by Lynn O’Shaughnessy, link here

What schools offer the best college financial aid?

Last month, I wrote this post: 51 Colleges with the Best Student Financial Aid.

Please take a look at the list because it includes schools with awesome financial aid policies that will reduce your stress about how you will pay for college. Researchers from the University of Pennsylvania and Amherst College assembled the names of colleges and universities that offered financial aid packages that didn’t include student loans.

You can also find a list of schools with great college financial aid at ProjectOnStudentDebt.org.

But here’s a problem: The list of colleges with the best student financial aid is in flux. The days of no-loan financial aid programs could be ending for many middle-income and affluent families. In fact, at least two colleges on the list of the 51 Colleges with the Best Student Financial Aid, wouldn’t even qualify anymore.

Last week Williams College announced that it was reducing the eligibility for its gold-plated college financial aid help.  Dartmouth College announced yesterday that it was ending its no-loan student financial aid policy. From now on families with incomes above $75,000 will have to borrow some of the tab.

I suspect the announcements will keep coming.

It was hardly a surprise that elite colleges, which traditionally offer the best financial aid, would start rolling back their cushy financial aid programs. You see these colleges launched these aid programs back in late 2007 and early 2008 –  right before the stock market collapsed and endowments started tanking.

When the no-loan financial aid policies first began in 2007, elite institutions didn’t want to be left behind so within a breathtakingly short period many super selective colleges and universities piled on. Now that Williams and Dartmouth have made their moves, I wouldn’t be surprised if many more colleges become stingier.

Lynn O’Shaughnessy is the author of The College Solution, an Amazon bestseller, and she writes a college blog for CBSMoneyWatch. Follow her on Twitter.

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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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The FAFSA is the standardized financial information form used by all colleges and universities across the country.  For 2010, sweeping changes have come to the FAFSA form.  This 60 minute webinar will orient you to the FAFSA in its new form.  We will be covering:

• FAFSA on the web
• The PIN website
• Financial Aid Priority Deadlines
• The FAFSA worksheet
• EFC and how it impacts you

The webinar will be at 7pm (central time) on Wednesday, January 20th.  Register below.

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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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Bank of America announced within the last week that they are suspending all federal student loan originations.  This really isn’t anything new.  Throughout 2009, banks and other lenders have been abandoning the federal loan programs administered through the Federal Family Education Loan Program (FFELP) en mass.

The reason for this wholesale action is The Student Aid and Fiscal Responsibility Act of 2009.  The Act has cleared the House of Representatives, and will in all likelihood be through the Senate by the end of the year.  The major effect of this new law is to remove all private lenders from participation in the federal student loan programs.  Previously, federal student loans were divided in two programs, the FFELP and the Direct Loans.  This new act eliminates the FFELP.

What is the real impact to you the student or family wanting to borrow money for a college education?  Well… the only real difference is that from now on, your federal loan will be serviced by a government beauraucrat, rather than a bank representative.  Previous loans will still be administered by the company you borrowed from, or the company they sold the paper to.  Student loans will not be any harder to obtain because of this change.  There is still plenty of money available to help pay for college.

These new changes apply only to Stafford and PLUS loans.  This does not have any impact on Perkins or private education loans.

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Income Based Repayment (IBR) for Federal Stafford, Grad PLUS, and Consolidation Loans is a new option this year for college borrowers.  This tool has been talked about for years, but it finally came into being in 2009.  In essence, IBR is a system designed to make payments on federal college loans more manageable, particularly for those students who have just graduated and have limited income and resources.  It’s design is not limited to new graduates however, it can also help those with federal college loans no matter how long ago they were taken out if they meet the income and family criteria of the program.

The formula for determining IBR payments is not terribly complex, but it’s far easier just to show you the table developed by the federal government.  Keep in mind that this table will be adjusted every year as it is based in part on the annual poverty line.

There are four primary benefits to borrowers of the IBR program:

1. Payments are lower than the standard 10 year payment program, and likely lower than other available payment programs as well.
2. The government will pay for up to three years of interest on subsidized Stafford loans if your IBR payment does not cover your total interest payment.
3. If you qualify for IBR payments for 25 years and meet certain other requirements, any remaining balance on your federal loans can be canceled after the 25 years of payments.
4. If you work in public service for 10 years and qualify for IBR payments, you may be eligible for forgiveness of your remaining loan balance.  For information on public service loan forgiveness, please read the Loan Forgiveness for Public Service Employees Fact Sheet.

There are also disadvantatges to the IBR program:

1. You will likely pay more interest while paying off your loans under IBR as compared to standard payment programs.  In other words, it will cost you more in the long run.
2. You must submit annual documentation verifying your income and family eligibility for the IBR program.  If the documentation is not provided, your payments will revert to the standard 10-year payment plan.

For more information on the IBR program, check out the Income Based Repayment Fact Sheet.

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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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