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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Are painful changes just around the corner for 529 prepaid college tuition programs?  If you live in Texas, they are not around the corner; they are staring you in the face and kicking you in the gut!

In a very surprising move last month, Texas Tomorrow Fund officials announced that their prepaid 529 fund would no longer return the accumulated interest on withdrawals if the money was not spent in Texas.  Some 100,000 families are now stuck with nothing more than a zero interest loan to the state if their students decide they would rather not go to college in Texas.

Why is this happening?  Simply put… legislative mismanagement.  The Texas Tomorrow Fund is bleeding at critical levels and will be over 1.7 billion dollars in the hole by 2030.  This is an excellent example of how what legislators thought was  a good idea is now blowing up in their faces.

Families have until November 30th to withdrawal the balances in their funds.  After that point, they will only get back the principal they paid in, minus administrative fees.  What a bargain.

Of course if you pull the money out by the end of this month and do not have allowable college expenses to spend it on, you will get penalized as well.  A real case of the state getting you coming and going.

Be very careful of relying upon any college savings plan that is beholden to government officials.  As we see in the example of Texas, their mismanagement or whim of change can cost you money.  Education Savings Accounts (Education IRA’s) are probably safer, but a sound savings plan will include several instruments.

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What does it cost to send a child to college is one of the most commonly asked questions by parents and students alike.  Of course, everyone first thinks about the differences in costs between in-state schools and out-of-state schools.  Then perhaps they think about the differences in costs of public versus private colleges and universities.  Sometimes families will assign the same in-state, out-of-state cost differences to private colleges as well.  There are no in-state versus out-of-state costs differences by the way.  It’s a common misconception.

Then you can figure in starting with the lower costs of a community college for the first two years.  What about scholarships and financial aid?  Those ultimately have an impact on costs… don’t they?  Tax credits… subsidized loans… financial aid… college savings plans… military service… these all get thrown into the mix in determining how a family is supposed to pay for it.  Are you confused yet?

Let’s just start looking at the numbers.

First thing to keep in mind is that tuition is not the only number you want to pay attention to.  Tuition, room and board, books & supplies, transportation, and other miscellaneous costs make up a number called the cost of attendance.  This is a holistic number that the schools use to describe what a typical, full-time student’s one year experience will cost at that school.  This however is not what the typical student pays at the school.  Amount paid and cost often have nothing to do with one another when it comes to college.  For example, below are the national average costs of attendance for college according to Collegeboard’s 2008 Trends in College Pricing:

• Community College – $14,054
• In-state, Four Year – $18,326
• Out-of-state, Four Year – $29,193
• Private, Four Year – $37,390

Now compare the costs above with the average amount paid to the schools:

• Community College – $7,440
• In-state, Four Year – $10,600
• Private, Four Year – $23,920

There are some very big differences between those numbers.  And you know what is even more irritating?  Those averages really don’t mean much… unless you particularly want to know the midpoint of a couple million college students.

Do you have an “average” student, with “average” costs, at an “average” college?  No you probably don’t.  You can rest assured of two things from those numbers.  Half of the students paid more, and half of the students paid less.  But there is one more thing to take away from those numbers… families rarely pay sticker price for college.

So the bottom line answer to the question “What will it cost to send my child to college?” is this… you’re asking the wrong question.  Stop worrying about what the average cost is, and start figuring out how to increase your chances of paying below the average.  That’s the key to lowering your costs for college.

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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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