The Maximizing Money for College online webinar appears to have been a big hit last Thursday night.  I know many of you have been very interested in seeing the replay of the webinar, so I’ve set up the recording online for easy access.

For those who haven’t yet seen or participated in Maximizing Money for College, it is a comprehensive overview of the college funding and selection process.

In 80 minutes, I cover the most important aspects of minimizing your students’ costs for college.  You will learn…

• How parents can often send their children to expensive private colleges for less money than a state school.
• How to fix lost money caused by popular college savings plans.
• How to identify schools that give you more free money.
• The great myths and misconceptions about college funding that can cost you thousands of dollars.
• What assets are penalized 4 times higher than others when applying for help.
• Why waiting one year can cost you as much as $5,000.

To view the recoding, click the link below…

Maximizing Money for College Webinar

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Maximizing Money for College has now come to the web.  Attendees have been praising this ground breaking presentation for years; now you can participate in the comfort of your own home or at work.

In 60 minutes, I will cover the most important aspects of minimizing your students’ costs for college.  You will learn…

• How parents can often send their children to expensive private colleges for less money than a state school.
• How to fix lost money caused by popular college savings plans.
• How to identify schools that give you more free money.
• The great myths and misconceptions about college funding that can cost you thousands of dollars.
• What assets are penalized 4 times higher than others when applying for help.
• Why waiting one year can cost you as much as $5,000.

“The information Mr. Anderson shared was
incredibly eye opening.” — Tricia Christiansen, Guidance Counselor,
Hampton-Dumont HS, Hampton, Iowa

“What an eye opener! We wish we had
attended this seminar sooner. This seminar has given us ideas and
information but also hope…” — Dave & Maria Sullivan, Rock
Island, Illinois

“He has provided our families with
invaluable information. Scott does an excellent job…” — Linda
Cutler, Guidance Counselor, Rockridge High School, Taylor Ridge,
Illinois

“Listening to all the options available
to pay for college encouraged us that we don’t have to sacrifice a
quality education because of a lack of money.” Pastor Scott & Tonya
Culley, Silvis, Illinois

This seminar will be here on the Web on Thursday, September 24th, at 6:00pm Central time.

To register, simply enter your email address below.

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Many colleges and universities are going to want letters of recommendation for your admissions application.  These letters typically will come from your teachers and/or guidance counselor.  Two or three will normally do.  Getting a letter of recommendation is not as easy as just popping in on your favorite teacher and asking them to write a letter for you.  That will not get you a good letter, and may not get you a letter at all.  You need to plan ahead, and you need to make this as easy for the letter writer as possible.  Here are 5 tips to help you get those great letters.

1.  Find out your high school’s policy and procedures for obtaining letters of recommendation.  Some high schools will have specific guidelines they follow.  You need to find out if this case immediately.  Contact your high guidance counselor or college admissions counselor to obtain this information.

2.  Start early.  Most students are going to wait to request letters from their teachers when the majority of other students are doing the same.  This is a bad plan.  You want to get your request in as early as possible in your senior year so that your teachers have time to devote to your letter.

3.  Put together a letter or recommendation package.  This package will include the following:

• Student re’sume’ or “brag sheet” — This one page sheet is very similar to a traditional employment re’sume’.  You want to highlight your academic achievements, leadership roles, community service, awards, and other extracurricular activities.  Your letter writer can use this information to refresh their memory and produce a better letter for you.  Remember… help them as much as possible.  This re’sume’ may also be included in your admissions application.
• Letter of recommendation examples.  Providing them examples will likely make it easier for them to put together a good letter in less time.
• A list of the colleges to which you will be applying and the deadlines for applications or letters to be submitted.
• Any recommendation forms that may be required by the individual colleges or the Common Application.
• If the teacher is sending the information directly to the university, then include self-addressed, stamped envelopes to the colleges in question.   Do not expect your teachers to pay for the stamp or to take their time to address envelopes.  Some letters of recommendation will all be grouped by the guidance counseling office.  In that case, no stamp will likely be required from you.
• Your contact information and a short note of thanks to your teacher.

4.  Ask the teachers who know you best.  Be ready to hand them your package when they agree.

5.  Follow up with them in a polite manner.  Give them time to get those letters written, but stopping by their room in a couple weeks to check on the progress is perfectly fine.  As long as you have given them plenty of time to get the letters written, you should have any problems.

Click on the following to see examples of a student re’sume’ and letters of recommendation.

Student Re’sume’

Letter #1

Letter #2

Letter #3

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Kiplinger recently published an article comparing the average student debt and average income, state by state.  Obviously this is not a definitive comparison, but it does give more insight into college finances.

Although some of their college costs don’t add up (which is not unusual for many college rating sites), I did find many interesting results in their analysis.  Here are just a few…

The University of North Carolina at Chapel Hill is one of the most highly respected public universities in the country.  It is also one of the most affordable in-state and out-of-state.

The three states with the lowest percentage of college graduates with debt are:

• Hawaii – 35%
• Utah – 42%
• Tennessee – 47%

The three states with the highest percentage of college graduates with debt are:

• South Dakota – 81%
• North Dakota – 80%
• Iowa – 74%

The three states with the lowest average student debt are:

• Utah – $13,299
• Hawaii – $15,199
• Wyoming – $16,005

The three states with the highest average student debt are:

• Iowa – $26,210
• Arizona – $25,628
• New Hampshire – $25,466

Below is the summary map, produced by Kiplinger.  Click on the map to enlarge.

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Inheritances are not a common financial event, thankfully; but they sure can create some confusion for the FAFSA and CSS Profile processes.  Most parents and students assume that because money is received out of an inheritance it must be income.  This is not necessarily true.

First of all, you need to be aware that neither the FAFSA nor Profile mention inheritances as income.  There are those catch-all questions such as on the FAFSA which asks for all income not recorded else where on this form and includes the example of having bills paid on the student’s behalf.  There is however no further description of what that income might be.  If you search the FAFSA and government student aid websites, you will find no mention of inheritances except as a brief example of a student whose financial picture changed over the summer and then may not want to borrow as much money as before.  If you search the Profile realated websites, the only context of inheritance is regarding the valuation of inherited assets.

So in other words, the FAFSA and the Profile are silent regarding inheritances.  In such a case, the smart money is to rely upon the recognized authority in defining income.  This is typically the Internal Revenue Service (IRS).  The IRS does not define inheritances as income.

Then how do inheritances affect a student’s financail aid filings on the FAFSA or CSS Profile?  They affect the filings through the valuation of students’ and parents’ assets and the income generated from those specific assets while in the possession of the immediate family.  That income could be captial gains, dividends, or interest earned.

For example… A grandparent dies in June 2009 and leaves $250,000 to the parents in cash, and $15,000 in cash to the student.  This inheritance would not be reported in any income column on the FAFSA.  However, at the time of filing the FAFSA form in February 2010, the parent still has $200,000 of the inheritance and the student has $5,000 left of the inheritance.  These assets will be reported on the FAFSA form as savings or investments.  In addition, the parent’s $200,000 generated $1,000 in interest for half the year, and the student’s $5,000 did not generate any income.  The $1,000 in interest will be reported as interest income on the FAFSA.

Keep in mind, some colleges and universities may consider inheritances as income for their individual forms.  Double check those forms before assuming the guidelines above apply to institutional paperwork.

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Rental Property on the FAFSA has always been an area of contention in my mind.  The manner these assets are listed on the FAFSA can mean the difference of thousands of dollars in financial aid.   For the government to tell you what is and is not a business enterprise that is making money kind of frosts me.  The 2009-10 FAFSA Application and Verification Guide states the following…

At times a student or parent will claim rental property as a business.  Generally, it must be reported as real estate instead. A rental property would have to be part of a formally recognized business to be reported as such, and it usually would provide additional services like regular cleaning, linen, or maid service.

If at all possible, you want to claim real estate as a small business, and therefore qualify for the small business exemption on the FAFSA form.  Here are a few guidelines to follow which make claiming real estate as a business much easier.

1.  Organize under a separate legal entity – Don’t hold rental properties directly in your name and expect them to fly with a financial aid officer.  They should always be organized under a C-corp, S-corp, LLC, or similar entity.  This is by far the most important qualification to be considered a business asset.

2.  The more activity the better – If you just have one piece of property that you rent out, or if you have a vacation cottage on a lake that maybe you rent once or twice during a season; don’t expect that to be considered a business asset.  The more activity you have in real estate the better.  You need to be able to demonstrate substantial levels of material participation and activity.  If you have multiple properties and active participation in managing them, it will strengthen your case.  This is one area where going big and acquiring more assets will help you.

3.  Show associated activity – The following activities showing in your corporation may also indicate more business activity, rather than just rentals:

• Develops or redevelops
• Constructs or reconstructs
• Acquires
• Converts
• Operates or Manages
• Brokers
• Other business activity associated with the property

4.  Other activities – There are other signs or activities which will add weight to listing real estate as a business operation:

• Registering for appropriate state and local permits
• An employer identification number (EIN)
• Fictitious name registration or DBA for the business
• Separate business checking account

These four guidelines will definitely strengthen your hand in getting that small business exclusion on the FAFSA form.  But it is not a black and white standard.  Some schools will let you keep the exclusion, others will not.  My recommendation is when in doubt, list the property as a business.  Make the school take the initiative to prove it otherwise.

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The Collegeboard’s CSS Profile (College Scholarship Service Profile) is a secondary financial aid form required by 300 to 400 colleges, universities, and scholarship programs.  And it is a doozy.  Where as the FAFSA asks for approximately 150 pieces of financial and demographic information, the Profile can ask for over 300 different pieces of information.  Here are six characteristics of the Profile of which you need to be aware.

1.  Earlier filing – Unlike the FAFSA form which cannot be filed until January of the student’s senior year in high school, the Profile can be filed as early as the beginning of October.  This can put a lot of pressure on families to gather their financial information much earlier.  In anticipation of filing the Profile, gather up the important financial information now and set it aside in a convenient place.  You will need your 2008 IRS tax return, current cash and investment balances, your mortgage information, and estimated income and financial data for 2009 and 2010.

2.  Fewer schools – The FAFSA form is required by every college across the country (over 3,800) if you want the money.  The Profile, however, is only required by about 300 to 400 schools and scholarship programs.  These schools will typically be the Ivy League, the near Ivies, the most selective private colleges, and a very small handful of very selective state schools.  For those schools that do want the Profile, you will typically file the form months ahead of filing the FAFSA for the same school.  You can tell if a school requires the Profile by checking the school’s financial aid website, or by checking the list at Collegeboard here.

3.  Cost – The FAFSA form does not cost anything to file as is is a service of the federal government.  The Profile on the other hand is administered by the Collegeboard, a private, non-profit company.  The Collegeboard charges $25 to register for the Profile which includes your first college submission.  For each additional college to which you want to submit the information, the Collegeboard charges you $16.

4.  More Information – The FAFSA form asks for about 150 pieces of information.  The Profile can ask for over 300 different pieces of information.  As compared to the FAFSA, the Profile will ask for much more detailed information regarding: your retirement assets, businesses, farms, and real estate.  The Profile will often ask for you to compile a family budget.  Unlike the FAFSA that asks for only one year’s tax and income information, the Profile asks for three years of information: the last completed tax year; estimations for the current year; and projections for the following year.  If the parents are divorced or separated, the Profile will often ask for detailed financial information on the non-custodial parent; whereas the FAFSA only cares about the custodial parent’s information.  The Profile can even go so far as to ask what kind of car you drive.  I assume they are tyring to find some kind of disconnect if you drive a $100,000 Mercedes but only make $30,000 a year.

5.  Changing your Profile – Before submitting the Profile, you can make changes as many times as needed to the online form (at Collegeboard.com).  However, after submitting the Profile, you can no longer make any changes to the form.  This is in contrast to the FAFSA which can be changed after submission at any time.  In order to correct or update any information on the Profile after submission, you have to print out a paper copy of the Profile, indicate the changes on the form, and then deliver that form to each college who received the Profile.  You can however add additional colleges after submission via Collegeboard’s online form.

6.  IDOC – The Instituational Documentation Service (IDOC) is the Collegeboard’s verification system for information submitted on the Profile.  For a school that uses the FAFSA only, verification is conducted by sending documents (tax returns, W-2’s, etc) to each individual school.  For schools that use the profile, those forms are sent one time to IDOC, and then IDOC distributes the needed information to the schools.  This is probably the one and only aspect of the CSS Profile process that is simpler than the FAFSA.

To file the CSS Profile, go to the Collegeboard’s Profile Web Page.

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