the FAFSA?

You DON’T! This is neither a parent or a student asset. Since Grandma owns the 529, its her asset. If she were for any reason to change the beneficiary at any time (which she has the legal authority to do), it wouldn’t be fair for this asset to affect your son’s financial aid.

Grandma or Grandpa owning a 529 Plan is an excellent means of saving and paying for college! And the asset doesn’t impact the FAFSA form… SWEET!


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My daughter lives with me but my ex-husband claims her on his income tax return. Which parent files the FAFSA?

In this case, you’re the parent who provides YOUR financial information (income & assets) and signs the FAFSA. Whichever parent has the primary/majority PHYSICAL custody should fill out the FAFSA. It’s a common error to assume that whichever parent claims the child as an exemption should file, but this is entirely incorrect.


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I don’t want my son to sign up for Selective Service. Is this a problem for getting financial aid?

It certainly is. I assume what generated this question was that you saw this on the FAFSA form. If a young man turns 18 and has NOT signed up for Selective Service, federal student aid is withheld.


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How do we fill out the FAFSA in January when we haven’t even received our W-2 Forms yet?

You can fill out your “1st-pass FAFSA” (as we call it) as early as January 1st for the upcoming college year with estimates for your prior tax-year income. The figures for your assets, however, should be as accurate as possible.

After your tax return is completed, you should then go back into your online FAFSA form and update with actual income numbers, matching exactly the numbers indicated on your federal Form 1040 that you sent to the IRS.


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Should both parents sign the FAFSA?

There are 2 electronic signatures required on the FAFSA form… one for the student and ONE parent. In the case of an intact family (mom and dad are married), it doesn’t matter which one signs, but there’s only room for one. The FAFSA is signed with a 4-digit PIN. You can get your PIN here.

In the case of divorced parents, the biological parent with whom the student lives the majority of time is the one who should provide financial information on the FAFSA as well as sign it with their PIN.


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Is there any reason to fill out the FAFSA if we know our EFC is too high to qualify for any grants?

If you’ve used the Department of Ed’s FAFSA4caster or our free online EFC Calculator or some other tool such that you KNOW beyond any uncertainty that your EFC is higher than the Cost of Attendance of the colleges under consideration, then there’s only one reason you would even consider filling out and submitting the FAFSA form.

That reason would be that you want to receive federal loans… specifically, the student Stafford loan and/or the parent PLUS loan. Personally, we advise against both. We’ve seen far too many heartbreaking situations from families all across the country that regret ever signing up for these things. (One of our corporate tenets here at GetCollegeFunding is “Debt-FREE College”.)

Even with the Congressional passage of HR-911, the “Bipartisan Student Loan Certainty Act of 2013”, in the summer of 2013, the potential interest rates you could be faced with (based on the caps) are ridiculous. The interest rates are adjusted annually, based on the 10-year Treasury Note… and the interest caps are as follow:

  • 8.25% for undergraduate student Stafford loans
  • 9.50% for graduate student Stafford loans
  • 10.5% for parent PLUS loans and Grad PLUS loans

(These rates are higher than the rates students and parents were so upset about BEFORE the passage of HR-911!)

If, however, you want either or both of these loans, although your EFC precludes your student from receiving any free need-based grants or federal work-study, the FAFSA must be filed in order to receive the loans.


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My daughter is applying to 12 schools and there’s only room to list 10 on the FAFSA form. What do we do?

You are correct… there’s only room to list 10 colleges on the FAFSA form. (Until somewhat recently, it was limited to 6!) Why in the world the Department of Education refuses to add a few more slots to the FAFSA form which is ONLINE is beyond me… but this is indeed the current limitation. So with that in mind, what are parents and students to do when applying to MORE than 10 colleges.

Here’s The Solution:

Complete the FAFSA with the first 10 colleges listed. Within 3 business days, you can expect an email from Federal Student Aid informing you that the FAFSA has been processed and you can download the SAR (Student Aid Report). Follow the instructions, and download the SAR. (It serves as a “receipt” of sorts that the FAFSA was indeed processed.)

After you’ve downloaded the SAR, go back into the online FAFSA and delete the 10 colleges, making room to add the additional colleges to the form. Resubmit the FAFSA. Again, within 3 days you’ll receive an email from Federal Student Aid informing you that a new SAR is available to download. Follow the instructions and download the 2nd SAR.

FAFSA Webinar

We’ll be conducting weekly webinars on How To Fill Out The FAFSA Form as well as How To Fill Out The CSS Profile Form beginning the first week of January and continuing through the end of March. They’re free but you’ve gotta register.

Sign up for a free webinar now…


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What’s the latest you can fill out a FAFSA form?

The correct answer to this is barely known by parents or students all across the country! You can actually fill out the FAFSA form within a few weeks of the END of the current college year! Now I am NOT advising this by any means… BUT, if a student is entitled to funds like a Pell Grant or a Stafford loan, these funds WILL be offered retroactively for the CURRENT college year, as long as everything is processed and certified before the last day of school for that school year.

It’s important to realize that colleges and states have MUCH earlier deadlines for funds THEY are providing. But the FAFSA is accepted for FEDERAL funds much later than most people are aware.


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What’s the earliest date for filling out the FAFSA form?

The FAFSA form is available January 1st… approximately at midnight-ish… for the upcoming college year. So for example, the FAFSA form for the 2014-2015 college year will be available January 1st, 2014. There are always 2 FAFSA forms available when you go to the website where it resides, www.fafsa.gov… the current year and the prior year. Be careful to complete the correct one!


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What is the SAR?

SAR stands for Student Aid Report. This is the resulting document from completing and submitting the FAFSA form. Every submission of your FAFSA… including edits… results in a new SAR being generated and sent to all the colleges listed on your FAFSA. With few exceptions you should limit your FAFSA submissions/edits to 3 max. More than this can create suspicion among Financial Aid Officers.

When you submit your FAFSA (or any revisions to it), within 3 days (typically) you’ll receive an email from “Federal Student Aid” informing you that your SAR is ready to retrieve from the FAFSA website (www.fafsa.gov). You should always retrieve your SAR(s), as this is evidence that you successfully submitted your FAFSA. Every SAR includes a permanent time stamp that serves as a “receipt”. Because of the high volume of FAFSA submissions, it’s not uncommon for colleges to claim they didn’t receive the FAFSA. Simply email your SAR as proof.


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I attended a Financial Aid Workshop and they said that 90% of FAFSA forms are filled out incorrectly each year. Is this true?

NO, this is not true. Actually, it’s a gross understatement… to be accurate, it’s a flat-out lie!

This claim is often stated by self-proclaimed College Funding “experts” whose ethics and/or knowledge-base are lacking. Through the years it’s become a trademark of permanent life insurance salesmen who resort to unscrupulous, fear-based selling tactics.

This particular lie often lays the foundation for unsuspecting moms and dads to engage with these “College Funding” impersonators. It most often results with a family mortgaging their home and/or cashing out their investments in order to purchase a universal or whole-life insurance policy.

Next time you hear someone make this claim, ask for their verifiable SOURCE (which does not exist, I guarantee you!)… then politely stand up and leave the room… as quickly as you can.


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I’m divorced from my son’s mother. Which one of us should file the FAFSA?

According to federal law, whoever maintains the majority of PHYSICAL custody files the FAFSA. If you share custody 50/50 right down the middle, then whichever parent contributed more to the support of your son files. Don’t make the common mistake that whoever claims the child on their federal income tax return is necessarily the one who files the FAFSA form.


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Which EFC is used when a college requires both the FAFSA and the CSS Profile forms?

GREAT question… and this causes mass confusion among families every year. For those 250-ish colleges that accept BOTH the FAFSA and the CSS Profile forms, the answer is really quite simple. The EFC (Expected Family Contribution) derived from the FAFSA form is used in determining FEDERAL and STATE eligibility for need-based financial aid. So funds like the federal Pell and SEOG grants as well as the subsidized Stafford loan are awarded as a function of the FAFSA EFC computation.

Institutional need-based financial aid is determined as a function of the CSS Profile EFC. Schools take their COA (Cost-of-Attendance) and subtract the EFC from the CSS Profile calculation to determine your student’s legitimate financial need. They then “overlay” their financial aid policies, often including how “desirable” the student is relative to the applicant pool, and award the student money out their own pocket.

It’s a little-known fact among families filing the CSS Profile form that their EFC varies… often dramatically… from one Profile school to another! How can this be, you might ask… since the Profile form is common to all the schools requiring its use? This is due to “service options”, instructions provided on a college-by-college basis that supersede the nominal CSS Profile computation that would have otherwise been provided by College Board.


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Should the student complete the FAFSA form like his high school recommends?

Absolutely NOT. I continue to be surprised that some high schools advise families that the STUDENT should complete his/her own FAFSA form. This is flat-out goofy! How many high school students understand anything about income tax returns… or what assets mom and dad own… and what should be declared and what should NOT? Parents need to complete the student’s FAFSA… period.

Click here to learn more about the FAFSA form…


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What assets DON’T have to be declared on the FAFSA?

There are only a few assets that are NOT to be declared on the FAFSA form. They are:

  • Home Equity… this means your residence. Any rental property or 2nd-home equity must be declared.
  • Retirement Funds… this includes 401(k), 403(b), IRA’s (all types), and non-qualified annuity funds (all types)
  • Business Assets… if your business has 100 or fewer employees, your biz assets are NOT to be declared. Greater than 100, you must declare them.

Your net worth (according to the FAFSA form) for financial aid considerations is determined by 2 lines on the FAFSA:

  • Cash, savings, checking
  • Investments (stocks, bonds, mutual funds, 529 plans, etc.)

Because home equity, retirement funds, and business assets are NOT declared on the FAFSA form, it’s not uncommon for high net-worth, NON-W-2 wage-earning families to qualify for federal funds, including the Pell Grant and subsidized Stafford loans (your tax dollars at work, hmmm…)

(NOTE: The CSS Profile Form is much better at determining true, legitimate “need”, resulting in some families avoiding colleges altogether that use it and limiting their kids’ applications to FAFSA schools only.)


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Can we fill out a FAFSA before our daughter’s senior year? We’d like to learn our EFC early.

You CAN learn your EFC before your daughter’s senior year, and in fact you SHOULD. This is highly advisable. However, you cannot SUBMIT the actual FAFSA form before the senior year. It will essentially go nowhere.

There are several good tools to help you learn your EFC. My favorite is ours (of course). It’s free, online, and you can gain access it HERE. The other one I would recommend is on the FAFSA website, and the tool is called FAFSA4caster. You can access the FAFSA4caster HERE.


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Do we claim business assets on the FAFSA?

There was a business-friendly change to the FAFSA several years ago. If you own a business and you employ 100 or fewer individuals, then you should NOT list any business assets on the FAFSA form.


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Where does rental property equity go on the FAFSA?

Rental property equity should be entered on the “Investments” line of the FAFSA. Be sure to NOT include any equity you have in your primary residence. If you have a 2nd or 3rd home… like a vacation home or a cabin… you should include this in the “Investments” line as well. Don’t include timeshares.


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My ex-husband and I have shared custody of our daughter, 50-50. Who fills out the FAFSA?

If your daughter’s PHYSICAL custody is indeed 50-50, right down the middle, then whichever parent provided the majority of her support in the base year (the year before she enters college) should fill out the FAFSA. The other parent should NOT declare anything on the form, unless child support was provided to the majority provider. Child support received is a separate line on the FAFSA.

By the way, if the shared custody isn’t exactly 50-50, then whichever parent has physical custody for at least “6 months and 1 day” should fill out the FAFSA.


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Home equity affects my son’s financial aid? What’s the calculation?

Home equity is asked about ONLY on the CSS Profile Form, not the FAFSA. But the actual assessment of your home equity can vary dramatically from school to school. There are 3 methodologies used by Profile schools in assessing your home equity.

METHODOLOGY #1: 5% Assessment

The nominal assessment on College Board’s CSS Profile form for home equity is 5%. So if you have $200K of equity, the NOMINAL assessment would result in an additional $10K of EFC. OUCH!

METHODOLOGY #2: Cap The Equity

Many schools are now “capping” the assessment of your home equity as a function of your AGI (Adjusted Gross Income). Common cap multipliers are 1.2 and 1.5. So if, for example, your AGI is $100K and the school is using the 1.2 multiplier, then your home equity would be “capped” at $120K, regardless of how much equity really exists in your home. The EFC assessment due to home equity no higher than 5% of the $120K, or $6K. If your home equity is actually less than the $120K, then the actual equity would be assessed. But if your home equity was greater (even far greater) than $120K, then the capped $120K would be used in the 5% calculation.

METHODOLOGY #3: NO Assessment

This, of course, is everyone’s favorite! But only a few Profile schools are NOT assessing home equity at all. Princeton and Harvard began this policy a number of years ago.

SUMMARY

Needless to say, if your student is applying to a Profile school (or several Profile schools) and you’re hoping to receive some need-based financial aid, you need to understand the schools’ policies regarding home equity EFC assessment. You should contact the Profile schools’ Financial Aid Offices and ask them the direct question, “How do you assess home equity relative to the EFC assessment?”


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THE CSS PROFILE FORM

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What’s meant by the term “Profile School”?

Only about 10%-ish of 4-year colleges require the CSS Profile Form in order for them to assess eligibility for need-based financial aid. These colleges are referred to as Profile Schools, or Profile Colleges.

Most colleges use the FAFSA form to calculate a student’s EFC (Expected Family Contribution). This calculation is used to assess eligibility for federal and state financial aid as well as institutional aid (i.e., money from the college’s own endowment funds).

Profile Colleges use the FAFSA for federal and state financial aid eligibility, but they use the CSS Profile Form for institutional aid assessment. The Profile Form is much more comprehensive in its questioning than is the FAFSA. For example, the Profile Form asks about such things as home equity, business assets (regardless of the size of the biz), retirement funds, and younger children’s assets, whereas the FAFSA does not.

Even if your student applies to only one Profile School AND your income and assets make you eligible for need-based financial aid, you should complete the CSS Profile Form.

Click here for a list of all the Profile Schools


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Why do I have to send in my tax documents to IDOC, yet the financial aid offices at my daughter’s colleges of interest will not allow me to send the same documents to them directly for their verification process?

Verification and the IDOC…

this does indeed cause a lot of confusion year after year.

First of all, the College Board collects families’ federal tax returns (and other documents) through the Institutional Documentation Service (IDOC), on behalf of participating colleges and programs. And the College Board notifies students selected by participating institutions as to when to submit these required documents.

In order to verify the tax figures on your FAFSA, the federal government has mandated a tool called the Data Retrieval Tool (DRT). Colleges have no choice but to use this… even though there continues to be technical issues (bugs) with this tool.  Because the DRT doesn’t always reflect the true financial position of the family, the IDOC turns out to be a good backup for most schools who use it.


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I heard that some schools require a form called the Non-Custodial Profile form in the case of divorced parents. How do I find out which schools require this?

This is a form provided by College Board. Some schools… not all… that require the CSS Profile form do indeed have a requirement for the Non-Custodial Profile form. This information is provided on the same list indicating which schools require the CSS Profile form.

Click here for a direct link to the list.


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How do I find a list of the colleges that require the CSS Profile form?

The list resides on College Board’s website. Click here for a direct link to the list.

You’ll also find a link in the footer at the bottom of every page of our website along with numerous other useful links:

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Where do I find the CSS Profile Form?

The CSS Profile Form is found on College Board’s website, www.CollegeBoard.com. Unlike the FAFSA form, this form is NOT free. It costs $9 to register and $16 for each college to which you submit the Profile Form.


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Our son has an irrevocable trust and is the designated beneficiary. Does this affect financial aid eligibility?

I’m sorry to be the bearer of bad news on this one, but the account value of the trust must be declared on financial aid forms as a student asset. The FAFSA form assesses this at the rate of 20%, while the CSS Profile form assesses at 25%. This applies even if the trust funds can’t be accessed until after college graduation… let’s say, age 25.

So, as an example, if the trust is valued at $100K, the FAFSA form would assess this asset at $20K, and this would be added to your son’s EFC (Expected Family Contribution), thereby decreasing his need-based financial aid eligibility by $20K. OUCH!

It’s important to note that a handful of colleges… led by Princeton University, one of THE most generous colleges in the nation… assesses student assets at the PARENT asset rate of only 5%. So the same $100K in the above example would have only a $5K impact to financial aid at such a college.


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What if I missed the college’s CSS Profile form priority deadline?

You should file the form anyway. It’s unfortunate that you missed the priority deadline, but you may still receive some need-based financial aid from the college. If you DON’T file it, it’s a certainty that you WON’T receive any aid from the college.


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Some of the questions on the CSS Profile form are really invasive. What if I don’t answer them?

Let’s pause for just a moment and think about this. You’re applying for need-based financial aid. You’re probably hoping that the colleges your student is applying to will be generous and give you lots of “free money”, right?

From the colleges’ perspective, all they’re trying to do is ascertain your legitimate financial NEED. In order to do so, the questions do indeed get quite personal, even invasive. But I’ve got to side with the colleges on this. Before they give you any free money out of their own pockets, it’s only reasonable that they understand your financial profile in detail.


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Lots of the questions on the CSS Profile form are the same as those on the FAFSA that I just filed. Can I skip them?

Nope, you cannot. These forms are administered by 2 entirely different entities. The FAFSA form is managed by the federal Department of Education and the CSS Profile form is managed by the College Board. They don’t communicate regarding the information asked for on their respective financial aid forms.


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I’m separated but still filing jointly with my son’s dad. How does this situation work with the FAFSA?

This gets just a tad messy, but it’s workable. Here’s what you need to do: File the FAFSA with ONLY your income and assets listed. When the colleges compare your FAFSA with your tax records, it will generate a flag. They’ll contact you, and you can then explain your situation. They’ll see on the FAFSA (as well as the CSS Profile form, if applicable) that you are separated, and they’ll understand what you’ve done with your income and assets declaration on the form(s).


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I normally file for an income tax extension. Will that be a problem for my son’s financial aid offering?

Unfortunately, the answer is YES. That is, if you are referring to need-based financial aid. Schools requiring the FAFSA and/or CSS Profile form will NOT make your son a formal (final) financial aid offer until your income tax return has been filed with the IRS. Some schools will give you an estimate based on your estimated numbers, but nothing formal. And remember, need-based money can “run dry” from colleges own funds, so this could result in a lack of financial aid that would otherwise have been offered.


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Are student assets assessed the same as parent assets?

No, they are not. Student assets are assessed at a much higher rate than parents assets.

For the FAFSA form, student assets are assessed at the rate of 20% (versus the max rate of 5.64% for Parent Assets). And for the CSS Profile form, student assets are assessed at the rate of 25% (OUCH!). This is in comparison to the max rate of 5.00% for Parent Assets.


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How heavily are parent assets assessed in the EFC calculation?

For the FAFSA form (which utilizes the Federal Methodology, or FM) assets are assessed at a maximum rate of 5.64%. This is after the Asset Protection Allowance has been deducted from your total assets declared on the FAFSA. (The Asset Protection Allowance is a whole topic in and of itself.)

For the CSS Profile form (which utilizes the Instituional Methodology, or IM) assets are assessed at a maximum rate of 5.00% (after an allowance as well).


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How many Profile schools are there in California?

Surprisingly of the 250-ish colleges requiring the CSS Profile form for need-based financial aid eligibility, only 10 of them are in the state of California (where 1 in 8 Americans live), and half of the 10 are in a consortium known as the Claremont Colleges. Here they are:

  1. Cal Tech (California Institute of Technology)
  2. Claremont McKenna College
  3. Harvey Mudd College
  4. Occidental College
  5. Pitzer College
  6. Pomona College (not to be confused with Cal Poly – Pomona, a Cal State University)
  7. Santa Clara University
  8. Scripps College
  9. Stanford University
  10. USC (University of Southern California)

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Does College Board provide the same EFC calculation to all of the schools listed on the Profile form?

No, College Board provides different EFC calculations to the colleges your student is applying to.

This is a major deviation from the FAFSA form process and is widely UN-known to families. How can this be, you ask? GREAT question!

Colleges that subscribe to the College Board’s CSS Profile Form processing submit Service Options to College Board. Service options override what we call the “nominal” EFC computation (also known as IM, or Institutional Methodology) performed by College Board’s algorithms that would normally be applied to your data submission.

The best example of a service option is the home equity assessment. The nominal EFC computation on the Profile form would take 5% of the home equity you declare. So for $200K of home equity, the assessment would be $10K. Many colleges use this nominal computation. But some… like Princeton and Harvard… have implemented a service option to College Board such that home equity is waived. So your EFC at Princeton would be $10K LESS than any college using the nominal Profile computation for home equity.

If your student applies to 10 colleges using the CSS Profile form, it’s quite likely that all 10 would have different EFC’s provided to them from College Board.


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Our son is just now preparing to enter college at the age of 25. Does our income as parents need to be declared?

No it does NOT. When a student is 24 years of age, they are declared an “independent student”. Only their income appears on the FAFSA and/or CSS Profile form. Mom and Dad… you’re in the clear!


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What’s the “base year”?

This is a financial aid term that applies to both the FAFSA and CSS Profile forms. The base year is the year whose income must be declared on these financial aid forms. It’s the calendar/tax year BEFORE the student enters college as a freshman. So if you have a student who will enter college in the fall of 2016, your base year is calendar/tax year 2015.


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When should we file the Profile form?

Unlike the FAFSA form which doesn’t come online until January 1st, the CSS Profile form is available October 1st. The deadline for completion varies dramatically from college to college, so you should check their individual websites and/or contact their respective Financial Aid Offices. For students applying Early Action or Early Decision, the preferred deadline for submitting the CSS Profile form can be as early as November 1st of the senior year!


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Financial Aid Night at our school made no mention of the CSS Profile Form. Is the form not all that important?

The CSS Profile Form is a critically important form if your student is applying to even just ONE school that requires it for institutional aid AND if you are eligible for such aid. There are roughly 250 Profile Colleges… about 10% of all the 4-year schools.

Click here to see a list of Profile Colleges

Not mentioning the CSS Profile Form is a common oversight at local high schools’ Financial Aid Nights. There’s all sorts of emphasis on the FAFSA form even though many of the colleges being applied to require the CSS Profile Form for need-based financial aid eligibility.


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I didn’t think retirement funds were used in assessing financial aid eligibility, but now I see that the Profile form asks about all of our retirement. How does that work?

Many parents are surprised when they see the inquiry as to their retirement funds on the CSS Profile Form, especially when they were told at Financial Aid Night that retirement funds are NOT declared. Most financial aid nights focus on one thing… the FAFSA form. While it’s true the FAFSA doesn’t ask about retirement funds, the CSS Profile Form DOES… and in detail! Now… the EFC (Expected Family Contribution) does NOT have an assessment against these retirement funds, but the Profile schools want to have an accurate picture of your entire financial “profile”.

I’m always surprised when families get upset with colleges using the Profile form, because they find it so “invasive”. Say WHAT? They’re asking the college for FREE money. All the Profile schools are trying to accomplish is to assess the family’s TRUE financial need. After all, it’s the college’s own money they’re awarding, based on an assessment of need. While many wealthy families receive federal aid due to the “weak” questioning on the FAFSA form… NOT so on the CSS Profile Form.


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Which EFC is used when a college requires both the FAFSA and the CSS Profile forms?

GREAT question… and this causes mass confusion among families every year. For those 250-ish colleges that accept BOTH the FAFSA and the CSS Profile forms, the answer is really quite simple. The EFC (Expected Family Contribution) derived from the FAFSA form is used in determining FEDERAL and STATE eligibility for need-based financial aid. So funds like the federal Pell and SEOG grants as well as the subsidized Stafford loan are awarded as a function of the FAFSA EFC computation.

Institutional need-based financial aid is determined as a function of the CSS Profile EFC. Schools take their COA (Cost-of-Attendance) and subtract the EFC from the CSS Profile calculation to determine your student’s legitimate financial need. They then “overlay” their financial aid policies, often including how “desirable” the student is relative to the applicant pool, and award the student money out their own pocket.

It’s a little-known fact among families filing the CSS Profile form that their EFC varies… often dramatically… from one Profile school to another! How can this be, you might ask… since the Profile form is common to all the schools requiring its use? This is due to “service options”, instructions provided on a college-by-college basis that supersede the nominal CSS Profile computation that would have otherwise been provided by College Board.


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How much does it cost to file the Profile form?

The CSS Profile Form is administered and maintained by College Board. The registration fee is $9 and each school to which you wish to send the Profile Form costs $16.


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I thought I was told that home equity doesn’t count for financial aid. Why is it asked for on the Profile form?

You’ll often hear this at “Financial Aid Night” at your local high school. Most Financial Aid Nights are discussing ONLY the federal FAFSA form… and it’s true that home equity is NOT to be declared on the FAFSA form. But that is NOT the case for schools requiring the CSS Profile Form. They ask 4 questions regarding your primary residential home:

  • Year your purchased your home
  • Purchase price
  • Current market value
  • Current debt on your home

Different Profile schools assess your home equity in different manners. It’s important that you understand HOW your student’s profile schools of interest assess home equity. This is an excellent question for the Financial Aid Office.


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Home equity affects my son’s financial aid? What’s the calculation?

Home equity is asked about ONLY on the CSS Profile Form, not the FAFSA. But the actual assessment of your home equity can vary dramatically from school to school. There are 3 methodologies used by Profile schools in assessing your home equity.

METHODOLOGY #1: 5% Assessment

The nominal assessment on College Board’s CSS Profile form for home equity is 5%. So if you have $200K of equity, the NOMINAL assessment would result in an additional $10K of EFC. OUCH!

METHODOLOGY #2: Cap The Equity

Many schools are now “capping” the assessment of your home equity as a function of your AGI (Adjusted Gross Income). Common cap multipliers are 1.2 and 1.5. So if, for example, your AGI is $100K and the school is using the 1.2 multiplier, then your home equity would be “capped” at $120K, regardless of how much equity really exists in your home. The EFC assessment due to home equity no higher than 5% of the $120K, or $6K. If your home equity is actually less than the $120K, then the actual equity would be assessed. But if your home equity was greater (even far greater) than $120K, then the capped $120K would be used in the 5% calculation.

METHODOLOGY #3: NO Assessment

This, of course, is everyone’s favorite! But only a few Profile schools are NOT assessing home equity at all. Princeton and Harvard began this policy a number of years ago.

SUMMARY

Needless to say, if your student is applying to a Profile school (or several Profile schools) and you’re hoping to receive some need-based financial aid, you need to understand the schools’ policies regarding home equity EFC assessment. You should contact the Profile schools’ Financial Aid Offices and ask them the direct question, “How do you assess home equity relative to the EFC assessment?”


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How do I edit the Profile form after my taxes are done? I submitted it with estimated income.

Believe it or not, you can NOT edit your Profile form once it’s been submitted to a given school. I have no idea why College Board doesn’t allow you to edit the form in the event of a data input error or to update the numbers after your income tax return has been filed… but they don’t. You must mark up/red-line any corrections and mail to the college(s) affected.

If you add another school to the CSS Profile form after you’ve submitted it to a school (or schools), then you can indeed make any necessary changes at that time, but these changes will NOT be reflected on the Profile form sent originally.


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DEBT-FREE COLLEGE

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Our son is in the process of signing his promissory note for the $5500 unsubsidized Stafford loan. What would you advise as an alternative?

If you live within a reasonable driving distance, have you considered having your son commute? Very few colleges offer room & board for less than $5500. It’s often double this amount or more. This in and of itself would allow you to avoid this student loan.

Another alternative that’s growing immensely in popularity is taking a “gap year”… this would involve your son delaying his college entry as a freshman for a year, providing him a year to work in his area of interest, almost like an internship program.

He should be able to earn well in excess of $5500. This would also give your family an opportunity to save more and possibly even adjust your expenses a bit. We encourage you to do everything you possibly can to avoid student loans.


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Where does financial aid enter into planning for zero-debt college?

After you’ve determined what you can pay for college without borrowing, then comes the research. You need to assess your student’s NEED- and MERIT-based financial aid eligibility. I can’t over-emphasize that this is the most difficult part in assessing what your out-of-pocket costs would be for your child’s choice colleges. It’s one of our organization’s specialties.

Colleges’ policies regarding need-based grants and merit-based scholarships vary all over the map. AND it depends on just how desirable your child is at his/her colleges of choice. I encourage you to begin researching BOTH of these elements, and if it gets a bit overwhelming, don’t panic! Rather… call us for help.


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Debt-free college seems impossible. What’s the first step we need to take in order to even possibly achieve this?

This is going to seem SO rudimentary, but the first step is sheer common sense. (Sadly, not so common today, unfortunately.) Not to diminish the value of higher education, it comes down to old-fashioned basics: don’t buy what you can’t afford. Eliminate even the concept of borrowing money for college!

Just think of other high-ticket items families purchase all the time… houses, cars, even vacations! Now while it’s true that many families borrow for all the above, we subscribe to the Dave Ramsey platform that you should not be borrowing money. I agree with Dave that there is indeed some slack given when it comes to purchasing a home, especially in some areas of the country. But for everything else, DON’T BORROW! Do I sound like Grandma or Grandpa yet? GOOD… I hope I do, because THEY had it right!

So the FIRST step in planning for your child to graduate college DEBT-FREE is… determine how much you can AFFORD to pay… out-of-pocket! Look at your ear-marked college savings account(s) and your available cash-flow, and that’s what you can afford. If it’s not enough for the college you’re committed to, then you’ve got to reduce your expenses, sometimes drastically.

It’s important to realize that just because you can’t afford to pay the sticker price for the college (properly called the COA: Cost-of-Attendance), this does NOT necessarily mean the school is unaffordable. The next steps in achieving debt-free college involve an accurate forecast of Financial Aid, both need- and merit-based.

By the way… college becomes a whole lot more “affordable” when Mom and Dad have NO debt themselves! If you as parents aren’t debt-free, then the biggest tip I can give you is to attend a Dave Ramsey 9-week class called Financial Peace University (FPU). Click here to find one near you.


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Along with our son graduating debt-free, my wife and I would like some help in becoming debt-free ourselves. Any suggestions?

I suspect you are among the thousands of families who have become tired of being a “slave to the lender”. CONGRATULATIONS!

The good news is that yes indeed… there IS help. I encourage you to go through Dave Ramsey’s Financial Peace University (FPU). This 9-week course is designed specifically to help you achieve your goal of becoming debt-free. We are such believers of Dave’s course that we volunteer every summer to host FPU in our office. Regardless of where you’re located, there’s an FPU nearby.

Click here to find a convenient location and time for you to attend. Then in the left-hand margin, click “Find a Class”. By the way, this was a GREAT question… one of the best ones I’ve ever been asked! THANK YOU!


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My kids are 10 and 13. I assume it’s too early to start thinking about college?

It’s a little early to create a College List, BUT… it’s NOT too early to strategically and intentionally accomplish 2 things from a College Planning perspective:

  1. Adjust your lifestyle (as/if necessary) such that you have no revolving debt. This will allow you to save for college.
  2. Emphasize to both your children the importance of doing their very best in school, and achieve the best grades they possibly can.

Sound old-fashioned? Sure does! And I can assure you that the pay-off for both these items is ENORMOUS.

If getting out of debt seems impossible, I would refer you to Dave Ramsey and his Financial Peace University. We are STRONG proponents of his debt-free lifestyle… and teachings!


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Our son is about to graduate and will be attending UCLA this fall to play water polo. There are no scholarships available for men’s water polo. Is it possible for him to graduate debt-free?

Part of achieving debt-free college is selecting the colleges that provide the necessary assistance through need- and merit-based financial aid. If no financial aid is being offered and we as a family don’t have the savings and/or cash-flow to pay for college, then debt-free college isn’t possible.

College Selection is 90% of successful debt-free college.


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What’s so hard about a student graduating with no debt? If they’re smart, can’t they get a full-ride?

The term “full-ride scholarship” is used loosely these days, and the reality is… there are very few true “full-rides”, meaning “free college”. Some colleges use the term full-ride to imply free tuition, but NOT inclusive of room & board, books, living expenses, etc.

But having said this, scholarships are typically “partial” in nature, including most athletic scholarships! While scholarships can be significant in reducing the college bill, with few exceptions, mom and dad are expected to make up the difference. With improper planning and research as to what financial aid is realistic AND how the financial system even works, many families find themselves coming up way short when the 1st-semester bill comes due for their freshman student.


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What’s wrong with a student paying for college all by themselves, even if that means taking out a lot of student loans? With a college education, aren’t they pretty much guaranteed to get a good job so they can pay it all back?

That’s a fair question! And the reality is that MANY students are NOT getting the jobs they were hoping their diploma would “guarantee” them. Let’s face it… the economy is tough out there. And employers at large are looking for skillsets that will help grow business. The days of the college diploma being a ticket for a good-paying job are… at least for now… gone. NOT to say that a valued degree being earned by a high performer with great internship experience won’t land a terrific job! But it’s not the economy or the landscape enjoyed a generation ago by moms and dads of today’s college graduates.


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The only way to guarantee no student loan debt is to go to a local community college, right?

While community college is indeed a viable option for many students, it’s not the ONLY solution for Zero-Debt College. Many factors enter into achieving the goal with College Selection being one of the largest. But the financial profile of mom and dad including savings and cash-flow, financial aid eligibility, and academic achievement must be considered as well. Lots of students attend public as well as private colleges and graduate debt-free… with the common thread being proper planning on the front-end of the process.


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What’s the single biggest tip you suggest for kids graduating college with no debt?

Graduating from college debt-free can be accomplished IF common-sense financial principles are applied. Paying for college SHOULD be like paying for any service or product, but for some reason, BORROWING for a college that’s totally unaffordable for a family has somehow become “normal”.

We take the Dave Ramsey approach: Imagine for the moment that borrowing for college is NOT an option. For most families, this would limit the colleges to which their kids would even apply in the first place. The single biggest tip would be this: Consider the ONLY options to pay for college to be limited to the following:

  • Cash in the bank earmarked for college (savings)
  • Available cash-flow earmarked for college (income)
  • Available need-based money (federal & state government programs, institutional grants from private colleges)
  • Available scholarships (colleges and private sources)
  • Help from dedicated 3rd party sources (grandparents, employers, etc.)

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When you refer to “Debt-Free College”, are you suggesting that students strategically default on their student loans?

No, no, a thousand times no. That’s the LAST thing we would ever suggest. Debt-free college is attainable by selecting the RIGHT schools for the RIGHT reasons, one consideration being true affordability based on the families ability to write the check. There are MANY factors in selecting the “right” colleges, and debt “forgiveness” is not one of them.


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When you say “Zero-Debt College”, are you referring to full-ride scholarships?

Not at all. Full-rides are few and far between. Partial scholarships are offered to many students, of course, but most often fall extremely short of paying the entire college bill. While scholarships obviously help reduce the out-of-pocket costs for the family, proper planning, including proper College Selection, is necessary to achieve Zero-Debt College.


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Can a student work their way through college like we did and graduate with no debt?

The cost of college has increased SO dramatically over the last 20 years that it’s very difficult for a student to “work their way through” as was once not all that unusual. With the average cost of college now tipping the $20K point, that’s a tough bill to pay while working part-time. However, if mom and dad are helping out, then it’s sometimes possible for a working student to pay the incremental amount necessary to avoid taking out student loans.


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What resources are available to help a student graduate from college with no debt?

Resources vary of course from one family to another. Depending on a family’s situation and choices, here are a few of the most common:

PARENT RESOURCES

  • Earmarked savings
  • Earmarked cash-flow

STUDENT RESOURCES

  • Earmarked savings
  • Need-based financial aid grants
  • Need-based work-study program
  • Merit-based scholarships
  • Part-time employment, on- or off-campus

OTHER RESOURCES

  • Grandparents (quite a popular resource actually!)
  • The military option (free college)
  • Mom’s or Dad’s employer scholarship programs
  • Private 3rd-part scholarships (FastWeb.com)
  • Professional College Counseling (www.GetCollegeFunding.org/debtfree)

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When does a family need to begin planning in order to achieve Debt-FREE College?

From an asset/savings standpoint, of course, there’s no such thing as starting “too early”. Many parents (and grandparents) start when a child is born (believe it or not) to establish a college fund.

From a college selection standpoint, this can begin as early as 8th or 9th grade. What you do NOT want to have happen is for the student to get “hooked” on some “Brand Name Colleges” before the parents understand the financial aid system and what they as a family can truly afford to pay for college out-of-pocket without borrowing any money.

We recommend families either research the admissions and financial aid “systems” extensively on their own (if they have the time and talent to do so) or “sub this out” by hiring a professional College Planning organization (like us). 🙂

… Either way, this should be well in place by the student’s sophomore year of high school.


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Are you saying we can send our student to the college of their choice… debt-free?

Absolutely NOT! When we refer to “Debt-Free College”, what we mean is that with proper planning, any student can achieve higher education, receiving valuable skills, training, education, and accrue NO debt. The caveat is that the student cannot attend ANY school and achieve this. Family finances MUST enter into the picture. Some students can attend Stanford debt-free, while others may need to select their local community college. There are many moving parts to successfully plan for Debt-Free College.

(NOTE: This happens to be one of our specialties at GetCollegeFunding!)


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YOU HEARD... WHAT?

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I’ve heard that girls virtually always do better on the ACT than the SAT. True?

I’ve heard for years that “many” girls do better on the ACT. I’ve never seen any data though, or any type of study. With few exceptions, we recommend that every student take both the SAT and ACT at least once… and gauge from there. There’s often a pronounced favorite after they’ve taken the “real tests” versus practice tests.


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I heard it’s a waste of time filling out the FAFSA form if you earn more than $100,000. Is that true?

This is such a common misconception and is absolutely… FALSE! Some families earning well beyond $100K qualify for significant need-based financial aid! To be sure, you should learn your EFC (Expected Family Contribution) early… which means well before the FAFSA form is due in January/February of your student’s senior year in high school.

By the way, when families have more than one child in college at the same time, each student’s need-based financial aid eligibility can increase dramatically. It depends on the colleges they’re attending, of course, but having 2 in college causes a split of your total EFC, nearly right down the middle.


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I heard that if we stop claiming our daughter as an exemption on our taxes, she will qualify for more financial aid. Is this true?

NO… this is absolutely not trueand is a common misconception. Until your daughter turns 24 (or gets married or has a baby or enters the military), she is considered a DEPENDENT student in the eyes of the government and the colleges. Sorry to be the bearer of bad news.

From a financial aid perspective, this means that parent income and assets must be declared on the financial aid forms.


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I heard that a discussion or inquiry of college merit scholarships should be held with the Admissions Office, not Financial Aid. Is this true?

Yes, this is indeed true. The Financial Aid Office of a college handles need-based financial aid, but the Admissions Office administers all merit-based financial aid.


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I heard that parents’ Social Security checks are being garnished if they fall behind on PLUS loan payments. Is this true?

This IS true! In fact it’s been going on for some time now, but the number of occurrences is rising dramatically. According to the Department of Treasury’s Financial Management Service data, in 2000 only 6 people had their Social Security checks garnished for delinquent student loan debt. In 2012 from January to August, 115,000 had their checks garnished.

GetCollegeFunding strongly advises AGAINST any parent taking out a federal PLUS loan.


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I heard that shacking up as opposed to getting married can improve my daughter’s financial aid eligibility because we don’t have to claim my boyfriend’s income. Is that true?

Actually, that did indeed used to be true. However, starting in the 2014-2015 college year, the reference to the student’s parents is changing from the traditional Father and Mother to the new Parent One and Parent Two.

And part of this change includes live-in partner arrangements. Shackin’ up will no longer remain a federally protected status. This means that your boyfriend’s income will now be included, even though you’re living together and not married.


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I heard that you can withdraw money from an IRA and use the funds to pay for your child’s college education. Is this true? And if so, what are the tax and penalty consequences?

Penalty-free withdrawals from regular IRAs can be made to pay for undergraduate or graduate qualified higher education expenses for the taxpayer, the taxpayer’s spouse, or the child or grandchild of the taxpayer at an eligible educational institution.

The taxpayer will owe federal income tax on the amount withdrawn, but will not be subject to the typical 10% early withdrawal penalty. The penalty-free IRA withdrawal is available only if the withdrawal is used to pay for “qualified education expenses”.

Qualified education expenses include tuition, fees, books, supplies, and equipment. Room and board are also included if the student is enrolled on at least a half-time basis.

Any tax-free item under IRC Section 117 must reduce these education expenses such as, scholarships or grants, IRC Section 135 qualified U.S. Series EE bonds, veteran’s education benefits, and other tax-free educational benefits.

While borrowing against retirement funds to help pay for college has become quite popular, we strongly recommend against the practice. The dollar you’re borrowing may have become ten dollars by the time you retire were it to have remained in a solid investment account.

GetCollegeFunding Advisory Team member Mr. Chuck Moore is our Tax Strategist. If you would like information on how to meet privately with Mr. Moore for expert tax analysis and strategies, click here.


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I heard that you can hide money in an annuity right up to the moment of submitting the FAFSA. Is this true?

Hmm, first of all I don’t like the term (or concept of) “hiding money”. Now on the other hand, I embrace the concept of intentionally and strategically strategizing for Financial Aid… every bit as well as for income tax.

You should never restructure your assets for the sole purpose of “looking poor”. If restructuring into an annuity is encouraged by your Financial Adviser and ultimately improves your family’s financial profile AND results in lowering your EFC a bit… then that’s GREAT! But it should never be the sole motivator.

On another note, NEVER let a college funding “expert” convince you to move money into a permanent life insurance policy in order to qualify for financial aid… NEVER! This practice has been going on for years and most of the time, the real motive is to line the pockets of the sales guy with a substantial commission.

What They DIDN’T Tell You…

Here’s an important point that those hungry to reposition your assets will likely NOT tell you: If the repositioning occurs well into the base year or even into January/February of your child’s senior year (when the FAFSA is due), all of the interest earned from the asset will be exposed on your income tax return as well as the FAFSA.

Even the most junior Financial Aid Officers are trained to look for the anomaly of “Interest Earned vs. Non-Declared Assets”. It’s a red flag and is seldom missed by most college Financial Aid Officers.

For legitimate annuities set up well before your student’s base year even begins, this will NOT be an issue and could very well be a bona fide financial planning strategy endorsed by your Financial Advisor.

When someone is encouraging you to move money into an annuity… and ESPECIALLY a permanent life insurance policy… BE CAREFUL! Always run this by a true College Funding/Financial Aid professional to assure your best interests are at heart.


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I heard that some schools require a form called the Non-Custodial Profile form in the case of divorced parents. How do I find out which schools require this?

This is a form provided by College Board. Some schools… not all… that require the CSS Profile form do indeed have a requirement for the Non-Custodial Profile form. This information is provided on the same list indicating which schools require the CSS Profile form.

Click here for a direct link to the list.


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I heard that parent PLUS loans are forgiven if the parent dies. What about income tax implications for the surviving spouse though?

First of all, a PLUS loan is taken out by just ONE parent, mom or dad… not both. So let’s say Dad’s name is on the PLUS loan. If Dad were to die at any time before the loan was repaid, then the loan would indeed be forgiven. Unfortunately, Mom would have to claim the loan forgiveness as “other income” and would pay federal and state income tax on the amount that was forgiven. However, she would NOT have to pay any social security tax on the amount.

If Mom died… and Dad’s name was on the PLUS loan, there is no forgiveness.


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I heard that a good “career center” is essential for a college to be considered. Do you agree?

Yes, I absolutely agree with this! Internships are critical for college undergraduates in today’s economy. Before a college makes its way to a high school student’s College List, the student needs to make sure it has a solid career center in place that will help them land a worthwhile internship program in their field of study throughout their junior and senior years.

Even though the overall unemployment/under-employment rate is high for recent college graduates, this is not the case for those graduating with a marketable degree AND meaningful internship experience on their resume.


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I recently heard that students have different “learning styles”. Should a college list reflect the learning style of the student?

The ideal college list would indeed account for the student’s “learning style”. Unfortunately, most moms and dads, students, even counselors don’t have the training or resources to match students to colleges with this parameter taken into consideration. This is considered Advanced College Counseling, and we have one of the few professional counselors in the nation who specializes in this.


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I heard that lots of colleges don’t require SAT or ACT scores. My son doesn’t test well, so should we pick colleges based on this?

Depending on just HOW bad your son scores on these standardized tests (after a genuine effort of test preparation) you may indeed be well advised to focus (at least on a 1st-pass) those colleges not requiring test scores. The list by the way seems to be growing year-to-year. According to FairTest.org, “nearly 850 four-year colleges do not use the SAT I or ACT to admit substantial numbers of bachelor degree applicants”.

Click here for FairTest.org’s list of colleges and universities that de-emphasize the use of standardized tests.

And remember that, while important, test scores are only one of numerous parameters taken into account in the College Admissions process, and different schools do indeed weight the importance of these scores quite differently.


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I’ve heard that most kids should attend their local community college for a couple years and then transfer to a public college. Is this typically the best solution?

This is NOT the perfect solution for “most” kids in our opinion. However, it is THE perfect solution for some… and for different reasons. Some 18-year olds are simply not ready to leave home from a maturity standpoint. Some have no real aspiration for “higher education” and are just looking for a good party! And some families don’t have the financial wherewithal to send their child (even if highly academic) to a 4-year college. But to suggest that “most” kids should initially attend community college is not accurate.

Secondly, private colleges are more ideal for many students as compared to public colleges… from a financial standpoint (surprised?) and overall learning experience. Private colleges are where most of the “free money” comes from, and there are other advantages as well, including (much) smaller class sizes, student/professor relationships/support, and superior graduation rates.


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At our school’s Financial Aid Night I heard that all we have to pay for college is our EFC. Is that true?

No, no, a thousand times NO! This is one of THE most misunderstood concepts (and myths) regarding EFC (Expected Family Contribution). The name would indeed imply that your family is expected to pay (contribute) this amount for college, your “EFC”. And it would seem reasonable to assume that your costs would be limited to this, right?

While it might seem reasonable, that assumption would be WRONG… (that is, except for only 64 colleges at last count out of 2500-ish that DO limit your cost to EFC). Most schools do NOT limit your out-of-pocket costs to EFC, and many public colleges offer families NO financial aid other than goofy government loans even when their EFC is quite low.

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Is it true that there’s lots of financial aid for every student?

No, this is NOT accurate. Financial aid varies dramatically from student to student, as well as from college to college. An understanding of the “system” is mandatory in order to forecast with any level of accuracy “who gets what”. Every family should understand student’s need-based eligibility as a function of their EFC (Expected Family Contribution) computation as well as merit-based eligibility as a function of student achievement.

Eligibility varies from college to college for the same student and from student to student for the same college! Therein lies the confusion facing families and the requirement to research and understand the policies of each college under consideration.

The government (and many colleges) have successfully convinced families that Student Loans and Parent Loans should somehow be considered “financial aid”.

This is ludicrous and a misrepresentation in our opinion! Beware when colleges (and Uncle Sam) tell you there’s PLENTY of financial aid for every student. What they’re OFTEN referring to is loans. Always reply with the clarifying question, “How much of the ‘financial aid’ you’re referring to is FREE money?” More and more parents (and students) are agreeing with us and rejecting the notion that loans should be considered as financial aid.


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I attended a Financial Aid Workshop and they said that 90% of FAFSA forms are filled out incorrectly each year. Is this true?

NO, this is not true. Actually, it’s a gross understatement… to be accurate, it’s a flat-out lie!

This claim is often stated by self-proclaimed College Funding “experts” whose ethics and/or knowledge-base are lacking. Through the years it’s become a trademark of permanent life insurance salesmen who resort to unscrupulous, fear-based selling tactics.

This particular lie often lays the foundation for unsuspecting moms and dads to engage with these “College Funding” impersonators. It most often results with a family mortgaging their home and/or cashing out their investments in order to purchase a universal or whole-life insurance policy.

Next time you hear someone make this claim, ask for their verifiable SOURCE (which does not exist, I guarantee you!)… then politely stand up and leave the room… as quickly as you can.


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I heard that we should move all of our daughter’s money out of her name. Do you agree?

ABSOLUTELY NOT!

You need to FIRST learn your EFC (Expected Family Contribution). If your EFC Due to Parent Income is anywhere near the total Cost of Attendance of the schools your family is considering, then moving assets will NOT improve your daughter’s financial aid situation at all.

While on rare occasions there are effective strategies to restructure children’s assets, consider such action only with extreme caution! Beware of any College Funding “expert” who advises you carte blanche to move money out of your child’s account regardless of your EFC in order to improve financial aid eligibility… and ESPECIALLY if they’re suggesting any kind of permanent life insurance (most often, universal life).


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I heard that you can negotiate any award from a college and probably get more money. True?

We recommend NEVER using the word “negotiate” in the presence of a college Financial Aid Officer. To some it approaches the status of being “offensive”. However, there is a process of requesting additional financial aid, and this is called the APPEAL process. You can appeal in the event of “special circumstances”, which include excessive medical expenses, financial hardship not revealed on financial aid forms, and recent changes in marital status. Under certain conditions and at some colleges, you can submit a “competitive appeal”. But refrain from the use of the word “negotiate” in all cases.


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We were told by a College Funding expert to move most of our liquid assets into an insurance policy in order to get financial aid. Do you agree?

I flat-out disagree with this “strategy”. While there are RARE occasions that this may incrementally help financial aid, most of the time the primary purpose is to line the pockets of the college funding “expert” with a hefty commission. Consult a reputable Financial Advisor before you consider moving significant amounts of money into a permanent life insurance policy. (And you may want to research Dave Ramsey’s perspective on permanent vs term life insurance.)


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I thought I was told that home equity doesn’t count for financial aid. Why is it asked for on the Profile form?

You’ll often hear this at “Financial Aid Night” at your local high school. Most Financial Aid Nights are discussing ONLY the federal FAFSA form… and it’s true that home equity is NOT to be declared on the FAFSA form. But that is NOT the case for schools requiring the CSS Profile Form. They ask 4 questions regarding your primary residential home:

  • Year your purchased your home
  • Purchase price
  • Current market value
  • Current debt on your home

Different Profile schools assess your home equity in different manners. It’s important that you understand HOW your student’s profile schools of interest assess home equity. This is an excellent question for the Financial Aid Office.


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I heard that my neighbor’s kid received a full-ride from Princeton for football. I didn’t think this was possible at an Ivy League school.

Hmmm, no disrespect to your neighbor, but this is impossible. The 8 Ivy League colleges agreed many years ago to not offer ANY… and they do mean ANY… merit-based scholarships of ANY kind. We hear this same thing occasionally as well… regarding Princeton, Yale, Harvard, etc. The reality is that any free money your neighbor’s son received was based solely on financial NEED… guaranteed.

Princeton, by the way, is one of THE most generous colleges in the nation. They have an internal policy of guaranteeing 100% of a family’s need… by way of a work-study program (typically, $2000 to $2500) and the rest a Princeton Grant! Princeton was the first college to implement a “No-Loan Policy”, meaning that NONE of the financial need would be met through loans.


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I heard that billions of dollars of financial aid aren’t awarded because it’s not applied for. True?

Nope, FALSE! This is one of the many ploys that unscrupulous College Funding “experts” throw out at every seminar/workshop they conduct. They want you to think that if you hire them, you’ll get your fair share of these BILLIONS of dollars. Run the other way!


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I heard that there’s ways for families to send their kids to an expensive school for less money than it would cost for a J.C. Is this legit?

Nope, not legit, sorry. Now it’s true that I could define a family profile… academically for the student, financially for mom and dad… whereby this claim would indeed be valid. But it’s for an infinitesimal segment of the population. Unscrupulous College Funding “experts” make this claim all the time! I’ve seen it in our own local newspaper in print. They would lead you to believe that this applies to EVERYone… just attend their seminar and learn the “secrets”. My advice? RUN the other way.


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I heard that no matter how much money you make, there’s plenty of financial aid for everybody. How do we get some of this free money?

This is another claim that is mythical at best. For extremely wealthy families, NO college in America will offer a dime of need-based money. Couple that with a complete under-achiever, and there are no “merit”-based scholarships either. Free money is NOT available for everyone. There are many “moving parts”, and for the combination of HIGH net-worth and LOW achievement, the likelihood is minimal to non-existent.


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I heard that we should move all the money out of our son’s account before his base year. Is that necessary?

Ah yes, the ol’ “You’ve got to move that money in order to get financial aid” line. While I can’t say this isn’t beneficial to a LIMITED number of families, this is by no means a directive that should be followed by everyone.

Before you even consider restructuring your family’s assets (parent or student), you must learn your EFC (Expected Family Contribution). Then, drilling down a little deeper, you must learn how much of your EFC is due to Parent Income. We have free software that calculates your EFC. You can access it by clicking here.

Beware of any college funding “expert” who recommends “repositioning” assets into a permanent life insurance policy. These folks tend to LOVE universal life insurance. It’s no coincidence that selling such policies produces large… and I do mean, LARGE… commissions for these “experts”. While the service fee for their “college planning” or “college funding” program may be as low as $995, they’re often collecting $10,000 to $20,000 (or more) in commissions(Surprised?)

If your EFC Due to Parent Income is anywhere close to the cost of the colleges your son/daughter is considering, there’s no need to even think about “moving money” ANYWHERE as a strategy to get more free money.

Here’s an excellent article by Kim Clark, writing for CNN Money. There are FINALLY people going to prison for their shady “College Planning” practices… it’s about time!


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I heard about a seminar where some guy’s going to reveal all the “secrets” of getting lots of free money, regardless of how much money you make. Sounds fishy to me.

Beware of the word “secrets” whenever you’re being lured into a Financial Aid seminar/workshop. Far more times than not, “secrets” is a code word for “shady character”.


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COLLEGE SELECTION

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I heard that a good “career center” is essential for a college to be considered. Do you agree?

Yes, I absolutely agree with this! Internships are critical for college undergraduates in today’s economy. Before a college makes its way to a high school student’s College List, the student needs to make sure it has a solid career center in place that will help them land a worthwhile internship program in their field of study throughout their junior and senior years.

Even though the overall unemployment/under-employment rate is high for recent college graduates, this is not the case for those graduating with a marketable degree AND meaningful internship experience on their resume.


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Our daughter won’t consider any colleges that aren’t on or near the beach. What schools would you recommend?

Hmmm, I’m not going to answer that question directly. The correct question should probably  be something like, “How do we convince our daughter of why she should achieve a college education?” While a “beach school” like Pepperdine or Univ of San Diego or UC-Santa Barbara offers a magnificent location, this should be nothing more than “icing on the cake”. The same goes for colleges with a great football team or schools with the best dorms.

Sadly, many students select colleges for some pretty goofy reasons when it comes right down to it. In our opinion, a bit more emphasis should be placed on the “higher EDUCATION” element.


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I recently heard that students have different “learning styles”. Should a college list reflect the learning style of the student?

The ideal college list would indeed account for the student’s “learning style”. Unfortunately, most moms and dads, students, even counselors don’t have the training or resources to match students to colleges with this parameter taken into consideration. This is considered Advanced College Counseling, and we have one of the few professional counselors in the nation who specializes in this.


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Should political or spiritual bents enter into college selection?

To us here at GetCollegeFunding this is a slam-dunk answer: YES, absolutely. I’m surprised at how many families and “counselors” don’t take this into account. A “Young Republican” would have some inherent challenges at UC-Berkeley as would a “Progressive” at Hillsdale College. Political and/or spiritual bents should indeed be taken into account when constructing the college list in the high school junior year.

When this is overlooked, it’s not uncommon to have some “lively” discussions over Christmas dinner when the student has been away from home for just a few months. Parents have been known to look at one another halfway into the meal and ask, “Who is this person joining us for dinner today? Looks like Joey, but…”


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I heard that lots of colleges don’t require SAT or ACT scores. My son doesn’t test well, so should we pick colleges based on this?

Depending on just HOW bad your son scores on these standardized tests (after a genuine effort of test preparation) you may indeed be well advised to focus (at least on a 1st-pass) those colleges not requiring test scores. The list by the way seems to be growing year-to-year. According to FairTest.org, “nearly 850 four-year colleges do not use the SAT I or ACT to admit substantial numbers of bachelor degree applicants”.

Click here for FairTest.org’s list of colleges and universities that de-emphasize the use of standardized tests.

And remember that, while important, test scores are only one of numerous parameters taken into account in the College Admissions process, and different schools do indeed weight the importance of these scores quite differently.


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I’ve heard that most kids should attend their local community college for a couple years and then transfer to a public college. Is this typically the best solution?

This is NOT the perfect solution for “most” kids in our opinion. However, it is THE perfect solution for some… and for different reasons. Some 18-year olds are simply not ready to leave home from a maturity standpoint. Some have no real aspiration for “higher education” and are just looking for a good party! And some families don’t have the financial wherewithal to send their child (even if highly academic) to a 4-year college. But to suggest that “most” kids should initially attend community college is not accurate.

Secondly, private colleges are more ideal for many students as compared to public colleges… from a financial standpoint (surprised?) and overall learning experience. Private colleges are where most of the “free money” comes from, and there are other advantages as well, including (much) smaller class sizes, student/professor relationships/support, and superior graduation rates.


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The most important consideration for picking the right college is curriculum, right?

While curriculum is one of THE most important considerations, we would put equal weight on the financial aspect as well. We want our kids to receive a stellar education, BUT… not at the expense of post-graduation Massive Debt Syndrome.


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My daughter is a junior and doesn’t know where to even begin in building her college list. Help!

There are several resources I recommend to students. These are great places to begin the process:

Constructing a realistic college list is one of our most important professional services. We’ve found that many students prefer working with an experienced pro on this critical task. If you would like to explore this as an option for your family, contact us at GetCollegeFunding.


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How many colleges should my child apply to?

With few exceptions, due to the competitive nature in today’s college landscape, students should apply to a bare-bones minimum of 6 colleges. 8 to 10 is what we would call the “sweet spot”, and 12 would be the number at the outset.


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Are you saying we can send our student to the college of their choice… debt-free?

Absolutely NOT! When we refer to “Debt-Free College”, what we mean is that with proper planning, any student can achieve higher education, receiving valuable skills, training, education, and accrue NO debt. The caveat is that the student cannot attend ANY school and achieve this. Family finances MUST enter into the picture. Some students can attend Stanford debt-free, while others may need to select their local community college. There are many moving parts to successfully plan for Debt-Free College.

(NOTE: This happens to be one of our specialties at GetCollegeFunding!)


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ADMISSIONS

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My daughter is about to begin her junior year in high school. Her GPA is 2.5 and she’s worried that she won’t get into college because of her grades. Is she right?

The vast majority of colleges in America are what we call “pay-and-go”. You daughter can easily get into many colleges with a GPA of 2.5. These colleges may or may not be the ones she has in mind.

But I think the real concern might be WHY your daughter wants to go to college. If she’s struggling to get A’s and B’s, a 4-year college might not be the best solution for her. Does her current GPA really reflect her “best” efforts? Or is she not all that interested in academics?


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Is it more beneficial to declare a major when applying to college or go undeclared?

There’s not a cookie-cutter answer for this. A large number of college freshmen enter undeclared. This is not uncommon. BUT… for a student who has aspirations of entering an impacted curriculum or otherwise selective college within a university and assumes they can “slip in under the radar” by entering undeclared and then transferring late in the sophomore year, they will most often be very disappointed.

The accurate answer to your question is this: The necessity to declare (or not declare) a major depends on a number of factors, including the college, the major, even the student’s academic credentials.


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I heard that a discussion or inquiry of college merit scholarships should be held with the Admissions Office, not Financial Aid. Is this true?

Yes, this is indeed true. The Financial Aid Office of a college handles need-based financial aid, but the Admissions Office administers all merit-based financial aid.


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What happens if my daughter applies Early Decision, gets accepted, and we can’t afford the college due to a lack of financial aid being offered?

It’s very unfortunate (and rare) that families actually back out of an Early Decision (ED) offer, but it does happen. Applying ED is a serious commitment. It is indeed a binding agreement. You’re agreeing that, if accepted, your child WILL attend. And by implication you’re agreeing to accept the financial aid package, if any, forthcoming.

The Common Application instructions for ED state:

“If you are accepted under an Early Decision plan, you must promptly withdraw the applications submitted to other colleges and universities and make no additional applications to any other university in any country. If you are an Early Decision candidate and are seeking financial aid, you need not withdraw other applications until you have received notification about financial aid from the admitting Early Decision institution.”

The Wiggle-Room

Now there IS a bit of wiggle-room in the instructions as indicated by this:

Should a student who applies for financial aid not be offered an award that makes attendance possible, the student may decline the offer of admission and be released from the Early Decision commitment. The institution must notify the applicant of the decision within a reasonable and clearly stated period of time after the Early Decision deadline.

So if you find yourself in this position, you should REQUEST being “released” from your commitment. And by all means get the release notification in writing/email.

How To Avoid This Situation

There are 2 things you can do to avoid back-peddling from an ED commitment:

  1. Most highly-selective (private) colleges have a decent Net Price Calculator online to give you a ballpark idea of the financial aid you can expect. Start here to get a rough idea of what an average financial aid award would look like for your family’s profile.(Beware that not all Net Price Calculators are created equal! Some of the ones used… especially by certain public institutions, it seems… are ridiculously inaccurate, so don’t rely on the Net Price Calculator results in their entirety.)
  2. If you cannot comfortably “write the check” for the total cost of college for an ED application, then you should request an Early Read from the Financial Aid Office. Different schools have different procedures for this activity. The results of this should be reliable and give you a reasonable idea of how affordable the school is for your family.

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When looking at SAT and ACT statistics for colleges, what does “middle 50%” mean?

Here’s an example:

Let’s say a school shows that the “middle 50%” for last year’s incoming freshman class for the Math SAT sub-score was “560-680”. This means that half of all the freshmen who matriculated (accepted the offer for admission) had an SAT math score between 560 and 680.

It ALSO means that 25% of the incoming freshmen had below a “560” and 25% had above a “680”. For students who find themselves consistently in the upper 25% of SAT and/or ACT test scores, as well as GPA, they will likely receive the lion’s share of merit scholarships from such schools, especially the private colleges.


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Does a college ever offer both Early Action and Early Decision?

Very seldom… but we see it occasionally. Many colleges offer either Early Action or Early Decision. Many colleges offer neither.

The big difference between these two is the commitment that’s agreed to by the student upon application. Early Decision is “binding”, meaning that if the student is accepted, they agree beforehand that they will attend AND accept the financial aid offered (or not offered).

Early Action on the other hand is non-binding. There needs to be a compelling reason to apply Early Decision. And unless mom and dad can “write the check”, it’s highly advisable to request an “Early Read” from the Financial Aid Office relative to the anticipated financial aid that can be expected.


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Don’t you have a much better chance of admission if you apply early?

Not necessarily. It’s easy to mis-interpret the statistics when reviewing Early vs Regular Decision. As a rule of thumb, unless you know you’re in the top 25% of the applicant pool for a particular college, with few exceptions you shouldn’t even consider applying early. You may find yourself being denied, whereas you may have squeezed an admission in the regular applicant pool.


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What’s the difference between Early Action and Early Decision?

There’s one BIG difference… Early Action is NON-committal, while Early Decision IS. You can apply Early Action and in the event that you’re accepted (typically by late December), you don’t need to commit until May 1st. However, if you apply Early Decision and you’re accepted, you agree to attend as well as accept the financial aid award offered.

There needs to be an exceptionally good reason to apply Early Decision because of the commitment to attend. Unless money is no object, you should always request an Early Read from the Financial Aid Office when applying Early Decision to ensure the college will be affordable.


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Can you appeal an admissions denial?

I don’t want to get your hopes up too much on this one, BUT… yes, you can indeed appeal an admissions denial. It’s rare that the appeal will be successful, BUT… we’ve had 2 clients through the years who have appealed with successful results.

Both schools happened to be here in southern California… UCLA and Chapman University. In both cases, as I recall, the STUDENT (not the parent) appealed the admission denial all by themselves. And in one of these two situations, the college commented specifically on how impressed they were that the student took it upon herself (without the support of her parents being present) to set up the appointment with her Regional Admissions Officer and pursue the appeal single-handedly.

Again, admission appeals are highly unlikely to be effective, but for some situations there may be a ray of hope.


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What’s most important to college Admissions Officers when they’re reviewing applications?

According to NACAC (National Association of College Admissions Counselors), here are the “Top Factors in College Admissions”:

  • 1a) Grades in College Prep Courses
    • AP (Advanced Placement) classes/tests
    • IB (International Baccalaureate) classes/diploma
    • Dual-enrollment Courses
  • 1b) Strength of Curriculum
    • Rigor
    • Relevance
    • Quantity & Quality
  • 2) Admissions Test Scores
    • SAT
    • ACT
    • AP & Subject Tests
  • 3) High School GPA
    • Overall
    • Don’t fall behind
    • Don’t lose focus

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I hear colleges are more competitive than ever. Just how competitive are they?

There’s an abundance of students trying to get into what they believe to be “choice” colleges. As an example, the college receiving the most applications in one year is UCLA.

80,472 applications were received and under 6000 matriculate (enter as freshmen)!

Now THAT’s competition!


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Should every student go to college right out of high school?

Absolutely NOT. While this paradigm hung in there for years, it is by all means obsolete. Many students (some reports suggest the majority) are not ready for college, and many should never go to a 4-year college. (Surprised?) In today’s economy AND with the exorbitant cost of higher education, do NOT assume that every student needs to go to college. What’s important are skills and knowledge. There are many alternatives to achieving this, including:

  • Community college
  • For-profit, private colleges
  • The military
  • Apprenticeships
  • Online courses

With the current employment rate of roughly 50% for recent college graduates, it’s clear that many students are graduating with degrees that are of questionable value in today’s economy.


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How much does it cost to apply to a college for admission?

Typically, you’ll find this cost to be between $50 and $80. By the time you take into account the cost of sending SAT/ACT test scores, transcripts, etc., assume $100 per college as the worst-case scenario.


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I need help with the Common Application.

We have Common App specialists here at GetCollegeFunding who can help you. Students (and parents) are often surprised to learn that there are sophisticated strategies in completing this important admissions document. The more selective the colleges under consideration, the more you should consider being “coached” by an expert.


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My daughter’s dream school is quite a reach. She was told to apply Early Admission to improve her chances a lot. Do you agree?

This depends largely on where your daughter fall in the applicant pool. As a rule of thumb, we advise students AGAINST applying Early Admission unless they are certain they fall within the top 25% of applicants to the college under consideration. Early Action is the most competitive applicant pool, and some students are declined whereas they may have been accepted had they applied Regular Admission.


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How many colleges should my child apply to?

With few exceptions, due to the competitive nature in today’s college landscape, students should apply to a bare-bones minimum of 6 colleges. 8 to 10 is what we would call the “sweet spot”, and 12 would be the number at the outset.


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SAT & ACT TESTING

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How many times can a student take the SAT?

There’s no ceiling on how many times a student can take the SAT test. BUT… practically speaking, there’s typically no need to take it more than 2 or 3 times. We recommend with few exceptions that every student takes the SAT as well as the ACT in the junior year. Many students have a clear preference of one of them over the other. If they feel confident that with additional preparation they can increase their score substantially, they should take it once more. This approach works well for most students.


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I’ve heard that girls virtually always do better on the ACT than the SAT. True?

I’ve heard for years that “many” girls do better on the ACT. I’ve never seen any data though, or any type of study. With few exceptions, we recommend that every student take both the SAT and ACT at least once… and gauge from there. There’s often a pronounced favorite after they’ve taken the “real tests” versus practice tests.


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I heard that lots of colleges don’t require SAT or ACT scores. My son doesn’t test well, so should we pick colleges based on this?

Depending on just HOW bad your son scores on these standardized tests (after a genuine effort of test preparation) you may indeed be well advised to focus (at least on a 1st-pass) those colleges not requiring test scores. The list by the way seems to be growing year-to-year. According to FairTest.org, “nearly 850 four-year colleges do not use the SAT I or ACT to admit substantial numbers of bachelor degree applicants”.

Click here for FairTest.org’s list of colleges and universities that de-emphasize the use of standardized tests.

And remember that, while important, test scores are only one of numerous parameters taken into account in the College Admissions process, and different schools do indeed weight the importance of these scores quite differently.


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My son needs to find a good ACT course, classroom style. Who do you suggest?

I need to find an online SAT course. Any suggestions?

There’s a number of good online programs. Kaplan has a beauty. And for a video-based program, check out ePrep.

Students who are “self-starters” with a character of discipline and high motivation tend to excel with online courses like these. But beware if your student is easily distracted when sitting in front of the computer… Facebook, Twitter, and Instagram are always there to distract them. If they’re unable to stay focused on the subject matter contained in an online SAT or ACT course, you may be better served by signing up for a classroom course or even a private tutor.


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How long is the ACT?

The ACT is just a little shorter than the SAT. There’s an optional essay, although we recommend always including the essay. With the essay, the ACT is 3 hours and 25 minutes. Without the essay, it’s 2 hours and 55 minutes. It’s comprised of 5 sections:

  • English, 1 section
  • Math, 1 section
  • Reading, 1 section
  • Science, 1 section
  • Writing, 1 section

Each of the 5 sections counts for 36 points, and the composite (total) score is the arithmetic average of the 5 section scores, so a perfect score would be 36.


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How long is the SAT?

The SAT is the longest test of all… 3 hours and 45 minutes, WHEW! It’s comprised of 10 sections:

  • Math, 3 sections
  • Critical Reading, 3 sections
  • Writing, 3 sections
  • Experimental, 1 section

The Math, Critical Reading, and Writing all count for 800 points each, so a perfect score would be 2400. About half the colleges aren’t counting the essay.


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What’s most important to college Admissions Officers when they’re reviewing applications?

According to NACAC (National Association of College Admissions Counselors), here are the “Top Factors in College Admissions”:

  • 1a) Grades in College Prep Courses
    • AP (Advanced Placement) classes/tests
    • IB (International Baccalaureate) classes/diploma
    • Dual-enrollment Courses
  • 1b) Strength of Curriculum
    • Rigor
    • Relevance
    • Quantity & Quality
  • 2) Admissions Test Scores
    • SAT
    • ACT
    • AP & Subject Tests
  • 3) High School GPA
    • Overall
    • Don’t fall behind
    • Don’t lose focus

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Our daughter is a super high achiever with a 4.0 GPA. Should she take the SAT or the PSAT in October of her junior year?

Hands-down she needs to take the PSAT. The junior sitting of the PSAT is the ONLY one that counts for National Merit! If she finishes strong enough compared to others in your state of residence, she may become a National Merit finalist… to which some marvelous scholarship money could be attached by any number of colleges across the country.


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When is the PSAT?

The PSAT is administered every mid-October at schools all across the U.S.

With few exceptions, we recommend ALL sophomores take the PSAT. The sophomore sitting counts for NOTHING… so there’s nothing to be nervous about, Sophomores. It’s great exposure to the test(s) that DO count in the junior year.

The junior sitting of the PSAT on the other hand DOES count… not so much for college admission but National Merit Scholarship funds. A sliver of students will go on to become National Merit Finalists, which has some sweet scholarship funds attached to their achievement!

The Ideal College Planning Timeline indicates that (ideally) ALL tests… SAT, ACT, even Subject Tests… should be completed by the end of the junior year. This would be the 1st Saturday in June (for the SAT and Subject Tests) and the 2nd Saturday in June (for the ACT).


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What is the average ACT score?

For 2012, according to Kaplan, the average ACT sub-scores were as follow:

  • English: 20.5
  • Math: 21.1
  • Reading: 21.3
  • Science: 20.9
  • Writing (Multiple Choice) : 20.9
  • Writing (Optional Essay): 7.1 (out of 12)

Total Average ACT Score: 21.1


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How are ACT tests scored?

Here are the 3 elements that define the scoring system for the ACT:

  • Correct Answer: +1 point
  • Omitted Question: 0 points
  • Incorrect Answer: 0 points

A HUGE difference between the SAT and ACT is that on the ACT, you’re not penalized for answering incorrectly. Knowing this, you should never leave an answer blank on the ACT. If you’re down to the last 60 secs of the test and you have 10 unanswered questions, GUESS! There’s nothing to lose.


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How are SAT tests scored?

Here are the 4 elements that define College Board’s scoring system for the SAT:

  • Correct Answer: +1 point
  • Omitted Question: 0 points
  • Incorrect Answer (multiple choice): -1/4 point
  • Incorrect Answer (non-multiple choice math questions): 0 points

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What is the average SAT score?

For 2012, according to Kaplan, the average SAT sub-scores were as follow:

  • Math: 514
  • Critical Reading: 496
  • Writing (Multiple Choice): 488
  • Writing (Essay): 7.1 (out of 12)

Total Average SAT Score: 1498


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Should students take both the SAT and ACT … or just one or the other?

Not all of the experts agree on this one, but our opinion is that… with FEW exceptions… ALL juniors should take BOTH the SAT and ACT tests, at least once. While there are several good “predictive” tests resulting in a recommended choice… SAT or ACT… there’s absolutely no downside to taking them both.

Many students are surprised when they get back their ACT scores and they’re far better than their SAT. In order to accomplish this, however, the student must intentionally plan their SAT/ACT testing SCHEDULE by late in their 1st-semester junior year. Ideally, ALL testing is completed by the June sitting… SAT, ACT, and Subject Tests.


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ESSAYS & APPS

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I need help coming up with a theme for my college essay. Where do I start?

You’ve got a number of options on this. Many students default to relying on their English teacher to assist with this. Our personal opinion is that this is not always a good option. (NO offense to all the great English teachers out there, but College Essays are not the same as term papers or writing assignments.)

The next option is to buy a good book on “Great Essays”. This may give students some creative ideas on essays already written that were successful (at least theoretically) to someone. This option by no means guarantees success! Different schools are looking for different levels of intellect, not to mention creativity. Which brings me to the final option:

Many students these days hire a “coach”. The more competitive the school, the more this should be seriously considered. Be aware that not all coaches are created equal!

We have several essay (and application) coaches at GetCollegeFunding. Contact us if you’d like to speak with one of them on this important subject.


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I thought there was just one “college essay”. My son told me he needs to write several. Who’s right?

Your son is absolutely correct. There’s no such thing as THE “College Essay”. Some students wind up writing 10 or more (believe it or not). As an example, let’s say your son applied to 7 private colleges (all of which accepted the Common App), 2 UC’s (Univ of CA), and 1 CSU (Cal State).

He would select one of the primary prompts from the Common App (Essay #1), there would be (at least) 7 additional “Supplement Essays” for the private colleges (Essays #2 thru #8), and 2 “Personal Statements for the UC application (Essays #9 & #10). The CSU application requires no essays.


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I can’t find the essay prompt on the Cal State application. Where is it?

There is no essay required for CSU. Lots of public colleges don’t have an essay requirement. You’ll find very few private colleges, however, that don’t have the requirement.


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How do you apply to several UC campuses? Is there a separate application for each campus?

Simple! It’s just one application. You’ll see 9 checkboxes on the application, 1 for each UC campus. Check as many as you want (not that this is my recommendation), but beware that each checkbox will cost you $70.

Click here for the University of California “How to Apply” webpage


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I just heard of the “Common Application”. How many colleges accept it?

As of the time of this answer, there are 488 colleges accepting the Common App. Click here to view the list of colleges.


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Can you just copy and paste essays for all the college applications?

Nope, you’ll find a wide variety of prompts among the colleges. Some of them are incredibly challenging and thought provoking. Now students HAVE been known to cut & paste essays for the prompt “Why do you want to attend College XYZ?” And during some last-minute deadlines, students still forget to “paste” the correct college name in place… OUCH! When cutting & pasting IS in order, be careful, students!


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How early should my daughter begin her Common App essay?

Your daughter should complete her 1st-draft Common App essay by Labor Day coming in to her senior year. Some students take this on as a summer project when they’ve become a rising senior. Some highly motivated students start thinking of themes in their junior year, some as early as the sophomore year!

Sadly, way too many students wait until well into their senior year to give this any serious consideration. And they often find themselves stressed out as time begins to run out. This can be avoided. Start early… NO later than early in the summer approaching the senior year.

By the way, the Common Application and website changed pretty dramatically in the summer of 2013, including the essay prompts. Juniors… even sophomores… should get familiar with the site, set up their free account, review the application, and assess the prompts.

Click here to see the new Common App website


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Why won’t my son’s teacher let him see the letter of recommendation he’s written?

These letters are considered highly confidential and (believe it or not) some students wouldn’t hesitate to alter or even create letters of recommendation if the process included them handling the letters.


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How important is the college essay?

Different colleges will answer this question in a variety of ways, and you’re sure to get a bunch of different answers from college counselors. Here’s what we’ve observed:

The student should make every effort to write something personal and uniquely interesting about them and their point of view. From a worse-case scenario, the essay might be viewed as “neutral”, meaning it won’t assist or hinder likelihood of admission. But on the upside, a well-written, well-thought-out essay can be a tie-breaker or even a boost in acquiring admission to choice colleges of a student.


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My daughter has written essays for her English class. Can she just use one of them for her college essay?

Nope, won’t work. The college essay isn’t the same as writings for English class. Some colleges call essays “personal statements” which more accurately reflects the whole purpose of them. Colleges want to learn something unique and personal about your daughter.

And just to clarify, it’s possible that your daughter may be writing multiple essays. If she applies to a few private schools that accept the Common Application, there will be one primary prompt she’ll select from the app. And then the individual colleges have “supplemental apps” as well, typically requiring an additional essay.


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When should a student have their 1st-draft essays and applications completed?

This may be a surprise, but for a student planning properly for college, their 1st-draft essays and applications should be completed by Labor Day as they are entering their senior year. This allows them a comfortable “cushion” schedule-wise in the 1st-semester senior year… when all their friends are stressing out, just beginning to get serious about their college selection, apps, essays, etc.


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STRATEGIES

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How is deferred compensation treated on the FAFSA form?

There are different types of deferred compensation (deferred comp) income.  In order for the income to be non-taxable (at this time) AND not declared on the FAFSA form, a non-qualified deferred compensation agreement must be in place and the deferment must be subject to what is called FORFEITURE. What this means is that the deferment of income must be put at risk of loss and the future payments must be in the form of a promise to pay at some point in the future. The wage-earner does not have ANY ownership of the funds or control over the future payments.

The risks of this type of arrangement are obvious. The paying/owing party could go bankrupt… or not live up to the agreement… and may not be able to pay as promised. But this is the arrangement that MUST be in place in order for NON-declaration on the FAFSA form of the deferred comp. If the wage-earner has control or ownership of the funds, the income… deferred as it may be… must be declared on the FAFSA.


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We’re accelerating our wedding date so that my husband’s insurance pays for an operation I need to have. After the operation we’re considering getting a quick divorce so that his income isn’t declared on the FAFSA. Will this strategy work?

Say what?

On a professional level, we fundamentally oppose “gaming the system”. Your strategy (even if it were to work) is against our business principles.

On a personal level… as a U.S. taxpayer I find such a notion offensive. As a man of (Christian) faith I find it particularly problematic.


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Is it more beneficial to declare a major when applying to college or go undeclared?

There’s not a cookie-cutter answer for this. A large number of college freshmen enter undeclared. This is not uncommon. BUT… for a student who has aspirations of entering an impacted curriculum or otherwise selective college within a university and assumes they can “slip in under the radar” by entering undeclared and then transferring late in the sophomore year, they will most often be very disappointed.

The accurate answer to your question is this: The necessity to declare (or not declare) a major depends on a number of factors, including the college, the major, even the student’s academic credentials.


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What happens if my daughter applies Early Decision, gets accepted, and we can’t afford the college due to a lack of financial aid being offered?

It’s very unfortunate (and rare) that families actually back out of an Early Decision (ED) offer, but it does happen. Applying ED is a serious commitment. It is indeed a binding agreement. You’re agreeing that, if accepted, your child WILL attend. And by implication you’re agreeing to accept the financial aid package, if any, forthcoming.

The Common Application instructions for ED state:

“If you are accepted under an Early Decision plan, you must promptly withdraw the applications submitted to other colleges and universities and make no additional applications to any other university in any country. If you are an Early Decision candidate and are seeking financial aid, you need not withdraw other applications until you have received notification about financial aid from the admitting Early Decision institution.”

The Wiggle-Room

Now there IS a bit of wiggle-room in the instructions as indicated by this:

Should a student who applies for financial aid not be offered an award that makes attendance possible, the student may decline the offer of admission and be released from the Early Decision commitment. The institution must notify the applicant of the decision within a reasonable and clearly stated period of time after the Early Decision deadline.

So if you find yourself in this position, you should REQUEST being “released” from your commitment. And by all means get the release notification in writing/email.

How To Avoid This Situation

There are 2 things you can do to avoid back-peddling from an ED commitment:

  1. Most highly-selective (private) colleges have a decent Net Price Calculator online to give you a ballpark idea of the financial aid you can expect. Start here to get a rough idea of what an average financial aid award would look like for your family’s profile.(Beware that not all Net Price Calculators are created equal! Some of the ones used… especially by certain public institutions, it seems… are ridiculously inaccurate, so don’t rely on the Net Price Calculator results in their entirety.)
  2. If you cannot comfortably “write the check” for the total cost of college for an ED application, then you should request an Early Read from the Financial Aid Office. Different schools have different procedures for this activity. The results of this should be reliable and give you a reasonable idea of how affordable the school is for your family.

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I took out a series of parent PLUS loans about 10 years ago and my debt has grown to $65,000. I’m currently out of work and have stopped making payments. Any suggestions?

Sadly, this is not an uncommon situation. I have a couple of recommendations. The first would be to make SOME level of payment as a good-will gesture. As for any creditor, some level of payback is encouraged… as small as it may be.

Secondly, we are proponents of Mr. Dave Ramsey and his get-out-of-debt philosophy. His claim to fame and foundational philosophy centers around becoming debt-free. Dave offers a methodical, intentional program for how to accomplish this. His results are stellar. I recommend his flagship program called Financial Peace University. It’s hosted all around the country year-round. In fact, we’re privileged to host this 9-week class every summer in our Dana Point office. Here’s the link for more information:

Dave Ramsey’s Financial Peace University

I hope this helps…


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If a family’s EFC exceeds the total cost of all the colleges the student is considering, is there any reason to fill out the FAFSA?

I need to ask a question in order to answer this… and here’s the question:

Do you plan on taking out ANY federal loans to help pay for college, including the student Stafford loan or the parent PLUS loan?

If the answer to this question about loans is a hardy “NO” (and we hope this is the case!),
then there is NO reason to fill out the FAFSA or the CSS Profile form. And let me clarify that a family must know with no uncertainty that their EFC is indeed higher than the COA (Cost-of-Attendance) of all the colleges under consideration.

If the answer to the question about loans is “YES” (and again, we hope this is NOT the case!),
then YES, the FAFSA form must be completed and submitted to the Department of Education.

In either case there will be no need-based financial aid offered by the federal or state governments or any of the colleges. Any free money will come exclusively from merit-based achievement.


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Our son is in the process of signing his promissory note for the $5500 unsubsidized Stafford loan. What would you advise as an alternative?

If you live within a reasonable driving distance, have you considered having your son commute? Very few colleges offer room & board for less than $5500. It’s often double this amount or more. This in and of itself would allow you to avoid this student loan.

Another alternative that’s growing immensely in popularity is taking a “gap year”… this would involve your son delaying his college entry as a freshman for a year, providing him a year to work in his area of interest, almost like an internship program.

He should be able to earn well in excess of $5500. This would also give your family an opportunity to save more and possibly even adjust your expenses a bit. We encourage you to do everything you possibly can to avoid student loans.


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I heard that shacking up as opposed to getting married can improve my daughter’s financial aid eligibility because we don’t have to claim my boyfriend’s income. Is that true?

Actually, that did indeed used to be true. However, starting in the 2014-2015 college year, the reference to the student’s parents is changing from the traditional Father and Mother to the new Parent One and Parent Two.

And part of this change includes live-in partner arrangements. Shackin’ up will no longer remain a federally protected status. This means that your boyfriend’s income will now be included, even though you’re living together and not married.


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My son won a scholarship from my employer. What are the tax laws for such scholarships?

This type of scholarship is considered a Scholarship Prize. Such scholarships can be used for any purpose, including a computer, car, travel, etc., even clothes. However, if part or all the funds are used for such purposes, then 100% of the scholarship funds are seen as taxable income.

If a portion of the scholarship is used to pay for college tuition but the rest is used to buy a car, then 100% of the scholarship funds are treated as taxable income. On the other hand, if ALL of the funds are used to pay for qualified educational expenses, such as tuition & fees, required books, supplies, etc., then the scholarship would qualify as tax-free income under IRS guidelines.


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Is there any impact to my daughter’s financial aid eligibility if I use some of my IRA funds to pay for college?

The withdrawals from IRAs used for qualified higher education expenses may be penalty-free, BUT… the withdrawals can indeed have some adverse financial aid ramifications. IRA withdrawals are considered taxable income and can reduce financial aid eligibility of the student by as much as 47% of the increase in AGI caused by the taxable IRA withdrawal.

This scenario is especially the case for families with low-to-moderate EFC’s (Expected Family Contributions). And this is not applicable for merit-based scholarships. We’re referring only to need-based financial aid.

GetCollegeFunding does not encourage moms and dads to borrow against retirement accounts to pay for college.


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I heard that you can hide money in an annuity right up to the moment of submitting the FAFSA. Is this true?

Hmm, first of all I don’t like the term (or concept of) “hiding money”. Now on the other hand, I embrace the concept of intentionally and strategically strategizing for Financial Aid… every bit as well as for income tax.

You should never restructure your assets for the sole purpose of “looking poor”. If restructuring into an annuity is encouraged by your Financial Adviser and ultimately improves your family’s financial profile AND results in lowering your EFC a bit… then that’s GREAT! But it should never be the sole motivator.

On another note, NEVER let a college funding “expert” convince you to move money into a permanent life insurance policy in order to qualify for financial aid… NEVER! This practice has been going on for years and most of the time, the real motive is to line the pockets of the sales guy with a substantial commission.

What They DIDN’T Tell You…

Here’s an important point that those hungry to reposition your assets will likely NOT tell you: If the repositioning occurs well into the base year or even into January/February of your child’s senior year (when the FAFSA is due), all of the interest earned from the asset will be exposed on your income tax return as well as the FAFSA.

Even the most junior Financial Aid Officers are trained to look for the anomaly of “Interest Earned vs. Non-Declared Assets”. It’s a red flag and is seldom missed by most college Financial Aid Officers.

For legitimate annuities set up well before your student’s base year even begins, this will NOT be an issue and could very well be a bona fide financial planning strategy endorsed by your Financial Advisor.

When someone is encouraging you to move money into an annuity… and ESPECIALLY a permanent life insurance policy… BE CAREFUL! Always run this by a true College Funding/Financial Aid professional to assure your best interests are at heart.


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Debt-free college seems impossible. What’s the first step we need to take in order to even possibly achieve this?

This is going to seem SO rudimentary, but the first step is sheer common sense. (Sadly, not so common today, unfortunately.) Not to diminish the value of higher education, it comes down to old-fashioned basics: don’t buy what you can’t afford. Eliminate even the concept of borrowing money for college!

Just think of other high-ticket items families purchase all the time… houses, cars, even vacations! Now while it’s true that many families borrow for all the above, we subscribe to the Dave Ramsey platform that you should not be borrowing money. I agree with Dave that there is indeed some slack given when it comes to purchasing a home, especially in some areas of the country. But for everything else, DON’T BORROW! Do I sound like Grandma or Grandpa yet? GOOD… I hope I do, because THEY had it right!

So the FIRST step in planning for your child to graduate college DEBT-FREE is… determine how much you can AFFORD to pay… out-of-pocket! Look at your ear-marked college savings account(s) and your available cash-flow, and that’s what you can afford. If it’s not enough for the college you’re committed to, then you’ve got to reduce your expenses, sometimes drastically.

It’s important to realize that just because you can’t afford to pay the sticker price for the college (properly called the COA: Cost-of-Attendance), this does NOT necessarily mean the school is unaffordable. The next steps in achieving debt-free college involve an accurate forecast of Financial Aid, both need- and merit-based.

By the way… college becomes a whole lot more “affordable” when Mom and Dad have NO debt themselves! If you as parents aren’t debt-free, then the biggest tip I can give you is to attend a Dave Ramsey 9-week class called Financial Peace University (FPU). Click here to find one near you.


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Along with our son graduating debt-free, my wife and I would like some help in becoming debt-free ourselves. Any suggestions?

I suspect you are among the thousands of families who have become tired of being a “slave to the lender”. CONGRATULATIONS!

The good news is that yes indeed… there IS help. I encourage you to go through Dave Ramsey’s Financial Peace University (FPU). This 9-week course is designed specifically to help you achieve your goal of becoming debt-free. We are such believers of Dave’s course that we volunteer every summer to host FPU in our office. Regardless of where you’re located, there’s an FPU nearby.

Click here to find a convenient location and time for you to attend. Then in the left-hand margin, click “Find a Class”. By the way, this was a GREAT question… one of the best ones I’ve ever been asked! THANK YOU!


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How is FAFSA effected with more than one student in college?

It can be advantageous for some families when more than one child is in college. The EFC (Expected FAMILY Contribution) is divided by the number of kids in college for the given school year, and the resultant EFC is the number used for the individual student’s need-based financial aid eligibility.

Here’s an example: Let’s say that a family’s contribution (EFC) with only one child in college is $40K. But the following year there are two in college. Assuming each child’s income and assets are negligible (and/or similar), each student would have an EFC of about $20K! Remember… the EFC represents the “family” contribution. This makes them EACH eligible for an additional $20K of need-based financial aid!

Depending on the COA (Cost-of-Attendance) of the colleges they’re attending and the colleges’ financial aid policies, the students could receive significantly more free money (grants) due to this.


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My kids are 10 and 13. I assume it’s too early to start thinking about college?

It’s a little early to create a College List, BUT… it’s NOT too early to strategically and intentionally accomplish 2 things from a College Planning perspective:

  1. Adjust your lifestyle (as/if necessary) such that you have no revolving debt. This will allow you to save for college.
  2. Emphasize to both your children the importance of doing their very best in school, and achieve the best grades they possibly can.

Sound old-fashioned? Sure does! And I can assure you that the pay-off for both these items is ENORMOUS.

If getting out of debt seems impossible, I would refer you to Dave Ramsey and his Financial Peace University. We are STRONG proponents of his debt-free lifestyle… and teachings!


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How do you select a college major?

Lots of research… or hire someone. These are the only 2 options on this one. We always recommend beginning with a high-quality Personality Assessment. These assessments are NOT created equal.

There are now over 7000 college majors offered across the country! WOW! Considering that, with few exceptions I recommend at least an Introductory Counseling Session with a professional who specializes in this.

Contact us at GetCollegeFunding for referrals.


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How much money can my daughter earn before her income hurts her financial aid?

This number is called the student’s “Income Protection Allowance” and is subject to change year-to-year. For the 2015-2016 FAFSA form, the number is $6310. Here’s the significance of this important allowance:

Let’s say your daughter’s total income in 2014 was $10K. Subtracting $6310 from the $10K income we have $3690. The income assessment is 50% of this amount! So when we take 50% of $3690, the “EFC Due to Student Income” is $1845. This means that because of your daughter’s $10K earnings, she would be eligible for $1845 LESS need-based financial aid than someone who didn’t work at all.

The moral of the story is… according to the government, the student who doesn’t work is “entitled” to more money from the government than a student who does. And the same goes for parents. Without getting into the politics of it all, it would appear that the government encourages students and parents to minimize their income so that they can receive “entitlements” from the government. Hmmm…

And for the “dreamers” here in my home state of CA? Well, they get FREE tuition… an “entitlement” amounting to over $50K at a Univ of CA institution.


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I normally file for an income tax extension. Will that be a problem for my son’s financial aid offering?

Unfortunately, the answer is YES. That is, if you are referring to need-based financial aid. Schools requiring the FAFSA and/or CSS Profile form will NOT make your son a formal (final) financial aid offer until your income tax return has been filed with the IRS. Some schools will give you an estimate based on your estimated numbers, but nothing formal. And remember, need-based money can “run dry” from colleges own funds, so this could result in a lack of financial aid that would otherwise have been offered.


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What’s most important to college Admissions Officers when they’re reviewing applications?

According to NACAC (National Association of College Admissions Counselors), here are the “Top Factors in College Admissions”:

  • 1a) Grades in College Prep Courses
    • AP (Advanced Placement) classes/tests
    • IB (International Baccalaureate) classes/diploma
    • Dual-enrollment Courses
  • 1b) Strength of Curriculum
    • Rigor
    • Relevance
    • Quantity & Quality
  • 2) Admissions Test Scores
    • SAT
    • ACT
    • AP & Subject Tests
  • 3) High School GPA
    • Overall
    • Don’t fall behind
    • Don’t lose focus

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Is there an EFC threshold for private colleges costing less than the publics?

GREAT question! There’s not an actual hard threshold per se, but since California is our home base, I’ll provide an analysis for this locale that should provide some insight as to how this works.

I tell CA families all the time that if their EFC is less than “$25K-ish” (this is a soft number), then they should seriously consider private colleges as an option, especially if their student has a solid academic achievement. Here’s why:

Let’s say a CA family has a $25K EFC (per the FAFSA). This family would likely have an income somewhere in the vicinity of $125K or so. With few exceptions, they will receive NO free money from a public college in CA… either at a Cal State or a UC campus. This means they’re writing a check for somewhere between $20K and $36K, totally out-of-pocket.

If their student attended any number of private colleges (in or out of CA) their need would be, let’s say, $55K – $25K = $30K. So the student is eligible for up to $30K of need-based financial aid. Couple this with even a modest merit-based scholarship, and this family could realize out-of-pocket costs lower than their EFC of $25K.

And remember… the likelihood of the student graduating from a private college in 4 years is high. From a public college in CA? Extremely unlikely to accomplish this! We see this scenario play out frequently! The end result is that many families can spend less money sending their student to a high-dollar private college for less money out-of-pocket than a public institution.

(Results will vary of course from state-to-state and from student-to-student.)


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Do we include our small business assets on the FAFSA?

Only if your business employs more than 100. Many families erroneously include small biz assets on their FAFSA, increasing needlessly their EFC (Expected Family Contribution) and often preventing them from receiving what would have been a generous need-based financial aid award.


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I keep hearing that private universities that cost 2 to 3 times as much as public colleges are somehow more affordable. How does that work?

Unless you qualify for federal and/or state funds, most families receive little to nothing from public colleges. Many private colleges, on the other hand, offer need-based financial aid resulting from your EFC calculation. Private schools offer much more merit scholarships as well.


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I heard that we should move all of our daughter’s money out of her name. Do you agree?

ABSOLUTELY NOT!

You need to FIRST learn your EFC (Expected Family Contribution). If your EFC Due to Parent Income is anywhere near the total Cost of Attendance of the schools your family is considering, then moving assets will NOT improve your daughter’s financial aid situation at all.

While on rare occasions there are effective strategies to restructure children’s assets, consider such action only with extreme caution! Beware of any College Funding “expert” who advises you carte blanche to move money out of your child’s account regardless of your EFC in order to improve financial aid eligibility… and ESPECIALLY if they’re suggesting any kind of permanent life insurance (most often, universal life).


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Is it true that if we emancipate our son before he leaves for college that he’ll get a lot of grants from the government?

A common MIS-conception is that this is easy AND effective. In reality, it’s NOT a strategy that results in more financial aid to the student. The government and the colleges consider a student to be “dependent” until they’re 24 years of age. As such, parent income and assets must be declared on the FAFSA and CSS Profile Forms.

And a quick side-note: It’s also a mis-conception that a college student claiming themselves as an exemption on their income tax return automatically classifies them as an independent student, thereby exempting mom and dad’s income and assets from the financial aid forms. This is not the case.


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Is it easy to establish in-state residency for our son since we have relatives in that state?

In-state residency requirements vary from state-to-state. But what I CAN tell you is that it’s not nearly as easy to establish residency as it was a generation or two ago. The public colleges caught on to awhile back. You should contact the public college in the state under consideration and ask an Admissions Counselor this question. Some research and Google’ing should yield correct answers as well.

In-state residency is irrelevant when it comes to private college tuition. It applies only to public colleges.


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We were told by a College Funding expert to move most of our liquid assets into an insurance policy in order to get financial aid. Do you agree?

I flat-out disagree with this “strategy”. While there are RARE occasions that this may incrementally help financial aid, most of the time the primary purpose is to line the pockets of the college funding “expert” with a hefty commission. Consult a reputable Financial Advisor before you consider moving significant amounts of money into a permanent life insurance policy. (And you may want to research Dave Ramsey’s perspective on permanent vs term life insurance.)


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When should a student have their 1st-draft essays and applications completed?

This may be a surprise, but for a student planning properly for college, their 1st-draft essays and applications should be completed by Labor Day as they are entering their senior year. This allows them a comfortable “cushion” schedule-wise in the 1st-semester senior year… when all their friends are stressing out, just beginning to get serious about their college selection, apps, essays, etc.


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Is it true that increasing 401(k) contributions will increase our financial aid?

Nope, this will NOT increase your financial aid one penny. This is one of the most common mistakes we see families make year-to-year. While it’s true that 401(k) contributions will decrease your AGI and therefore your EFC (Expected Family Contribution), any contributions to qualified retirement plans… 401(k), 403(b), even IRA’s… are added back on the financial aid forms, so it’s a “net-zero” effect. This often results in less cash liquidity for mom and dad when the college bill comes.


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What assets DON’T have to be declared on the FAFSA?

There are only a few assets that are NOT to be declared on the FAFSA form. They are:

  • Home Equity… this means your residence. Any rental property or 2nd-home equity must be declared.
  • Retirement Funds… this includes 401(k), 403(b), IRA’s (all types), and non-qualified annuity funds (all types)
  • Business Assets… if your business has 100 or fewer employees, your biz assets are NOT to be declared. Greater than 100, you must declare them.

Your net worth (according to the FAFSA form) for financial aid considerations is determined by 2 lines on the FAFSA:

  • Cash, savings, checking
  • Investments (stocks, bonds, mutual funds, 529 plans, etc.)

Because home equity, retirement funds, and business assets are NOT declared on the FAFSA form, it’s not uncommon for high net-worth, NON-W-2 wage-earning families to qualify for federal funds, including the Pell Grant and subsidized Stafford loans (your tax dollars at work, hmmm…)

(NOTE: The CSS Profile Form is much better at determining true, legitimate “need”, resulting in some families avoiding colleges altogether that use it and limiting their kids’ applications to FAFSA schools only.)


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Can we fill out a FAFSA before our daughter’s senior year? We’d like to learn our EFC early.

You CAN learn your EFC before your daughter’s senior year, and in fact you SHOULD. This is highly advisable. However, you cannot SUBMIT the actual FAFSA form before the senior year. It will essentially go nowhere.

There are several good tools to help you learn your EFC. My favorite is ours (of course). It’s free, online, and you can gain access it HERE. The other one I would recommend is on the FAFSA website, and the tool is called FAFSA4caster. You can access the FAFSA4caster HERE.


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Do we claim business assets on the FAFSA?

There was a business-friendly change to the FAFSA several years ago. If you own a business and you employ 100 or fewer individuals, then you should NOT list any business assets on the FAFSA form.


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My ex-husband and I have shared custody of our daughter, 50-50. Who fills out the FAFSA?

If your daughter’s PHYSICAL custody is indeed 50-50, right down the middle, then whichever parent provided the majority of her support in the base year (the year before she enters college) should fill out the FAFSA. The other parent should NOT declare anything on the form, unless child support was provided to the majority provider. Child support received is a separate line on the FAFSA.

By the way, if the shared custody isn’t exactly 50-50, then whichever parent has physical custody for at least “6 months and 1 day” should fill out the FAFSA.


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I heard that there’s ways for families to send their kids to an expensive school for less money than it would cost for a J.C. Is this legit?

Nope, not legit, sorry. Now it’s true that I could define a family profile… academically for the student, financially for mom and dad… whereby this claim would indeed be valid. But it’s for an infinitesimal segment of the population. Unscrupulous College Funding “experts” make this claim all the time! I’ve seen it in our own local newspaper in print. They would lead you to believe that this applies to EVERYone… just attend their seminar and learn the “secrets”. My advice? RUN the other way.


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I heard that we should move all the money out of our son’s account before his base year. Is that necessary?

Ah yes, the ol’ “You’ve got to move that money in order to get financial aid” line. While I can’t say this isn’t beneficial to a LIMITED number of families, this is by no means a directive that should be followed by everyone.

Before you even consider restructuring your family’s assets (parent or student), you must learn your EFC (Expected Family Contribution). Then, drilling down a little deeper, you must learn how much of your EFC is due to Parent Income. We have free software that calculates your EFC. You can access it by clicking here.

Beware of any college funding “expert” who recommends “repositioning” assets into a permanent life insurance policy. These folks tend to LOVE universal life insurance. It’s no coincidence that selling such policies produces large… and I do mean, LARGE… commissions for these “experts”. While the service fee for their “college planning” or “college funding” program may be as low as $995, they’re often collecting $10,000 to $20,000 (or more) in commissions(Surprised?)

If your EFC Due to Parent Income is anywhere close to the cost of the colleges your son/daughter is considering, there’s no need to even think about “moving money” ANYWHERE as a strategy to get more free money.

Here’s an excellent article by Kim Clark, writing for CNN Money. There are FINALLY people going to prison for their shady “College Planning” practices… it’s about time!


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TAX CONSIDERATIONS

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How is deferred compensation treated on the FAFSA form?

There are different types of deferred compensation (deferred comp) income.  In order for the income to be non-taxable (at this time) AND not declared on the FAFSA form, a non-qualified deferred compensation agreement must be in place and the deferment must be subject to what is called FORFEITURE. What this means is that the deferment of income must be put at risk of loss and the future payments must be in the form of a promise to pay at some point in the future. The wage-earner does not have ANY ownership of the funds or control over the future payments.

The risks of this type of arrangement are obvious. The paying/owing party could go bankrupt… or not live up to the agreement… and may not be able to pay as promised. But this is the arrangement that MUST be in place in order for NON-declaration on the FAFSA form of the deferred comp. If the wage-earner has control or ownership of the funds, the income… deferred as it may be… must be declared on the FAFSA.


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Does existing student loan debt impact future EFC calculations for families?

There’s nowhere on the FAFSA or CSS Profile forms to enter any type of “deduction” for student (or parent) loan debt. However, depending on the specifics, some families are able to take advantage of tax credits and deductions.

Tax credits, of course, reduce tax liability and translate dollar-for-dollar to more cash flow for college. Also, there’s a “Student Loan Interest Deduction” on the 1040 Form. Since this is positioned “above the line”, any such qualified deduction reduces Adjusted Gross Income (AGI), resulting in a reduced EFC.

If you’ve taken out higher education loans and have future FAFSA filings, you should plan on discussing this important topic with your tax professional.


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I heard that if we stop claiming our daughter as an exemption on our taxes, she will qualify for more financial aid. Is this true?

NO… this is absolutely not trueand is a common misconception. Until your daughter turns 24 (or gets married or has a baby or enters the military), she is considered a DEPENDENT student in the eyes of the government and the colleges. Sorry to be the bearer of bad news.

From a financial aid perspective, this means that parent income and assets must be declared on the financial aid forms.


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Why do I have to send in my tax documents to IDOC, yet the financial aid offices at my daughter’s colleges of interest will not allow me to send the same documents to them directly for their verification process?

Verification and the IDOC…

this does indeed cause a lot of confusion year after year.

First of all, the College Board collects families’ federal tax returns (and other documents) through the Institutional Documentation Service (IDOC), on behalf of participating colleges and programs. And the College Board notifies students selected by participating institutions as to when to submit these required documents.

In order to verify the tax figures on your FAFSA, the federal government has mandated a tool called the Data Retrieval Tool (DRT). Colleges have no choice but to use this… even though there continues to be technical issues (bugs) with this tool.  Because the DRT doesn’t always reflect the true financial position of the family, the IDOC turns out to be a good backup for most schools who use it.


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Does receiving the American Opportunity Tax Credit affect a student’s financial aid eligibility?

The FAFSA form asks if the student or parents receive the American Opportunity Tax Credit. This in and of itself will not disqualify the student from receiving federal or state financial aid.

However, more and more colleges are looking at the tax credit as what they refer to as an outside resource, and depending on the individual colleges’ policies, receiving the tax credit could cause the college to reduce the amount of institutional aid they offer out of their own pockets.


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What’s the purpose of the 1098-T tax form?

IRS Form 1098-T tax form looks to be very simple and straightforward. However, interpreting it correctly is actually a bit complicated.

This form is used by the IRS to determine whether or not a taxpayer can claim the educational tax credits and whether or not scholarships or grants are taxable or tax-free to the student.

The form shows the dollar amounts received by the college or the amounts billed and whether or not the student is full- or part-time. It will sometimes show prior year adjustments and scholarships or grants along with related prior year adjustments.

Misinterpreting this form can cause a family to forfeit thousands of dollars in tax credits and thereby pay thousands of dollars in unnecessary taxes.

We have on our team one of the nation’s foremost authorities regarding Tax Strategies for College Planning. If you would like a consultation with him, send us an email at support@GetCollegeFunding.org.


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Our local hospital is offering my daughter a $15,000 tuition nursing scholarship with the stipulation that she will work for the hospital for at least 5 years after she graduates. The scholarship documents suggested we check with our tax professional on potential tax consequences. This isn’t taxable, is it?

Due to the requirement to work for the hospital for 5 years after your daughter graduates, the IRS will likely view the scholarship as future earnings and require her to pay taxes on the funds in the year the money is received. Very few tax professionals understand this little known IRS ruling.


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My son won a scholarship from my employer. What are the tax laws for such scholarships?

This type of scholarship is considered a Scholarship Prize. Such scholarships can be used for any purpose, including a computer, car, travel, etc., even clothes. However, if part or all the funds are used for such purposes, then 100% of the scholarship funds are seen as taxable income.

If a portion of the scholarship is used to pay for college tuition but the rest is used to buy a car, then 100% of the scholarship funds are treated as taxable income. On the other hand, if ALL of the funds are used to pay for qualified educational expenses, such as tuition & fees, required books, supplies, etc., then the scholarship would qualify as tax-free income under IRS guidelines.


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Is there any impact to my daughter’s financial aid eligibility if I use some of my IRA funds to pay for college?

The withdrawals from IRAs used for qualified higher education expenses may be penalty-free, BUT… the withdrawals can indeed have some adverse financial aid ramifications. IRA withdrawals are considered taxable income and can reduce financial aid eligibility of the student by as much as 47% of the increase in AGI caused by the taxable IRA withdrawal.

This scenario is especially the case for families with low-to-moderate EFC’s (Expected Family Contributions). And this is not applicable for merit-based scholarships. We’re referring only to need-based financial aid.

GetCollegeFunding does not encourage moms and dads to borrow against retirement accounts to pay for college.


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I heard that you can withdraw money from an IRA and use the funds to pay for your child’s college education. Is this true? And if so, what are the tax and penalty consequences?

Penalty-free withdrawals from regular IRAs can be made to pay for undergraduate or graduate qualified higher education expenses for the taxpayer, the taxpayer’s spouse, or the child or grandchild of the taxpayer at an eligible educational institution.

The taxpayer will owe federal income tax on the amount withdrawn, but will not be subject to the typical 10% early withdrawal penalty. The penalty-free IRA withdrawal is available only if the withdrawal is used to pay for “qualified education expenses”.

Qualified education expenses include tuition, fees, books, supplies, and equipment. Room and board are also included if the student is enrolled on at least a half-time basis.

Any tax-free item under IRC Section 117 must reduce these education expenses such as, scholarships or grants, IRC Section 135 qualified U.S. Series EE bonds, veteran’s education benefits, and other tax-free educational benefits.

While borrowing against retirement funds to help pay for college has become quite popular, we strongly recommend against the practice. The dollar you’re borrowing may have become ten dollars by the time you retire were it to have remained in a solid investment account.

GetCollegeFunding Advisory Team member Mr. Chuck Moore is our Tax Strategist. If you would like information on how to meet privately with Mr. Moore for expert tax analysis and strategies, click here.


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I heard that parent PLUS loans are forgiven if the parent dies. What about income tax implications for the surviving spouse though?

First of all, a PLUS loan is taken out by just ONE parent, mom or dad… not both. So let’s say Dad’s name is on the PLUS loan. If Dad were to die at any time before the loan was repaid, then the loan would indeed be forgiven. Unfortunately, Mom would have to claim the loan forgiveness as “other income” and would pay federal and state income tax on the amount that was forgiven. However, she would NOT have to pay any social security tax on the amount.

If Mom died… and Dad’s name was on the PLUS loan, there is no forgiveness.


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My company matches a portion of my 401(k) contribution. Do I need to claim their contribution on the FAFSA?

No, fortunately you do not. But you must claim YOUR contribution in the “Untaxed Parent Income” section of the FAFSA form.


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I need help with some tax questions before I fill out the FAFSA. Can you recommend anyone?

My personal recommendation is Mr. Chuck Moore in Louisville, Kentucky. We’ve been working with Mr. Moore for years and have found him to be the most knowledgeable tax expert with a total bent toward College Planning. Click here to see his consultation rate.


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I’m recently remarried and my new husband doesn’t feel his income should be included for my son’s financial aid. What do I need to do?

Sorry to be the bearer of bad news, but whether your new husband likes it or not, his income IS considered as part of your son’s “Household Income”. It MUST be included. If he insists on not participating, then you might as well not even file any financial aid forms. This is a black-and-white issue from the viewpoint of the colleges and the government.


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All my income is untaxable, so I don’t file a 1040 Form. How do I file for financial aid?

Ahhh, the financial aid forms (the FAFSA and the CSS Profile) don’t care if your income is taxable OR un-taxable. With few exceptions, just about all income must be declared on the financial aid forms. There’s a special section for “Untaxed Income”… how convenient!


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How much money can my daughter earn before her income hurts her financial aid?

This number is called the student’s “Income Protection Allowance” and is subject to change year-to-year. For the 2015-2016 FAFSA form, the number is $6310. Here’s the significance of this important allowance:

Let’s say your daughter’s total income in 2014 was $10K. Subtracting $6310 from the $10K income we have $3690. The income assessment is 50% of this amount! So when we take 50% of $3690, the “EFC Due to Student Income” is $1845. This means that because of your daughter’s $10K earnings, she would be eligible for $1845 LESS need-based financial aid than someone who didn’t work at all.

The moral of the story is… according to the government, the student who doesn’t work is “entitled” to more money from the government than a student who does. And the same goes for parents. Without getting into the politics of it all, it would appear that the government encourages students and parents to minimize their income so that they can receive “entitlements” from the government. Hmmm…

And for the “dreamers” here in my home state of CA? Well, they get FREE tuition… an “entitlement” amounting to over $50K at a Univ of CA institution.


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I’m separated but still filing jointly with my son’s dad. How does this situation work with the FAFSA?

This gets just a tad messy, but it’s workable. Here’s what you need to do: File the FAFSA with ONLY your income and assets listed. When the colleges compare your FAFSA with your tax records, it will generate a flag. They’ll contact you, and you can then explain your situation. They’ll see on the FAFSA (as well as the CSS Profile form, if applicable) that you are separated, and they’ll understand what you’ve done with your income and assets declaration on the form(s).


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My daughter lives with me, but my ex-husband claims her on his taxes. He files the FAFSA, right?

Wrong… whichever parent has PHYSICAL custody of the student the majority of the base year fills out the FAFSA. In your case, that’s you, regardless of the fact that you’re not claiming your daughter as an exemption on your taxes. This is a common mistake.


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I normally file for an income tax extension. Will that be a problem for my son’s financial aid offering?

Unfortunately, the answer is YES. That is, if you are referring to need-based financial aid. Schools requiring the FAFSA and/or CSS Profile form will NOT make your son a formal (final) financial aid offer until your income tax return has been filed with the IRS. Some schools will give you an estimate based on your estimated numbers, but nothing formal. And remember, need-based money can “run dry” from colleges own funds, so this could result in a lack of financial aid that would otherwise have been offered.


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My daughter lives with me but my ex-husband claims her on his income tax return. Which parent files the FAFSA?

In this case, you’re the parent who provides YOUR financial information (income & assets) and signs the FAFSA. Whichever parent has the primary/majority PHYSICAL custody should fill out the FAFSA. It’s a common error to assume that whichever parent claims the child as an exemption should file, but this is entirely incorrect.


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I’m divorced from my son’s mother. Which one of us should file the FAFSA?

According to federal law, whoever maintains the majority of PHYSICAL custody files the FAFSA. If you share custody 50/50 right down the middle, then whichever parent contributed more to the support of your son files. Don’t make the common mistake that whoever claims the child on their federal income tax return is necessarily the one who files the FAFSA form.


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Is it true that increasing 401(k) contributions will increase our financial aid?

Nope, this will NOT increase your financial aid one penny. This is one of the most common mistakes we see families make year-to-year. While it’s true that 401(k) contributions will decrease your AGI and therefore your EFC (Expected Family Contribution), any contributions to qualified retirement plans… 401(k), 403(b), even IRA’s… are added back on the financial aid forms, so it’s a “net-zero” effect. This often results in less cash liquidity for mom and dad when the college bill comes.


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What assets DON’T have to be declared on the FAFSA?

There are only a few assets that are NOT to be declared on the FAFSA form. They are:

  • Home Equity… this means your residence. Any rental property or 2nd-home equity must be declared.
  • Retirement Funds… this includes 401(k), 403(b), IRA’s (all types), and non-qualified annuity funds (all types)
  • Business Assets… if your business has 100 or fewer employees, your biz assets are NOT to be declared. Greater than 100, you must declare them.

Your net worth (according to the FAFSA form) for financial aid considerations is determined by 2 lines on the FAFSA:

  • Cash, savings, checking
  • Investments (stocks, bonds, mutual funds, 529 plans, etc.)

Because home equity, retirement funds, and business assets are NOT declared on the FAFSA form, it’s not uncommon for high net-worth, NON-W-2 wage-earning families to qualify for federal funds, including the Pell Grant and subsidized Stafford loans (your tax dollars at work, hmmm…)

(NOTE: The CSS Profile Form is much better at determining true, legitimate “need”, resulting in some families avoiding colleges altogether that use it and limiting their kids’ applications to FAFSA schools only.)


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COLLEGE LOANS

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I want to go back to college and get my degree, but I left for a couple semesters and got behind on my student loan payments. They’re now in default. Can I still get financial aid?

If your federal student loans are in default, you automatically forfeit eligibility until the default is cleared up. To determine your options, contact your loan holder right away. Once you have resolved your default status with your loan holder, your college may request additional documentation from your loan holder also referred to as a Title IV eligibility letter or clearance letter.


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My daughter’s financial aid award has two line items for the Stafford Loan… a subsidized loan for $3500 and an unsubsidized loan for $2000. Do we have to accept the unsub’d loan in order to receive the sub’d one?

Fortunately, NO you do not. Accepting a financial aid award has a feature like a “line-item veto”. You can pick and choose which items you wish to accept and those you refuse. We strongly recommend avoiding federal UN-subsidized loans altogether. The interest rates are (currently) capped at 8.25%, and economists are forecasting that this rate could be realized in the not-to-distant future.

We recommend accepting subsidized loans only if you have a plan to repay them in one lump sum with cash saved as soon as the first payment becomes due after your student graduates from college, thereby avoiding any interest.


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My son will be entering college this fall and all we were awarded was federal loans. Where can we find some of that “free money” we heard so much about?

I’m sorry to be the bearer of bad news, but unless there are some compelling “special circumstances” regarding your family’s finances or some exceptional level of hardship, it’s unlikely that any significant “free money” is available. Forecasting the out-of-pocket costs for colleges before applying is the key to avoiding this common problem. Once a student has accepted the offer for admission, with few exceptions the free money that comes through from the school doesn’t change much from the initial award.


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Does existing student loan debt impact future EFC calculations for families?

There’s nowhere on the FAFSA or CSS Profile forms to enter any type of “deduction” for student (or parent) loan debt. However, depending on the specifics, some families are able to take advantage of tax credits and deductions.

Tax credits, of course, reduce tax liability and translate dollar-for-dollar to more cash flow for college. Also, there’s a “Student Loan Interest Deduction” on the 1040 Form. Since this is positioned “above the line”, any such qualified deduction reduces Adjusted Gross Income (AGI), resulting in a reduced EFC.

If you’ve taken out higher education loans and have future FAFSA filings, you should plan on discussing this important topic with your tax professional.


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What is the average student loan debt?

For the past few years we’ve been told that the average student loan debt has been hovering around $25K-ish. This appears to be a bit low according to Fidelity Investments. In May 2013 they announced the results of their second “Cost-Conscious College Graduates Study”.

The bottom line was their study found that the average student loan debt for the class of 2013 was actually substantially higher:

$35,200

This included federal, state, and private loans, even personal debt to family and credit card debt. And according to the study, 50% of the 2013 graduates with student loans are surprised as to just how much debt they accumulated during their college career.

We encourage moms, dads and students all across America to STOP buying into the madness that a college education equates to students going into debt. Colleges and the government have successfully convinced the public that loans are somehow financial aid… which is ludicrous. They’ve even convinced the public that a work-study program (more commonly called a JOB) is financial aid.

Student Loans Accomplish 3 Things

  1. They enslave our kids to debt.
  2. They provide a revenue source (this year estimated to be over $50 BILLION) to the government, more than the revenue enjoyed by the most wealthy oil companies.
  3. They embolden the colleges to continue to raise their prices anywhere between 3% and 7% EVERY year, regardless of any fiscal need to do so.

Unless you support any of these 3, don’t permit your student to borrow money for college.


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How are parent PLUS loans paid back?

PLUS loans were designed to be paid back over a 10-year period and always beginning 60 days after disbursement of funds to the college.

But a few years ago, a few more options were made available. Currently there are 3 options in paying back parent PLUS loans. They are:

  1. Principal & Interest amortized over 10 years, beginning 60 days after disbursement of funds
  2. Interest Only as long as the student is in college
  3. Deferred Payments until after the student graduates from college

Regardless of which of these payback methods is chosen by the parents, for the 2014-2015 college year the interest rate on the PLUS loan is 7.21% with a 4% origination fee, and the interest is never subsidized.

GetCollegeFunding strongly recommends not taking out PLUS loans from the federal government.


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I took out a series of parent PLUS loans about 10 years ago and my debt has grown to $65,000. I’m currently out of work and have stopped making payments. Any suggestions?

Sadly, this is not an uncommon situation. I have a couple of recommendations. The first would be to make SOME level of payment as a good-will gesture. As for any creditor, some level of payback is encouraged… as small as it may be.

Secondly, we are proponents of Mr. Dave Ramsey and his get-out-of-debt philosophy. His claim to fame and foundational philosophy centers around becoming debt-free. Dave offers a methodical, intentional program for how to accomplish this. His results are stellar. I recommend his flagship program called Financial Peace University. It’s hosted all around the country year-round. In fact, we’re privileged to host this 9-week class every summer in our Dana Point office. Here’s the link for more information:

Dave Ramsey’s Financial Peace University

I hope this helps…


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I heard that parents’ Social Security checks are being garnished if they fall behind on PLUS loan payments. Is this true?

This IS true! In fact it’s been going on for some time now, but the number of occurrences is rising dramatically. According to the Department of Treasury’s Financial Management Service data, in 2000 only 6 people had their Social Security checks garnished for delinquent student loan debt. In 2012 from January to August, 115,000 had their checks garnished.

GetCollegeFunding strongly advises AGAINST any parent taking out a federal PLUS loan.


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Our son is in the process of signing his promissory note for the $5500 unsubsidized Stafford loan. What would you advise as an alternative?

If you live within a reasonable driving distance, have you considered having your son commute? Very few colleges offer room & board for less than $5500. It’s often double this amount or more. This in and of itself would allow you to avoid this student loan.

Another alternative that’s growing immensely in popularity is taking a “gap year”… this would involve your son delaying his college entry as a freshman for a year, providing him a year to work in his area of interest, almost like an internship program.

He should be able to earn well in excess of $5500. This would also give your family an opportunity to save more and possibly even adjust your expenses a bit. We encourage you to do everything you possibly can to avoid student loans.


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Can you take out a loan for the total amount of the college bill?

Many families can… and do… borrow the entire amount due to the college. We strongly advise against this but many families justify the incurred debt. There are some details, however, that must be noted.

First of all, the ONLY “entitlement” loan that a student can expect to receive is the Stafford loan. This amounts to $27K over 4 years. Families who do not receive any financial aid… need- or merit-based… sometimes choose to borrow the balance in one of two manners:

  1. Federal parent PLUS loan. This is NOT an entitlement and must applied for by EITHER Mom or Dad. Depending on the financial profile of the family, some parents are approved and some are not. You can borrow up to the cost of college, NOT counting financial aid offered. The interest rate for this loan is 7.9% (OUCH!) and there is a 4% origination fee (double-OUCH!)
  2. Private loans. Institutions like Sallie Mae, Chase Bank, Citibank, etc. offer student loans with the contingency that Mom or Dad must co-sign. These loans vary in interest rates as a function of credit history, risk, etc.

If you as a family are considering taking out significant loans for your student to attend college, we encourage you to consider the alternatives, including Community College, taking a gap year, the military, etc. Don’t become part of the massive student loan debt crisis that continues to grow.


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I heard that parent PLUS loans are forgiven if the parent dies. What about income tax implications for the surviving spouse though?

First of all, a PLUS loan is taken out by just ONE parent, mom or dad… not both. So let’s say Dad’s name is on the PLUS loan. If Dad were to die at any time before the loan was repaid, then the loan would indeed be forgiven. Unfortunately, Mom would have to claim the loan forgiveness as “other income” and would pay federal and state income tax on the amount that was forgiven. However, she would NOT have to pay any social security tax on the amount.

If Mom died… and Dad’s name was on the PLUS loan, there is no forgiveness.


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I need help understanding all the college loan options. Where can I go for answers?

You can read about the various college loan programs on www.FinAid.org/loans. This is a fabulous website that covers a wide variety of college funding and financial aid topics. If you’re not into research and you want to talk to a live body about this, contact us at GetCollegeFunding. We have several specialists in this area.


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What are “campus-based funds”?

Campus-based funds are funds provided by the federal government to colleges. The distinguishing factor of campus-based funds is this:

The colleges decide… based on their financial aid policies… who gets the money.

There are 3 main campus-based funds:

  1. SEOG grant funds (Supplemental Education Opportunity Grant)
  2. Perkins loan funds (Student loan, always subsidized)
  3. Federal Work-Study (A job, typically on campus)

These campus-based funds are most often available only to students who have demonstrated “need” by filing a FAFSA form, resulting in an EFC substantially below the COA (Cost-of-Attendance) of the college.

In contrast to campus-based funds are the federal “entitlement funds”. The most popular entitlement funds are:

  1. Pell Grant
  2. Subsidized Stafford Loan
  3. Unsubsidized Stafford Loan

Entitlement funds are not based on individual college policies but simply meeting the requirements set forth by the federal government. Based on the information provided on the FAFSA form, entitlement funds are automatically provided by the Department of Education to the college on behalf of the student.


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I heard that for students who can’t pay back their college loans, all they need to do is file bankruptcy. Is this true?

This is absolutely, unequivocally, NOT true. Bankruptcy does NOT discharge student loan obligations.


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I’ve seen a lot of news articles lately on the massive amount of student loan debt. Just how high is the debt?

Student loan debt now exceeds 1.3 trillion dollars. That’s a lot of zeros! This is more than the total credit card debt in America. Some projections show this number increasing to 2 trillion by 2020.

$1,300,000,000,000

We recommend NOT borrowing for college, especially an undergraduate program.

But if you must borrow, DON’T borrow from Uncle Sam! He’s known for changing the rules at will… and often NOT to your favor.


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What’s the interest rate for the Perkins loan?

The interest rate for the Perkins loan is 5%.

The Perkins loan is a federal student loan and is always subsidized, meaning there’s no interest as long as the student is enrolled in a college with at least half-time status.

GetCollegeFunding advises AGAINST federal student loans.


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What’s the interest rate for the parent PLUS loan?

This is set legislatively by the U.S. Congress. The rate changes annually on July 1st. Once the rate is established for the given year, it’s fixed for the life of the loan. For the 2015-2016 college year, the rate (established on July 1st, 2015) is currently:

6.84%

(The next update will be July 1st, 2016 for the 2016-2017 college year.)

Here are some important points you need to know about the PLUS loan:

  • The parent PLUS loan is in only ONE of the parent’s name
  • This is NOT an entitlement loan… it’s credit-based. Some parents are denied the loan.
  • Interest always begins accruing immediately.
  • The loan origination fee (for 2015-2016) is 4.272%… OUCH!

We are NOT fans of this loan at GetCollegeFunding… but many parents, due to its ease in procuring for many families, jump at the PLUS loan.


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What’s the interest rate for the student Stafford loan?

The interest rate is set by the U.S. Congress. For the 2012-2013 college year, the rate was fixed at 6.8% for unsubsidized Stafford loans and 3.4% for subsidized. This changed quite significantly, however, in the summer of 2013.

After June 30, 2013, the interest rate became variable… based on the 10-year Treasury Note rate. For the 2013-2014 college year, all undergraduate Stafford loans were set at 3.86%.

The new rate effective July 1, 2014 for the 2014-2015 college year is 4.66%.

Part of the new legislation involved setting caps on future interest rates. The cap for undergraduate Stafford loans is 8.25% and 9.5% for graduate Stafford loans… (OUCH!)

We strongly recommend that students avoid these loans. The popular worldview, however, is to embrace these as legitimate “financial aid”. As the student loan debt continues to spiral out of control, more and more families are realizing the danger of borrowing from the government (as well as private institutions) for higher education.


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What’s the difference between a subsidized and an unsubsidized loan?

These terms typically refer to federal student loans.

While student loans… subsidized and unsubsidized… always offer deferred repayment terms until post-college graduation, subsidized loans are vastly preferred to unsubsidized.

Federal subsidized loans accrue NO interest as long as the student is enrolled in college with a status at least equal to half-time. For students receiving the maximum subsidized Stafford loan of $3500 for the freshman year, even if they were to continue into an advanced degree program (Masters, even Ph.D.), the day they graduate (many years later), the principal on their freshman loan would still be $3500.

Federal unsubsidized loans accrue interest from the moment the funds are disbursed to the college. We advise AGAINST taking out federal unsubsidized loans. Interest rates are uncertain and these adjust each summer. They can potentially exceed 8%… OUCH!

We fundamentally oppose student loan debt.

If you DO have the funds covered and your student is offered a SUBSIDIZED loan, then and only then should you accept the loan (in our somewhat humble opinion). Invest the funds you would have used for college costs, allowing them to grow over the next several years. Then pay off the loan upon graduation, avoiding any interest.


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What loans can a student get without a parent signature?

Contrary to what many families to be the case, the ONLY student loan that is guaranteed to undergraduate college students is the federal Stafford loan. Every freshman is entitled to $5500, sophomores $6500, and juniors and seniors each receive $7500. Their are additional education loans you may have heard of including Perkins loans, (parent) PLUS loans, and private loans, but these are NOT entitlement loans. Adding up the Stafford loan amounts mentioned, students can borrow $27K over 4 years, and if a 5th year (or more) is required to achieve the undergrad degree, an additional $4K (total) is available, maxing the Stafford loan out at $31K.


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Why are loans considered financial aid?

What a FABULOUS question! Many moms and dads are shocked when they learn this. Some colleges boast at “meeting 100% need”, with the financial aid “award” being nothin’ more than a big old “debt award”!

There’s 2 basic categories of student loans: subsidized and UN-subsidized. There’s somewhat of a case to be made… weak as it may be… that the subsidized loans are financial aid, because these loans are interest-free to the student as long as the student is enrolled at least half-time in a college. The fact that “someone else” (typically the government/tax-payers) is paying the interest lends itself to categorizing this type of loan as financial aid. BUT… it’s still a loan that must be paid back after graduation, and with some level of interest.

Now for the 2nd category of loans… unsubsidized. While the government and many colleges consider these too to be “financial aid”, I just cannot agree. Granted… the payments are deferred ’til after graduation, BUT these loans begin accruing interest the day the funds are disbursed to the college. And the federal Stafford loan (the most common/de facto standard) could creep up to the capped interest rate of 8.25%!

GetCollegeFunding strongly advises against these loans.


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How much can my student borrow?

The only “entitlement loan” your student can count on is the federal Stafford loan. All freshmen are offered $5500 by Uncle Sam. If a student’s EFC (Expected Family Contribution) is low enough AND if the school selects them for eligibility, they may be offered a federal Perkins loan for up to an additional $5500, but you cannot count on this.

Any other student loan must be co-signed for at a private banking institution.

Subsidized Stafford loans have no interest until graduation from college. However, most students receive the UN-subsidized Stafford loan, meaning that interest begins accruing as soon as the funds are disbursed from the government to the college. Payments are deferred until after graduation, but interest accrual begins immediately.

Federal legislation in August 2013 adjusted the interest rate for both sub’d and unsub’d Stafford loans to 3.86%. This rate will re-adjust every July 1st and is expected to increase should the economy improve. Based on current federal law, it could go as high as 8.25%.

GetCollegeFunding strongly advises against government loans of any kind.


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I NEED HELP WITH...

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Along with our son graduating debt-free, my wife and I would like some help in becoming debt-free ourselves. Any suggestions?

I suspect you are among the thousands of families who have become tired of being a “slave to the lender”. CONGRATULATIONS!

The good news is that yes indeed… there IS help. I encourage you to go through Dave Ramsey’s Financial Peace University (FPU). This 9-week course is designed specifically to help you achieve your goal of becoming debt-free. We are such believers of Dave’s course that we volunteer every summer to host FPU in our office. Regardless of where you’re located, there’s an FPU nearby.

Click here to find a convenient location and time for you to attend. Then in the left-hand margin, click “Find a Class”. By the way, this was a GREAT question… one of the best ones I’ve ever been asked! THANK YOU!


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I need help with some tax questions before I fill out the FAFSA. Can you recommend anyone?

My personal recommendation is Mr. Chuck Moore in Louisville, Kentucky. We’ve been working with Mr. Moore for years and have found him to be the most knowledgeable tax expert with a total bent toward College Planning. Click here to see his consultation rate.


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I need help understanding all the college loan options. Where can I go for answers?

You can read about the various college loan programs on www.FinAid.org/loans. This is a fabulous website that covers a wide variety of college funding and financial aid topics. If you’re not into research and you want to talk to a live body about this, contact us at GetCollegeFunding. We have several specialists in this area.


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I read that college statistics for financial aid are readily available but I don’t understand how to interpret them. Can you help with this?

College Financial Aid Statistics can indeed be confusing, and many families think they understand them only to find out too late they made some bad assumptions. We have College Financial Aid Stats for just about every college in the U.S., and interpreting  these stats and explaining them in an understandable and practical manner is one our specialities.

These stats are important IF you’re a need-based family, meaning your EFC (Expected Family Contribution) is significantly less than the COA (Cost-of-Attendance) of the colleges under consideration. Understanding the stats is paramount to accurately forecasting the amount of need-based financial aid a family should expect… at least on average.

Perhaps the most mis-interpreted financial aid statistic is Average Percent Need Met. Moms and Dads miss one of the most important elements of this stat… that being “AVERAGE”. Here’s an example:

Let’s say a college publishes its Average Percent Need Met statistic as 90%. First of all, this is highly favorable! (We like to see numbers greater than 75%.) 90% Need Met on Average means that for every student whose need is met 100% (and yes, there could indeed be some), correspondingly there is a student whose need has been met only to the tune of 80%.

Hmmm… so how does THAT work, you might ask? Well, the more “desirable” a student is within the incoming freshman applicant pool, the higher the Percent Need Met will tend to be. For a student in the top 5% of the applicant pool (academically) who demonstrated financial need (via their EFC), he/she will likely receive a higher percent need met than a student whose squeezes into the admit pool but was in the lowest 5%.

The exception to this would be the schools that have a stated policy of meeting 100% need for ALL admitted students. These would be schools like Princeton, Stanford, and The Claremont Colleges.


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I’m totally confused on this EFC calculation. Where can I get some help?

There’s a document that explains in detail how EFC (Expected Family Contribution) is calculated every year. If you’d like to study the tables and charts and read all about EFC, here’s a link to the document:

EFC Formula, 2013-2014

If you want some hand-holding on this, we’re experts on EFC. Contact us at GetCollegeFunding and ask for Tom. Whether you dig into this yourself or seek the help of a professional, it’s imperative that you:

  • Know your EFC calculation
  • Understand the 4 sub-calculations that make up your total EFC
  • Understand the significance of your EFC at your student’s colleges of choice

To learn your EFC… go to: www.EFC.guru


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My son needs to find a good ACT course, classroom style. Who do you suggest?

I need to find an online SAT course. Any suggestions?

There’s a number of good online programs. Kaplan has a beauty. And for a video-based program, check out ePrep.

Students who are “self-starters” with a character of discipline and high motivation tend to excel with online courses like these. But beware if your student is easily distracted when sitting in front of the computer… Facebook, Twitter, and Instagram are always there to distract them. If they’re unable to stay focused on the subject matter contained in an online SAT or ACT course, you may be better served by signing up for a classroom course or even a private tutor.


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I need help coming up with a theme for my college essay. Where do I start?

You’ve got a number of options on this. Many students default to relying on their English teacher to assist with this. Our personal opinion is that this is not always a good option. (NO offense to all the great English teachers out there, but College Essays are not the same as term papers or writing assignments.)

The next option is to buy a good book on “Great Essays”. This may give students some creative ideas on essays already written that were successful (at least theoretically) to someone. This option by no means guarantees success! Different schools are looking for different levels of intellect, not to mention creativity. Which brings me to the final option:

Many students these days hire a “coach”. The more competitive the school, the more this should be seriously considered. Be aware that not all coaches are created equal!

We have several essay (and application) coaches at GetCollegeFunding. Contact us if you’d like to speak with one of them on this important subject.


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How do you select a college major?

Lots of research… or hire someone. These are the only 2 options on this one. We always recommend beginning with a high-quality Personality Assessment. These assessments are NOT created equal.

There are now over 7000 college majors offered across the country! WOW! Considering that, with few exceptions I recommend at least an Introductory Counseling Session with a professional who specializes in this.

Contact us at GetCollegeFunding for referrals.


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My daughter is a junior and doesn’t know where to even begin in building her college list. Help!

There are several resources I recommend to students. These are great places to begin the process:

Constructing a realistic college list is one of our most important professional services. We’ve found that many students prefer working with an experienced pro on this critical task. If you would like to explore this as an option for your family, contact us at GetCollegeFunding.


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How do we fill out the FAFSA in January when we haven’t even received our W-2 Forms yet?

You can fill out your “1st-pass FAFSA” (as we call it) as early as January 1st for the upcoming college year with estimates for your prior tax-year income. The figures for your assets, however, should be as accurate as possible.

After your tax return is completed, you should then go back into your online FAFSA form and update with actual income numbers, matching exactly the numbers indicated on your federal Form 1040 that you sent to the IRS.


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My daughter is applying to 12 schools and there’s only room to list 10 on the FAFSA form. What do we do?

You are correct… there’s only room to list 10 colleges on the FAFSA form. (Until somewhat recently, it was limited to 6!) Why in the world the Department of Education refuses to add a few more slots to the FAFSA form which is ONLINE is beyond me… but this is indeed the current limitation. So with that in mind, what are parents and students to do when applying to MORE than 10 colleges.

Here’s The Solution:

Complete the FAFSA with the first 10 colleges listed. Within 3 business days, you can expect an email from Federal Student Aid informing you that the FAFSA has been processed and you can download the SAR (Student Aid Report). Follow the instructions, and download the SAR. (It serves as a “receipt” of sorts that the FAFSA was indeed processed.)

After you’ve downloaded the SAR, go back into the online FAFSA and delete the 10 colleges, making room to add the additional colleges to the form. Resubmit the FAFSA. Again, within 3 days you’ll receive an email from Federal Student Aid informing you that a new SAR is available to download. Follow the instructions and download the 2nd SAR.

FAFSA Webinar

We’ll be conducting weekly webinars on How To Fill Out The FAFSA Form as well as How To Fill Out The CSS Profile Form beginning the first week of January and continuing through the end of March. They’re free but you’ve gotta register.

Sign up for a free webinar now…


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I need help with the Common Application.

We have Common App specialists here at GetCollegeFunding who can help you. Students (and parents) are often surprised to learn that there are sophisticated strategies in completing this important admissions document. The more selective the colleges under consideration, the more you should consider being “coached” by an expert.


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I want to go back to college and get my degree, but I left for a couple semesters and got behind on my student loan payments. They’re now in default. Can I still get financial aid?

If your federal student loans are in default, you automatically forfeit eligibility until the default is cleared up. To determine your options, contact your loan holder right away. Once you have resolved your default status with your loan holder, your college may request additional documentation from your loan holder also referred to as a Title IV eligibility letter or clearance letter.


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My daughter is about to begin her junior year in high school. Her GPA is 2.5 and she’s worried that she won’t get into college because of her grades. Is she right?

The vast majority of colleges in America are what we call “pay-and-go”. You daughter can easily get into many colleges with a GPA of 2.5. These colleges may or may not be the ones she has in mind.

But I think the real concern might be WHY your daughter wants to go to college. If she’s struggling to get A’s and B’s, a 4-year college might not be the best solution for her. Does her current GPA really reflect her “best” efforts? Or is she not all that interested in academics?


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My son will be entering college this fall and all we were awarded was federal loans. Where can we find some of that “free money” we heard so much about?

I’m sorry to be the bearer of bad news, but unless there are some compelling “special circumstances” regarding your family’s finances or some exceptional level of hardship, it’s unlikely that any significant “free money” is available. Forecasting the out-of-pocket costs for colleges before applying is the key to avoiding this common problem. Once a student has accepted the offer for admission, with few exceptions the free money that comes through from the school doesn’t change much from the initial award.


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What is out-of-state tuition?

Out-of-state tuition applies only to public colleges.

In-state residents (and now, illegal aliens… I know, I know, “politically incorrect”, hmmm) are offered a tuition discount that’s subsidized by the state. For instance, UCLA currently costs about $35K for CA residents (and illegals) but well over $50K for students from other states, even those bordering CA, like AZ, NV, and OR.

Out-of-state tuition does NOT apply to private colleges. Whether a student is from CA or PA, the sticker price of Stanford University is $65K-ish.


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Do you ever have to pay a grant back?

No… by definition a grant is “free money”. It’s also referred to as “gift aid”.

Grants typically refer to need-based free money and are offered primarily by 3 entities:

  • The federal government
  • The state governments
  • Private colleges

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Does EFC equate to affordability?

Families often confuse the meaning of their EFC (Expected Family Contribution) calculation as derived from the FAFSA form. The federal government… as well as the colleges… are NOT saying that your EFC represents what you can comfortably afford/write the check for.

Rather, they’re saying that based on the federal algorithms (properly called the Federal Methodology), it’s what they expect you to pay (minimally), notwithstanding merit scholarships. Realize that they have defined the phrase to be EXPECTED Family Contribution, not AFFORDABLE Family Contribution.

Adding to the confusion of this term (EFC) is the fact that very few colleges limit a family’s out-of-pocket costs to the EFC calculation! We see many cases where a family has an EFC in the $15K-ish range, yet their “Financial Aid Award” package consists of nothing but loans in excess of $30K, even $40K in some instances.


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Why am I expected to pay far more than my “expected” family contribution at my son’s public college?

I don’t know who came up with the term Expected Family Contribution (EFC), but it is indeed extremely misleading! The EFC used by your son’s public college is the calculation resulting from the information you provided on the federal FAFSA form.

Of the roughly 2500 undergraduate colleges in America, there’s currently only 64 that have a policy to limit a family’s out-of-pocket college costs to the EFC. Most families pay more… some, much more… towards college than they are lead to believe based on their EFC.

Expected Family Contribution is a horribly inaccurate phrase at best. Unless your child is attending one of the 64 colleges mentioned above, you should view your EFC as a “gauge” of sorts used by the colleges to assess his/her eligibility for need-based financial aid but not the amount of money you’ll pay for college.

Click here to view the 64 colleges that limit your out-of-pocket costs to your EFC


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My kids are 10 and 13. I assume it’s too early to start thinking about college?

It’s a little early to create a College List, BUT… it’s NOT too early to strategically and intentionally accomplish 2 things from a College Planning perspective:

  1. Adjust your lifestyle (as/if necessary) such that you have no revolving debt. This will allow you to save for college.
  2. Emphasize to both your children the importance of doing their very best in school, and achieve the best grades they possibly can.

Sound old-fashioned? Sure does! And I can assure you that the pay-off for both these items is ENORMOUS.

If getting out of debt seems impossible, I would refer you to Dave Ramsey and his Financial Peace University. We are STRONG proponents of his debt-free lifestyle… and teachings!


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Is there an EFC threshold for private colleges costing less than the publics?

GREAT question! There’s not an actual hard threshold per se, but since California is our home base, I’ll provide an analysis for this locale that should provide some insight as to how this works.

I tell CA families all the time that if their EFC is less than “$25K-ish” (this is a soft number), then they should seriously consider private colleges as an option, especially if their student has a solid academic achievement. Here’s why:

Let’s say a CA family has a $25K EFC (per the FAFSA). This family would likely have an income somewhere in the vicinity of $125K or so. With few exceptions, they will receive NO free money from a public college in CA… either at a Cal State or a UC campus. This means they’re writing a check for somewhere between $20K and $36K, totally out-of-pocket.

If their student attended any number of private colleges (in or out of CA) their need would be, let’s say, $55K – $25K = $30K. So the student is eligible for up to $30K of need-based financial aid. Couple this with even a modest merit-based scholarship, and this family could realize out-of-pocket costs lower than their EFC of $25K.

And remember… the likelihood of the student graduating from a private college in 4 years is high. From a public college in CA? Extremely unlikely to accomplish this! We see this scenario play out frequently! The end result is that many families can spend less money sending their student to a high-dollar private college for less money out-of-pocket than a public institution.

(Results will vary of course from state-to-state and from student-to-student.)


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How is EFC calculated?

The simplified answer is this:

There are 4 sub-computations that, when added together, comprise your student’s EFC (Expected Family Contribution). The 4 computations are:

  1. Parent Contribution Due to Income
  2. Parent Contribution Due to Assets
  3. Student Contribution Due to Income
  4. Student Contribution Due to Assets

Click here to use our FREE EFC Calculator

About half of all the financial aid awarded each year is determined by the EFC calculation. It’s REALLY important to know not only your EFC but also understand its “breakout”… the 4 sub-computations mentioned above.


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How many Profile schools are there in California?

Surprisingly of the 250-ish colleges requiring the CSS Profile form for need-based financial aid eligibility, only 10 of them are in the state of California (where 1 in 8 Americans live), and half of the 10 are in a consortium known as the Claremont Colleges. Here they are:

  1. Cal Tech (California Institute of Technology)
  2. Claremont McKenna College
  3. Harvey Mudd College
  4. Occidental College
  5. Pitzer College
  6. Pomona College (not to be confused with Cal Poly – Pomona, a Cal State University)
  7. Santa Clara University
  8. Scripps College
  9. Stanford University
  10. USC (University of Southern California)

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Does College Board provide the same EFC calculation to all of the schools listed on the Profile form?

No, College Board provides different EFC calculations to the colleges your student is applying to.

This is a major deviation from the FAFSA form process and is widely UN-known to families. How can this be, you ask? GREAT question!

Colleges that subscribe to the College Board’s CSS Profile Form processing submit Service Options to College Board. Service options override what we call the “nominal” EFC computation (also known as IM, or Institutional Methodology) performed by College Board’s algorithms that would normally be applied to your data submission.

The best example of a service option is the home equity assessment. The nominal EFC computation on the Profile form would take 5% of the home equity you declare. So for $200K of home equity, the assessment would be $10K. Many colleges use this nominal computation. But some… like Princeton and Harvard… have implemented a service option to College Board such that home equity is waived. So your EFC at Princeton would be $10K LESS than any college using the nominal Profile computation for home equity.

If your student applies to 10 colleges using the CSS Profile form, it’s quite likely that all 10 would have different EFC’s provided to them from College Board.


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How do I find out if a college requires the CSS Profile Form?

College Board manages the list of colleges subscribing to the CSS Profile form requirement. Here’s a link to the page that shows all of the colleges using the Profile.There’s currently about 250-ish colleges using the form. As a safety check, you should verify with your colleges of interests (in particular, the private colleges) if they require it for need-based financial aid eligibility.


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Is the same FAFSA EFC provided to all colleges listed on the FAFSA?

Yes indeed… the Department of Education submits the same information to ALL the colleges listed on your FAFSA, including the raw data and the EFC calculation. It’s important to realize, however, that this is NOT the case for the CSS Profile form.

If your student is applying to colleges that require the Profile form, click here to learn more about the vastly different process involving EFC at these schools.


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Who administers the FAFSA form?

The Department of Education administers the FAFSA form. When you submit the FAFSA, it goes to the Dept of Ed who distributes your data and resultant EFC (Expected Family Contribution) to all the colleges listed on the FAFSA. The Dept of Ed is effectively the conduit between you and the colleges. You don’t/can’t submit the FAFSA directly to a college.


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How many types of financial aid forms are there? I’ve only heard of the FAFSA.

Financial Aid Forms fall into 3 categories:

The individual college websites will indicate which of these is necessary. Some colleges require only the FAFSA, while others require the FAFSA and the Profile, and yet others, all 3.

These forms are necessary ONLY if you qualify for need-based financial aid. They are not necessary for merit-based scholarships. Many parents are told that everyone needs to complete the FAFSA form, and this is simply incorrect… IF their EFC is higher than the Cost-of-Attendance of all the colleges being applied to.

For many public colleges, the only “financial aid” offered some families is in the form of loans… the student Stafford loan and the parent PLUS loan. GetCollegeFunding strongly advises AGAINST these loans.


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What’s the purpose of filing financial aid forms?

This is actually a really good question. Families think all kinds of erroneous things regarding the actual PURPOSE of filling out and submitting the FAFSA form as well as the CSS Profile form for those schools that “require” it.

The sole purpose of these forms is to create an EFC (Expected Family Contribution) calculation. This number is then used by colleges (and the government) to assess eligible “need” and ultimately need-based financial aid awards.


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How much do you pay for college if your EFC is higher than the total cost of the college?

When EFC (Expected Family Contribution) is greater than the total COA (Cost-Of-Attendance) of the college, then your out-of-pocket costs are limited to the COA. The EFC computation in this case is nothing more than a “gauge”… indicating that you will not receive a dime of need-based money.


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At our school’s Financial Aid Night I heard that all we have to pay for college is our EFC. Is that true?

No, no, a thousand times NO! This is one of THE most misunderstood concepts (and myths) regarding EFC (Expected Family Contribution). The name would indeed imply that your family is expected to pay (contribute) this amount for college, your “EFC”. And it would seem reasonable to assume that your costs would be limited to this, right?

While it might seem reasonable, that assumption would be WRONG… (that is, except for only 64 colleges at last count out of 2500-ish that DO limit your cost to EFC). Most schools do NOT limit your out-of-pocket costs to EFC, and many public colleges offer families NO financial aid other than goofy government loans even when their EFC is quite low.

Don’t know your EFC yet? Click here


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I heard from my daughter that one of her classmates received a scholarship from Stanford. I didn’t know Stanford offers scholarships.

Stanford does NOT offer academic scholarships. They DO, however, offer athletic scholarships for their top-notch D-1 athletes. They also offer incredibly generous need-based grants. Stanford is one of the few “100%-need-based” colleges. This means that they will meet 100% of your need, as calculated by subtracting your EFC from their cost. And almost all of the financial aid they offer is university-based grant money, sometimes called “gift aid” because it’s free money… you DON’T pay it back.


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Who gets all the merit scholarship money?

There’s no “one-size-fits-all” answer to this question, but fundamentally, the lion’s share of merit-based scholarships offered by colleges go to the top 25%-ish students, based on any number of parameters, but primarily academics and talent.


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How much can a student expect to receive for a work-study?

The Average… about $2000

Work-study programs tend to vary between $1000 on the low end and $4000 on the high end… with $2000-ish being the most common award value.

They’re Considered Financial Aid?

It’s a bit goofy (in our opinion) that work-study programs are categorized “financial aid”, but they are. I suppose the case could be made that since work studies are typically subsidized by the federal government… this would dictate that they fall into the “financial aid” category.

But let’s face it… a work-study is a job. The student works (for a modest/low wage) and receives a pay check (or in some cases a credit applied to their college account). Outside the walls of higher education, we call this… a JOB.

No Guarantees

It’s important to note that federal work-study programs fall into the campus-based funds arena, meaning they are funded by the government but awarded by the college/campus. These are NOT entitlements. The school decides who receives them and who does not.

Work studies are ONLY awarded to students who have demonstrated “need” by submitting the FAFSA form… with the resultant EFC Calculation being sufficiently lower than the college’s total costs. And because work studies aren’t entitlements, funds DO run out. Just because a work-study is offered on an official Financial Aid Award letter… does NOT guarantee a job will be available. This is a case of “first come, first served”.

What If Your Child Doesn’t Receive One?

Don’t worry if your child doesn’t receive a work-study program offer as part of their Financial Aid Award. In most cases there are plenty of jobs available on (and off) campus for the ambitious/enterprising college student. And in some cases, they may actually earn more money than the federal government is willing to pay through a work-study!


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When should a family first learn their EFC?

I guess a family really can’t learn it TOO soon, but we advise parents to learn it by their oldest student’s sophomore year in high school… before the student starts getting “hooked” on schools based on peer pressure from their friends. Understanding EFC should be an integral component in building the student’s college list.

To learn your EFC in less than 30 minutes, go to www.EFC.guru.


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What’s the 4-year college graduation rate these days?

The numbers tend to hover around 35%-ish. So roughly only 1 out of every 3 students in college are achieving their bachelor’s degree in 4 years.


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Should every student go to college right out of high school?

Absolutely NOT. While this paradigm hung in there for years, it is by all means obsolete. Many students (some reports suggest the majority) are not ready for college, and many should never go to a 4-year college. (Surprised?) In today’s economy AND with the exorbitant cost of higher education, do NOT assume that every student needs to go to college. What’s important are skills and knowledge. There are many alternatives to achieving this, including:

  • Community college
  • For-profit, private colleges
  • The military
  • Apprenticeships
  • Online courses

With the current employment rate of roughly 50% for recent college graduates, it’s clear that many students are graduating with degrees that are of questionable value in today’s economy.


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Is it true that there’s lots of financial aid for every student?

No, this is NOT accurate. Financial aid varies dramatically from student to student, as well as from college to college. An understanding of the “system” is mandatory in order to forecast with any level of accuracy “who gets what”. Every family should understand student’s need-based eligibility as a function of their EFC (Expected Family Contribution) computation as well as merit-based eligibility as a function of student achievement.

Eligibility varies from college to college for the same student and from student to student for the same college! Therein lies the confusion facing families and the requirement to research and understand the policies of each college under consideration.

The government (and many colleges) have successfully convinced families that Student Loans and Parent Loans should somehow be considered “financial aid”.

This is ludicrous and a misrepresentation in our opinion! Beware when colleges (and Uncle Sam) tell you there’s PLENTY of financial aid for every student. What they’re OFTEN referring to is loans. Always reply with the clarifying question, “How much of the ‘financial aid’ you’re referring to is FREE money?” More and more parents (and students) are agreeing with us and rejecting the notion that loans should be considered as financial aid.


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When should we file the Profile form?

Unlike the FAFSA form which doesn’t come online until January 1st, the CSS Profile form is available October 1st. The deadline for completion varies dramatically from college to college, so you should check their individual websites and/or contact their respective Financial Aid Offices. For students applying Early Action or Early Decision, the preferred deadline for submitting the CSS Profile form can be as early as November 1st of the senior year!


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What does FAFSA stand for?

FAFSA stands for Free Application for Federal Student Aid. This term is a little confusing, however, because it’s used for MORE than “federal student aid”. States use the data provided on this form for state grant programs and most colleges (around 90%) use it in awarding their institutional need-based aid as well.

You can find the FAFSA form online at www.fafsa.gov. The new form comes out every January 1st. There’s always TWO years of FAFSA forms available… one for the current college year, and one for the previous year. Be sure you fill out the correct one. (This is the source of a common error.) As an example, if your student is attending college for the 2014-2015 schools year, be sure NOT to fill out the 2013-2014.

If you need help with completing your FAFSA, contact us! It’s one of our many specialties…


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I don’t want my son to sign up for Selective Service. Is this a problem for getting financial aid?

It certainly is. I assume what generated this question was that you saw this on the FAFSA form. If a young man turns 18 and has NOT signed up for Selective Service, federal student aid is withheld.


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What is the SAR?

SAR stands for Student Aid Report. This is the resulting document from completing and submitting the FAFSA form. Every submission of your FAFSA… including edits… results in a new SAR being generated and sent to all the colleges listed on your FAFSA. With few exceptions you should limit your FAFSA submissions/edits to 3 max. More than this can create suspicion among Financial Aid Officers.

When you submit your FAFSA (or any revisions to it), within 3 days (typically) you’ll receive an email from “Federal Student Aid” informing you that your SAR is ready to retrieve from the FAFSA website (www.fafsa.gov). You should always retrieve your SAR(s), as this is evidence that you successfully submitted your FAFSA. Every SAR includes a permanent time stamp that serves as a “receipt”. Because of the high volume of FAFSA submissions, it’s not uncommon for colleges to claim they didn’t receive the FAFSA. Simply email your SAR as proof.


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What’s the number one reason for the students dropping out of college?

The primary reason that students drop out of college is due to financial hardship. This often occurs after 3 to 4 years of paying for college or after the 2nd or 3rd student from a family has entered college. With few exceptions, proper planning can prevent this from occurring. With college costs now being the second biggest expense (first being the home mortgage) incurred by families, it’s surprising that more emphasis isn’t placed on preparing for the tremendous cost of college today.


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Why are the UC’s so expensive?

Sadly, we have one of THE most mis-managed states in the nation. This has taken its toll in many elements, including higher education. The cost of University of CA schools is increasing at a MUCH higher rate than the average 3-7% seen by most other colleges in the nation. Sadly, there’s no end in sight, and we find ourselves recommending the UC system less and less due largely to the fiscal uncertainty and irresponsibility of Sacramento law-makers and leaders.

CA tax-payers are outraged (and for those not… they should be). Not only is the cost of a UC school unreasonably high, it’s become more and more difficult for legal CA residents to gain admission to a UC for the following 2 reasons:

  1. Fewer in-state residents are admitted in order to make room for MORE out-of-state and international students. These students pay an additional $20K-ish tuition which fiscally helps the state’s mis-managed economy.
  2. The CA Dream Act allows for free tuition (about $13K/year) to children whose parents entered the country illegally. So while a student who’s an American citizen from neighboring Arizona pays over $30K for tuition, a CA student whose family is here illegally pays nothing for tuition. Hmmm…

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Can I graduate earlier if I take a bunch of AP classes in high school?

It all depends on which colleges you get into AND how well you scored on the AP tests. The answer to this question varies dramatically from college-to-college as well as student-to-student. Contact the colleges under consideration and find out what their policies are regarding this important topic.


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What is the “retention rate”?

Retention rate is a measurement of how many students successfully completing their freshman year in college return as sophomores.


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Can I get a job on campus?

Yes absolutely… and even off-campus in many cases. For students who qualify for need-based financial aid (resulting from a low-to-moderate EFC), a federal work-study may be part of the package, whereby the federal government pays for the wages. But even for those students who do NOT qualify for or who are not offered a work-study program, there are often numerous opportunities for part-time employment.


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What about athletic scholarships?

Athletic scholarships are highly misunderstood… and over-rated in many cases. First of all, only a small number of exceptionally talented high school athletes have even a CHANCE of being recruited into a Division 1 college. And for those fortunate ones who are, the vast majority will find only a partial scholarship being offered them. Most often it doesn’t come even close to paying for tuition… not to mention room & board, books, and living expenses.

Another important point unknown to many is that in the event of injury that prevents the student from performing, the athletic scholarship is taken away. It is NOT a 4-year guarantee, unlike merit scholarships based on continued academic achievement. Many families are disappointed when they learn of the limited funds their student athlete will receive… after a tremendous investment of time, money, energy, and loyalty.


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How long does it take most students to graduate from college these days?

It used to take only 4 years to receive (most) bachelor’s degrees… hence, the term “4-year college”. However, this has changed dramatically in recent years. The average graduation time is currently 6(+) years. The likelihood of graduating in 4 years is low for public colleges. It increases significantly for private colleges.

For a public college, the chance of earning a degree in 4 years increases if the student is admitted with substantial AP tests on which they scored high (4’s and 5’s), but acceptance of these towards college credits varies dramatically from college to college. For private colleges, where classes aren’t as crowded and readily available, the opportunity to graduate in 4 years is much greater.


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Do I need a car?

From an 18-year old’s perspective, the answer is obvious:

OF COURSE!

However, most college campuses won’t even allow freshmen to have a car on campus. And you’ll likely find parking a car on campus to be expensive (that’s an understatement!)… approaching as much as $1000 a year at some colleges… and for many students, quite challenging in terms of WHERE to park.

So… sorry kids, a car is NOT a college necessity and is often advised AGAINST. How ’bout considering a new iPad or computer instead 😉


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Where are the scholarships?

While its true that most colleges offer merit scholarships, the “big money” clearly comes from the private schools. Huge amounts of “free money” are awarded each year to entering freshmen (and upper classmen as well) as a function of achievement… and in a vast array of areas, from pure academics to leadership to talent. Significant scholarship money is rarely found from public colleges at large, shy of the sliver of exceptional athletes who are recruited by D-1 schools.


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What is “transfer rate”?

Transfer rate is a measurement of the percentage of a student body who leave the college they’re attending and transfer to another 4-year college.


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