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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When is a student supposed to file their FAFSA and other financial aid forms?  This is a question families are asking all across the country right now.  Their admission applications are pretty well done.  Now it’s on to the financial paperwork… but hold on a minute.  Many parents and students are jumping the gun.

The CSS Profile has been available to file for the coming school year since October.  This gives families plenty of time to complete what is arguably the most complex of all financial aid forms.  Only about 350 colleges want the Profile filed, so the large majority of families have nothing to do with this form.  But you better be sure and double check with the schools to which you have applied to make certain you haven’t overlooked it.

The 2010-11 FAFSA will not be available until January 2010 however, and this creates some confusion.  In their zeal to get on top of all the details, many students and families have completed the already available 2009-10 FAFSA thinking they were completing the right paperwork for the next college year.  I hate to tell you this, but you just wasted a good chunk of time and energy on a form that is useless to you.

If you are one of the unfortunate students or families that were confused by the FAFSA forms, you will have to wait until January 2010 and redo the new FAFSA.  There is no way for the schools to hold over or transfer your information.  A new FAFSA must be completed.

The good news is you will be much better prepared to complete the FAFSA than your neighbors will.

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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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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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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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High school seniors should already be deep into the college search process.  If you’re not, it’s time to get on the ball!  Some of you are already moving on to the college admissions applications.  Congratulations!  Way to stay ahead of the game.  But for the majority of us, here are 4 steps for the fall.

Step 1: Don’t get hung up on knowing exactly what you want to study.  It’s great if you know your chosen field, but it is not critical to the admissions application process.  Many schools will allow you to apply as “undecided” or under the general “liberal arts” banner.  Even if you do apply under one major and decide a year or two later to change your major, you are not alone.  Half of college students change their major at least once.

Step 2:  Identify at least six colleges that you feel comfortable applying to for admission.  I cannot stress enough the importance of avoiding the idea that there is only one or two schools that are worthy to apply to.  That is a recipe for disaster.  Try to get in as many campus visits as you can.  The more college campuses you visit, the easier it is to identify what you want in a college.  Applying to multiple colleges will give you real options when it comes time to decide where you will ultimately go for your first year.  Applying to multiple schools is also an important aspect of securing the best opportunities for the monies available from different colleges.  Here again, don’t think that your choice will be set in stone.  One third of all college students transfer to another college at least once.

Step 3:  Complete your admission applications.  I recommend you have your admissions applications done by the end of October.  If the schools require letters of recommendation, make sure you get your letter requests to your teachers, guidance counselors, pastors, etc. as soon as possible.  The later you wait, the more requests they will have to sort through.  And here’s a tip that will be a huge help… Write up a recommendation cheat sheet for those who you make requests.  On this cheat sheet (no more than one page) include your high schools activities, interests, achievements, etc.  This will be a big help to those who are trying to sort through 30 or 40 or more different letter requests.

Step 4:  Do not make a decision of where you will be going to college anytime this fall.  You still don’t know what college is going to cost you.  There is no other purchase that you would make without knowing what the cost is, so don’t start now.  You still have the financial applications to go through.  Most of the financial application won’t be available to you until next January (the FAFSA form).  Some colleges will want a CSS Profile, but even that isn’t available until October or November.  99% of the time, you need to wait until the financial forms are filed and you have the financial award offers back from the schools before you should make any decision of what school to choose.  And that won’t be until next March or April.

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Need Blind and Need Sensitive are admission policies that impact some students when applying to colleges around the country.

Need Blind admissions guarantee equal opportunities for admission into a college or university regardless of the student’s ability to pay for the costs at that college.  There are only a handful of colleges in the country that actually post need blind policies.  These include the likes of Harvard, Yale, Princeton, and Stanford.  These schools have very substantial endowments and do not need to be concerned about revenue from needy students.

Need Sensitive admissions will sometimes take into consideration a student’s ability to pay for the college costs when deciding to admit the student.  In actuality, the vast majority of colleges and universities are need sensitive in one way or the other.

Need sensitivity may be offensive to you.  On the surface, it would make sense that all colleges should be need blind.  After all, we live in an egalitarian society and everyone should at least be given the chance accept or refuse an offer of admission if they have the qualifications to get into that school.  But consider the following example.

Two students are on the wait list at a college.  The admissions representatives are deciding who to give those last few offers of admission to.  Student “A” will require $30,000 in financial aid in order to afford the school.  Student “B” qualifies for only $5,000 in a federal loan.  The students are equally matched in all aspects, except financial need.

Remember, these two students are on the wait list.  That means these decisions are being made late in the admissions cycle and the vast majority of financial aid dollars have already been distributed to other students.  So would it make sense to offer one of the few last remaining spots to student “A”, knowing that the school does not have the money to help the student?  Or does it make more sense to make the offer to student “B” who is far more likely to be able to pay the bill?

Although Need Sensitive admission policies may seem unfair at first glance, they are the only logical and fair policy for  colleges that do not have unlimited resources.

These policies should in no way influence you not to apply for admission or file financial aid applications at any colleges or universities.  Always file the financial aid applications no matter what.  Not filing financial aid applications will not help you.  If you are a student who is on the bubble and gets refused because of financial need, then thank the school.  They just saved you from admission into a school that you could not afford anyway.

The solution to need sensitive admissions policies is not to try and pick and choose to which schools you will file financial aid applications.  The solution is always have a sound, well thought out application strategy.  Always apply to colleges with generous financial track records.  Always file to at least one safety school; 4-6 match schools; and 2-3 stretch schools.

If you follow a sound college application strategy, you will always have plenty of great options to choose from.

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Where have you heard this before?  “If we could simplify this to just the few important pieces of information, we could get this form on a postcard.”

Well… this time, it’s not about your income tax return.  It’s about the FAFSA.

The College Board has again been studying how to simplify the financial aid process.  And again, they have come up with many suggestions of how the FAFSA (administered by the Department of Education) could improve it’s form to make it less intimidating to lower-income families.

But as for the College Board’s own Profile form, I quote from Jared McDonald’s article in the The Daily Pennsylvanian on April 14th, 2009…

For students with “complicated finances” applying to more expensive,
private schools like Penn, Baum said, an extensive amount of
information is inevitably required and is gathered through the College
Board’s Profile form.

Honestly, I’m really getting tired of the ivory tower mentatlity of the College Board.  The federal government with its 120 question FAFSA needs to be whittled down to a postcard.  But the College Board’s Profile with as many as 300 questions is just inevitable.

Don’t hold your breath for any simplification folks.  This latest study is just more smoke and mirrors.

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