College Students Hide Hunger, Homelessness was the headline for the NPR (National Public Radio) news story from July 27, 2010.  The story described the dire straits that some college students find themselves in like Diego Sepulveda at UCLA.  Sepulveda became a causality of the down economy when he lost his job at Subway and was without a place to stay.  The article went on to describe how some students are battling against the tough economic situations they find themselves in.

These are tough stories to read about.  Frankly, they frustrate me to no end.

Earlier this week, I was looking at relative EFC (expected family contribution) in relation to the median income in this country.  It is shocking how many students are most likely not going to college and leaving thousands of dollars on the table.  Many students like Diego who are in college are leaving thousands on the table at no fault of their own.  They have believed those myths about state colleges being cheaper, or the sticker price determines what you pay, or who knows what others they’ve been trapped with.

There are so many opportunities for financial help for students in tough financial conditions.  Why are these students not getting the message?  Are high schools ignoring financial preparation for students?  Are the students oblivious to the sources available to them?  Are the generous schools that bad at getting the word out?

I suppose I could ask similar rhetorical questions for hours, but that won’t make a difference.  We will just keep working to educate students and families.  I am looking forward to EduLaunchpad going live soon.  It will be a powerful tool to combat this despicable problem.

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Many colleges are already seeing significant cuts in work-study positions for next year.  Federal officials in Washington are decreasing funds available for work study by as much as 40%.  This means 2 out of every 5 work study jobs could disappear next year.  The cuts come in the face of dramatic increases in student loan programs.  Apparently the federal government does not like students earning their education, but it does like putting them in debt for their education.

These cuts highlight the importance of applying to colleges with generous track records.  Students cannot rely upon government sources of funds alone.  They need to make sure the schools to which they apply have several sources of funds which go beyond the government.  This often means making sure to include private colleges in the mix of schools for application.

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Seth Godin is a blogger I read every once in a while.  One of my business partners sent me a link to his latest blog with some thought provoking analysis of very common trends amongst colleges and universities.

I encourage you to take some time and read through what Seth has to say.  It strikes home with every student and family looking forward to college.

Here is a preview of his five primary points…

1. Most colleges are organized to give an average education to average students.
2. College has gotten expensive far faster than wages have gone up.
3. The definition of ‘best’ is under siege.
4. The correlation between a typical college degree and success is suspect.
5. Accreditation isn’t the solution, it’s the problem.

Click here to read Seth’s blog.

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The waiting game is the hardest part of the college financial and selection process.  Everybody has to play this game.  But if you cut this game short, you could lose a lot of money and spend more on college than you need.

During the fall, students and parents are consumed with college admission applications.  For many families, they longed for the day when the admissions applications would be over.  Sometimes it took months to finish.  Then when December and January rolled around, the financial applications started.  Maybe yours only took a day.  For a few unlucky contestants, days turned into weeks.

But now for most of you, the admissions applications are done, and the financial applications are history.  So what’s the next step?  Do you jump at that admissions offer from your student’s top choice?  Do you take the school with the lower sticker price?  What if you haven’t heard anything out of the schools yet?  Have they forgot about you?  What do you do now?

This is where the hardest part of the college selection process starts.  It’s nerve-wracking.  It’s frustrating.  It’s going to play with your mind and make you feel like you don’t know what you are doing.  It’s… waiting.  Yes, waiting.  The one thing that Americans are the worst at of any people on earth… waiting.  Just think of it as a character building experience arranged for you by God Almighty.  He always said that patience was a virtue.  Now you get to prove it.

Colleges and universities need time in making these decisions.  They’ve got thousands of applications to sort through.  Some are faster than others.  Some are slower than others.  But don’t fret.  This is just the way the game works.  What’s the old proverb from the military… “hurry up and wait”

You need to wait for all of the financial offers to come in from the schools you or your student applied to.  Then you need to take your time to compare those offers.  Then you need to formulate your appeals back to those colleges (negotiate) if appropriate.  It is very likely you will not actually pick a college until April or sometimes as late as May.

Now in the meantime, you might want to consider putting down the housing deposits for any schools you or your student is exceptionally interested in.  Housing deposits are often non-refundable, so you have to be willing to give those up if you decide on a better offer at a different school.  But at least putting down a housing deposit will give many students comfort in the face of risking the dreaded “temp-housing”.

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“How do I file as an independent on the FAFSA?” or “How do I qualify as an independent student?” are some of the most common questions asked this time of year.  Once students and parents start digging into the FAFSA form, they quickly realize that independent students have lower EFC’s and therefore have a much better opportunity for financial aid than dependent students.  When this realization is coupled with the common position that “College is my student’s responsibility, not mine…” families quickly look to find out what does it take for a student to file as an independent on the FAFSA form.  It’s difficult… very difficult.

It is not as simple as not claiming your child as a dependent on your tax forms.  That is only a very small, if even insignificant aspect of student dependency status.  Below are the questions that the FAFSA form uses to determine dependency.

1. Are you older or will you be older than 23 during the award year?
2. Are you married?
3. Are you working on a graduate level degree?
4. Are you currently serving in the US Armed Forces other than training?
5. Are you a veteran?
6. Do you have children you support more than 50%?
7. Do you have other dependents you support more than 50%?
8. At any time since you were 13 regardless of present condition… are your parents deceased, or in foster care, or a ward of the court?
9. Are you or were you an emancipated minor as determined by a court?
10. Are you or were you in legal guardianship as determined by a court?
11. At any time on or after July 1, 2008, did your high school or district determine you to be an unaccompanied youth who was homeless?
12. At any time on or after July 1, 2008, did the director of an emergency shelter or federally funded transitional housing program determine you were a unaccompanied, homeless youth?
13. At any time on or after July 1,2008, did the director of a runaway or homeless youth center determine you to be an unaccompanied youth who was homeless or were self-supporting at risk of being homeless?

Questions 1 through 8 were the standard dependency questions for years.  Not until last year have the questions been expanded.

These questions are pretty straight forward.  If the student can answer “yes” to any of the above questions, then they can file “independent” status.  If they cannot answer “yes” to any of the above questions, then the student will be considered a dependent student.  In some very unusual circumstances, students can get a waiver from the financial aid office at the college which they are enrolled.  But a parent’s desire for a student to take care of their own college expenses is far from likely to merit a waiver from a financial aid officer.

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College Finances 101: Introduction to college funding and financial aid is now available for review.  This recording was made on the evening of December 8th, 2009 and covers the following:

• The college funding environment
• The college financial aid system
• Expected Family Contribution (EFC)
• FAFSA
• CSS Profile
• Financial Aid Priority Deadlines
• College Financial Track Records
• College Application Strategies
• College Financing
• Strategies and Tactics to Minimize College Costs and Increase College Financial Offers
• Negotiating the College Financial Award

This overview runs about 71 minutes. After you have finished watching, click the link below the video to request a PDF of the presentation be emailed to you.

Should you have any problems viewing the video, you may need to update your computer’s flash player.  You can do that at the Adobe website.

Webinar Response Form

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People often ask “what is the annual FAFSA or CSS Profile income limit that still allows my student to get college financial aid?”  This is a logical question, right?  The IRS uses all kinds of income limits for taxes.  Loan companies have income limits for borrowing money.  Colleges have grade point, ACT, or SAT limits for awarding money.  So what’s the income limit for getting college financial aid?

There is none.  There are no income limits for college financial aid.

College financial aid is a very complex calculation which utilizes student and parent income and assets, number of students in college, the cost of the college, amount of taxes paid, and a whole host of other information to determine what a student is eligible for.  There are no hard and fast rules that says one family will get $5,000, but the family making X number of dollars more will get nothing.  In fact, I have seen situations where a family with income around $70,000 per year received no financial help from a college, while a family making $200,000 received a pretty good chunk of money.  The money the student is awarded is dependent upon the unique factors of that student’s individual family.

Now there are some pieces of financial aid which have EFC (expected family contribution) limits attached to them such as Pell Grants, SEOG grants, and certain subsidized loans.  But EFC and income are not directly correlated.  There are also some individual colleges and universities which will have their own internal policies keyed to specific income levels, but these individual policies are not universal by any means.  For example, Harvard University will cover the total cost of college for student’s whose families make less than $60,000 per year.  But again, this is specific to Harvard.  Also, students whose families make more than $60,000 will be eligible for substantial amounts of financial help specific to their unique circumstances.

Do not get hung up on any kind of income limits.  Always complete the financial aid paperwork.  If you have heard about some income limit above which students don’t get any help, then your listening to useless rumor and inuendo.

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Next Webinar is…

Tuesday, December 8th, 2009 at 7pm Central Time

Register Below

College Finances 101 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 90 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

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In July of this year, I published an article titled The Mythical Ivy Impact.  I discussed the evidence which suggests striving to get into prestigous colleges like Harvard, Stanford, or Yale may not be worth it if you have to take on substantial debt to do so.  Now it’s the fall, and discussions about college selection are flying all over forums on the Internet.  And I am still surprised how quickly the knives come out when you suggest it may be better to take the money and go to a so called “second tier” school, as opposed to mortgaging your future to pay for an Ivy or near-Ivy college.

I invite you to read my full article at the link above.  Also, here are the links to the supporting articles from USA Today and the Brookings Institute:

USA Today: Wanted: CEO, No Ivy Required PDF

Brookings Institute: Who Needs Harvard PDF

In a nutshell, don’t get hung up chasing prestigious named schools.  If you get in and it’s reasonably affordable, great!  But there is no reason to put yourself under a mountain of debt.

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Coldwell Banker Real Estate recently published their annual study of college town real estate markets.  This study was predicated on similar four bedroom, 2.5 bath homes in each evaluated market.  Considering that housing costs are the single largest indicator of cost of living for an area, this study provides the ability to indentify those college towns which have the most affordable cost living.  This is very useful information if the University of Michigan and UCLA both provide the course of study you are looking for.  Michigan is in one of the top 10 most affordable areas, while UCLA is in the top 10 least affordable areas.  The bottom line costs of living in these areas will be dramatic.

Check out the most affordable and least affordable top 10’s below.

Top 10 Most Affordable College Towns

Top 10 Least Affordable College Towns

For a complete list of the Coldwell Banker study, click here.

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