Financial Aid: Figuring out What you are Actually Paying for College

Financial Aid: Figuring out What You are Actually Paying for College

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This month, we have talked about College Financial AID and how the numbers are worked up. We have been dealing with what is called “Need” and what kind of aid is available to fill this gap. Last week, we talked about government aid. This week, we will briefly discuss grants available from the colleges themselves.

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Grants usually come in the form of “Merit” based aid. Merit aid goes to students that the colleges or universities are targeting to add to their student body. This typically goes to students that work on positioning the 5 different college entrance requirements: high school grades, SAT scores, extracurricular activities, letters of recommendation and the college entrance essay. For the students that meet these entrance hurdles, colleges can target certain students in the upper qualification echelon with a percentage of aid to meet their “Need.” (Bear in mind that the family still has to pay the Effective Family Contribution (EFC)). So, when you receive offers from the universities or colleges, their grants will be working on this perceived “Need.”

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Here is where you have to be careful regarding the award letters. As mentioned earlier, some letters do not have very accurate Cost of Attendance figures, making the real cost higher then what they send you. Other offers with wrap in various student loans as part of the offer so it becomes important to read the fine print to see exactly what real money is coming out of the schools’ pocket and what will ultimately come out of your pocket and then make a comparison between the schools you are looking at. You may find that one offer that appears to look equal to another has a bottom line that actually has you paying more dollars due to various loans and work programs. Next week we will mention some ways to attempt to get the schools to up the grant.

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 Action Time.

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As you receive offers from schools, make a spread sheet that deals with what you believe is the real cost of attendance, your EFC, the perceived need, the actual grant from the college, the loans that need to be taken out, the contributions based on work-study programs and any other values that you believe you may experience and then calculate how much the real cost for each school. Now you will have a valid cost comparison. I would be glad to review the offers you receive and see how they compare.

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Come over to our website specifically designed for college preparation.

www.lifeprepcollegeplanning.com

To Jump Starting Your College Life!

Coach Rossitto

 

 

 

 

The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC

The LPL Financial Registered Representative associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, CA, MD, NY. TX

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Sorting out the Maze of College Financial Aid

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Last week we talked about actual college costs and the equation that calculates the Family Need. Just as a refresher, here is the equation:

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Cost of Attendance (COA) – (Effective Family Contribution (EFC) + Scholarships) = Need

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We mentioned that not all COAs are created equal and to do your research to make sure you know what the final bottom line is. So, to clarify, the equation for the potential out of pocket to the family is:

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                                    Out of Pocket = EFC + Need

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For lower income families, the perceived “need” can be covered by various government grants. PELL Grants come from the Federal Government and make up a fairly large portion of grants provided. Most of the PELL Grant dollars go to families with $50,000 of income or less. Information for the PELL grant program can be obtained on the Federal site. One other program is the Federal Supplement Educational Opportunity Grant (FSEOG). Information about the FSEOG dollars can be obtained on the Government site. These dollars are usually limited to families with EFCs of $0. They are used up very quickly so it is important to file the Free Application for Student Aid (FAFSA) form on Jan 1 as the dollars can be gone just that quick. The next source of “need” based aid comes from the states. Some states are more generous than others when dealing out aid to the financial needy. Again, it is important to file the FAFSA early as state dollars also run out quickly as well. Other programs that assist families are related to subsidized and unsubsidized federal loans. These loans, offer interest rates that are typically lower then convention student loans and have some other benefits as well. Do remember that we are talking about the “Need” part of the equation. The family is still responsible for the EFC part of the equation. Loans can fund the “Need” and the EFC.

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Action Time.

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Looking at these two financial aid equations, you can see that it is important to have the lowest possible EFC value. It becomes important to have your college education financial aid house in order to minimize your EFC. That is the first step in working through the process. I work with families to first estimate their current EFC and then, where ever possible, reposition resources to minimize the EFC during the four years of college. That’s right. You have to redo the EFC each year the student is in college. The first step to help me calculate your EFC is to go to my website http://lifeprepcollegeplanning.com and complete the Data Form from the tool bar at the top of the page. Know that I look forward to working with you in the maze of college financial aid.

Come over to our website specifically designed for college preparation.

www.lifeprepcollegeplanning.com

To Jump Starting Your College Life!

Coach Rossitto

 

 

 

 

The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC

The LPL Financial Registered Representative associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, CA, MD, NY. TX

Turning your Vision Statement into Actionable Goals

Turning your Vision Statement into Actionable Goals

The tunnel is getting brighter. Since January, we have been working through developing a values/purpose statement with the ultimate goal of developing a vision for what we would like our future path to look like. No guarantees that it will be like what we envision. The goal is to have a vision for the bigger picture.

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In my personal values statement, I have listed, first, some action words (serve, grow and laugh) then some nouns (trust, integrity and zest) to generate action and finally a purpose (for the glory of God) to fulfill the purpose of living the way I do. I offered the example of putting personal insights into the action words and how they were important to me. The next step I took was to put some meaning into the action words and the purpose to come up with a few meaningful paragraphs describing my value statement.

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So, here is what I would suggest as the next step. With a broad brush, put down the key goals that you have for the next year, 3 years, 5 years and 10 years for both your personal and professional life. Don’t get too specific. Choose to list out the biggies for each of these time periods. You can deal with the steps on getting there later. Once you have listed these out, work on the common threads between these goals. For me, they were the relationships I have with family, friends and business acquaintances, then the maintenance of existing resources and the future purchase of new resources and finally, the areas of recreation that I would like to become involved in. With these as a list, I would suggest developing paragraphs that summarizes the core of your values when incorporated into the goals you have set for the next 10 years. How about them apples?

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This probably will take some thought and a few runs at it. In the end, I hope to have developed a rich and full vision of what and how I hope to approach the next years that have been allotted to me.

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Action Time.

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There are many ways to make these meaningful statements. With the values, I found it easier to look through a list and find the most meaningful concepts. Others would suggest you write down the values that come to your mind in a 30 second time period. I offered some additional steps in the process to design some vision for the future. I am not suggesting this is the only way.   It is one way I have found to be reasonable. The goal is to Just Do It. Having gone through the process, the challenge is to live it out. I would look forward to what you develop. If you wish, I would enjoy looking over your shoulder and hold you accountable to getting it done and then living it out. That is what a good coach does.

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Come over to our website specifically designed for college preparation.

www.lifeprepcollegeplanning.com

To Jump Starting Your College Life!

Coach Rossitto

 

 

 

 

The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC

The LPL Financial Registered Representative associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, CA, MD, NY. TX

Avoid this Mistake in your College Financial Planning

Avoid this Mistake in your College Financial Planning

Every now and again, I respond to questions asked of another blog site. One of the recent questions posted came from the parent of a junior in High School. The just of the question was concern over costs of college and the impact of borrowing $10,000 from the equity of their home to give to a stock broker and in doing so the impact on the FAFSA form. Now, this blog is not one to give investment advice, so let’s put that on the table up front. And, the examples we talk about are specific, may be hypothetical and probably aren’t the same as what you personally might experience. Best of all, they aren’t a guarantee of future performance or your own success. Having said all that legal stuff, let’s consider some of the issues.

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When you borrow money, you have to pay interest. Let’s assume the interest rate is 5%. So, just to break even, you have to make at least 5% plus the brokers fees for investing the money cause he ain’t gonna do it for nothing. Now, the stock has to go up for you to win, then he has to sell it for you to profit and he gets a fee for selling it. Then you pay taxes in the range of 0% to 35%, depending on your tax bracket and how long you own the stock. That’s if the stock goes up. What if it goes down? OOPs! Now you have to pay back the loan with dollars that you otherwise could have used to pay for college. So far, this is a risky expensive deal.

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Now, let’s look at the impact on the FAFSA form (Free Application for Student Aid). FASFA and is an estimate of the parent’s and/or student’s ability to pay for post secondary education. It generates something called the Effective Family Contribution, EFC, which is the U.S. government’s attempt to determine how much a family can afford for college and any eligibility for student aid from either the state or federal government or the schools themselves. Parents have to declare lots of assets. Home equity isn’t one of them. So, putting money into a brokerage account usually raises their Effective Family Contribution. It could be as high as 25% of the account value. That could raise their EFC by $2500. That means reducing their College Aid by $2500/year. Sounding worse as we go. Now, let’s say they are fortunate enough to make a profit and they sell it. The gain is considered income and causes the income part of the FAFSA to go up or as they make a profit but don’t sell it, the whole value of the account is causing their effective family contribution to go up $0.25 for every $1 they make. What that could mean is they have to make a 30% return each year to offset the cost of the interest and the impact on the FAFSA score. Do you know any place that can guarantee 30%/year without any risk? If so please let me know.

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Action Time.

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Planning for college is a complex progress. Sometimes we have the best of intentions but shoot ourselves in the foot. For this person, that appears to be the case. A couple of options are available. One would be to make use of some of the various cost calculators that various sites offer and input the data with and without the money in the brokerage account and see what the EFC turns out to be.   If there is an increase in the EFC, calculate that into the return you would have to make including the interest charge just to break even. That offers a reasonable picture as to the risk. If the return is pretty high, an alternative may be to use the equity to pay the college bill and pay the loan off over time. This doesn’t impact the FAFSA or any student aid and may offer some tax deductions, based on their personal situation. If your path is somewhat muddy, I would look forward to hearing about your circumstances and seeing how I might be of assistance.

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Examples presented in material are meant for illustrative and or informational purposes only, and not indicative of any specific investment product. Individual circumstances will vary. Please see your investment and/or tax professional regarding education planning.

 

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Come over to our website specifically designed for college preparation.

www.lifeprepcollegeplanning.com

To Jump Starting Your College Life!

Coach Rossitto

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The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC

The LPL Financial Registered Representative associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, CA, MD, NY. TX

 

How to Effectively Stay Focused on Task at Hand

How to stay laser focused with a task at hand

We live in a somewhat rural part of San Diego. I enjoy growing fruit trees and anything that bears fruit. I figure if I am going to water them, I ought to get something I can eat out of the effort and expense. Well, with rural living come gophers. While they serve a useful function in loosening the soil, they raise havoc on my produce.

Solution: Cats. Outside cats. Cats stalk and eat gophers. There are a few purposes for cats that I enjoy. This is one. (No cat jokes here!)

If you have ever watched cats stalk a gopher or bird or other small critters (and sometimes other cats in play) their focus is inspiring. Their whole being is intent on the action. So intent are they on the task that they are oblivious to what is going on around them. (Want some fun?) Quietly sneak up on a stalking cat with a rolling video and spook them. (The video might go viral!)

Great athletes play their game in the same fashion. Baseball outfielders are often so focused on the path of the ball, they will collide with the outfield wall in chasing a fly ball. So, too, are football receivers as they run their pass routes. It is the capacity for sharp focus that makes them great.

Focus is a learned skill. People who listen well have a great capacity to focus on the conversation. Various professions will get into a zone where their focus allows them to accomplish effectively the task at hand.

Action Time!

To help develop the focus skill, lie down for a few minutes and try to focus on your breathing. Might sound odd, maybe even dumb, but check it out. Lay down someplace quiet and quietly breathe. Focus your mind on the in and out of just breathing. The goal here is to go for thirty seconds, maybe a minute without allowing your mind to wander. You can’t think on the test you are having today or the argument you have with your sibling or the date you have tonight. Now, if you focus too well, you might just go to sleep! So there is the challenge. See how you do.

To help develop the skill of focusing, as a thought goes through your mind, label it and let it go. Say it is about a date later today, label it, ”Date thought” and go back to focusing on your breathing. No harm done. When the next thought about something other than breathing comes, label it as well. Back to breathing focus. Goal here is to train your brain to quickly recognize and eliminate distractions as they come and focus on the task you want to accomplish.

Another way to focus your attention is to focus on a task and when a distraction comes, make a small mark on a piece of paper. This is another way to identify the distraction and go back to focus. The recording isn’t to generate a guilt trip on how big time you blow focusing (that would be pretty dumb for something as insignificant as focusing on breathing!). The goal is gaining control of your thoughts, identifying distractions and getting back on task. That is focus. Check it out. Try either of these two every day for a few weeks and see it you can’t reduce the number of mental distractions you experience during the exercise. See if it doesn’t impact your listening and concentration skills. If you are journaling, make a note of your progress over a month and treat yourself for gains.

 

 

Come over to our website specifically designed for college preparation.

www.lifeprepcollegeplanning.com

To Jump Starting Your College Life!

Coach Rossitto

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The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC

The LPL Financial Registered Representative associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, CA, MD, NY. TX