college aid- negotiation- college- prep

How to Appeal a College’s Financial Aid to Receive More

college aid- negotiation- college- prep

How to Appeal a College’s Financial Aid to Receive More

Dealing with a Low Ball Offer

This month, we have been going over various types of grants. The last part of this series is perhaps the most important. It has to do with getting schools to compete for you after they have sent a formal offer. The bottom line is you can appeal to the school for more money. This can happen in a couple of different ways. The first is due to hardship. If your family has experienced some financial hardship in the last year that makes the Free Application for Student AID (FAFSA) unrepresentative of your current circumstances, you can appeal to the financial aid officer and present your case. Bear in mind that these have to be legitimate family issues; a parent that was recently laid off their job, a sickness in the family, or some other valid reason. Vet bills for your favorite horse probably don’t apply. Financial officers have the ability and discression to adjust expenses due to out of the ordinary new circumstances. They are people too and have a heart.
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The second appeal is to simply ask for more dollars. Schools can and do low ball their first offers. There is information available that estimates the average percentage of “need” that a college will provide. If the figure you receive is significantly below that average for you as a student, the school is attempting to low ball you. In this case, you can go back to the college and indicate that their offer is below what you believe you can afford and thus ask them to sweeten the pot. If you are a student they want to fill their seats, they are often willing to do so. It never hurts to ask.
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The last appeal is based on competition. If you have a school that wants you and you want to go there but another school is offering a better package, tell the lower bidder. Explain the situation. Express the fact that you would like to go to their school but have other offers from other quality schools that are more cost effective. Provide the low bidder the details of the offer and ask them to meet it. If they want you and the offer is truly competitive, you may be surprised to see how the low bidder will work to get you into their school. Worst case is they won’t do it. Best case is they can up the grant and save you significant dollars.
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Action time.

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College education is a business, a big one. It works like a business in its dealings. While not quite the same as the corner used car lot, there are issues to be considered in reducing your costs and trying to obtain the best deal and still receive a quality education. I would look forward to working with you to help you receive the best value for your education dollar. Feel free to email me of give my office a call for an initial consultation.
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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Figuring out the Maze of College Financial Aid

Sorting out the Maze of College Financial Aid

Figuring out the Maze of College Financial Aid

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

Figuring out Actual College Costs

college tuition

Figuring out Actual College Costs

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This is an exciting time for High School Seniors. The end is in sight. Many are going to be receiving their acceptance offers from the colleges they have applied to. For the next few weeks, lets focus on some math and cost of attendance examples that go along with acceptance letters.
First, it is important to know that not all acceptance letters are equal. Some colleges are in the habit of making their offers look, well, perhaps better then they are. So, lets go over the deal. First off, you should have completed and sent in the Free Application for Student Aid (FAFSA). If you have all the correct financial information for the calculation, the government will send to you and the colleges you put on the form your Effective Family Contribution (EFC). That is the number the government says you can afford to pay for college. You may not agree with them but that is the number! So, what is the first equation?
            Cost of Attendance minus Effective Family Contribution equals Need
Short hand for all of this is:
                                                            COA – EFC = Need
So let’s pick this apart for a few sentences. What is the Cost of Attendance?
Well, that is a good question. Seems apparent but sometimes some things get left out and families face more expenses than the letters state.
Bottom line, Cost of Attendance should include:
                                                Tuition
                                                Room & Board
                                                Texts books
                                                Necessary travel
It would be nice to also have estimates of the following included in the cost of attending:
                                                Lab fees
                                                Personal Expenses
                                                Student Activities
If any of these expenses are left out of the equation, well, the actual cost of attending the school will be misquoted.

Action Time.

Having applied to the colleges of your choice, go to their sites and check out their estimates of their Cost of Attendance or their Net Price calculators. This will give you the ability to compare their Cost of Attendance and Net Price to the cost associated with their offer letters. The differences may be significant. All this takes time and effort but will keep you from having any surprises. We will be covering more about this throughout the month of March. I would be glad to work through the letters with you to help you fully understand the bottom line. Keep in mind that every person’s circumstance will vary and each school has its own format.

 

 

 

 

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

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.

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.

Action Time.

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.

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.

 

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

 

divorced parents, college planning

College Planning for Divorced Parents Part 2

divorced parents, college planning

College Planning for Divorced Parents Part 2

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Last week, we talked about students with Divorced parents going to schools that use the Free Application for Student Aid (FAFSA) and it got a little messy. Well, hold on to your hats! For those of you going to some of the more elite schools, life gets even more interesting.
Why so you say?
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Well, some of our elite brethren choose to use a different set of rules. Some schools use an additional form called the Profile Form or CSS/Profile form. If you want a list of these schools, try www.collegeboard.com .
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Now, this is where life gets really interesting. Many of these schools have you complete the Profile form and then only provide you an offer without letting you know the formula and charge you a fee to boot! For our purposes here, as we are only talking about families in a divorce situation, we won’t mention the fact that the Profile schools often require you to divulge home equity but we won’t mention that. Rank has its privileges! Back to the case at point. Divorce. The schools using the CSS Profile form may ask for the non-custodial parents’ income. Asking for it, they may not use it. Others ask for it and use it. Others may ask for the all the income from both sets of married couples and come to some value significantly higher for their school. As the schools will not divulge how they arrive at the results, you are at their mercy. So, as I see it, the issue is where you want to go to school and how much are you willing to pay for it. If your desire is to get a reasonably good education, with a lower price tag, you may be advised to seek out only the schools that just use the FAFSA form. If your desire is to go to one of the more elite schools, unless you are the student they highly value and they are willing to negotiate for, you may be forced to pay a significantly higher price tag based on some obscure formula and at the flexibility of the financial aid office.
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Action Time

The price for higher education can be a maze in the simplest of circumstances.  Divorce, separation and family issues only add to the confusion. I would suggest your goal, under any circumstance, is to pursue the education that best meets your needs and desires at an appropriate price. Be forewarned that you may have to put in significant effort to be an informed consumer and be a hard negotiator to obtain the best price tag from the college you attend. Know that colleges are businesses and they are also looking for the biggest bang for their efforts and product as well. I would look forward to working with you to identify the goals you have for your career and education and help you find the schools with a price tag you are comfortable with
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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

 

College Planning for Divorced Parents

College planning for divorced parents

College Planning for Divorced Parents

Divorce is usually painful for all parties, and is often hard on kids. All types of issues surface and often take years to resolve. Unfortunately, college financing can be one of those issues and the rules can be somewhat gray.
There are a number of things to consider. Let me try to explain a few.
The first is the type of school the student is looking to attend. When dealing with financial aid, most schools require the student and the parents to file the Free Application for Student Aid, the famous FAFSA form. In a divorce situation, the rules require the FAFSA to be filed by the custodial parent. This in itself has its fine tuning points. Most would consider the custodial parent to be the one that claims the student on their tax returns. Well, not so fast. Word is that the custodial parent is the one who took care of the student for the majority of the immediate 12 months prior to the date of filing the FAFSA form. Got that?
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OK, next point.
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For the schools that only use the FAFSA, if the custodial parent has remarried and the new couple file a joint tax return and sometimes, even if they don’t file a joint return, if they live at the same address, irrespective of prior legal arrangements, the FAFSA looks at their combined income when considering financial aid. Now, that may not seem fair but unfortunately, thems’ appear to be the rules (I say “appear” as some schools can treat the situations differently!). For those whose ire is up on this one, you can appeal to the admitting college and sometimes can get an exception. You will need to make your case to the financial aid officer.   You will never find out unless you try.
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As we are on the part of the custodial parent, one can get creative here as there may be some serious bucks involved. If you are living in the same town and changing living arrangements doesn’t cause too many issues, the student can go to live with the parent whose income may be significantly less and therefore qualify for additional aid. The rule is what parent the student is living for the majority of the 12 preceding months based on the date the FAFSA is filed. So, to get this to apply, “the move” would have to take place when the student is a junior in high school. Ain’t all this stuff interesting?
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Action Time!

This topic has a lot of twists and turns so we will spend a week on some of the issues. Understand that individual circumstances can be very unique, so it becomes important to look carefully at the rules and use them accordingly. This blog can’t give specific advice because each person’s situation may be very unique. It also is important to know that each school can respond differently and ask for additional information (like the other biological parents income) even though it isn’t required on the form.  The point is this is a complex deal with varying circumstances and a certain amount of flexibility on the part of the admitting school. Also, if you have offers from different schools, you may be able to negotiate the offers due to your unique family circumstances. You may find a significant difference on the parts of the schools to make exceptions.  I would look forward to hearing your experiences or circumstances.
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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

 

FAFSA college tuition, college fees

Preparing for the Free Application For Student Aid (FAFSA)

FAFSA college tuition, college fees

Preparing for the Free Application For Student Aid (FAFSA)

Some years ago, the Federal Government put together a process to try to level the tuition playing field for families of differing incomes and assets. They devised a Worksheet for the student/parent to complete and thus determine what the family, in theory, should afford in putting a student through college. It’s this thing called the Free Application for Student Aid or FAFSA form. Parents and students divulge their income and resources and the government calculates some number called the Effective Family Contribution or EFC. The number goes to all the schools that you list on the form. The schools use the EFC number and their “List Price’ and their own financial aid formula to determine how much if any they might be willing to give you in the form of Student Aid. So, they usually send you an offer in the spring as to what you will need to spend and what they are willing to offer in the form of Aid. That is the quick and dirty. The FAFSA can be sent in as early as January 2nd for the following school year and it is important to get it in on the 2nd as the results quickly go out to schools and the schools start their budgeting process. Late filers seldom obtain school grants as the “early bird catches the worm!” (How does it feel being called a “worm?”)

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Well, one important process is to get the EFC down as low as you can and that can take some preparation. First you need to know what assets and income are reportable and counted toward the EFC. Some assets that aren’t counted are: home equity, 401k/IRA/403B values, annuity values, life insurance cash values, values of business with less than 100 employees, family farms, restricted bank accounts and some other unexpected financial aid. So, those are all the things off the radar scene. Now, EFC calculating guys don’t take into consideration your cash flow. They are just interested in how much your family makes and how much cash or reserves you have. So, one thing to consider is if your family has some cash and you have some existing debt and the interest on the debt is more than what you are getting on the account, pay down the debt. For some, they can put more into their retirement accounts and live off savings to draw down the savings account prior to completing the FAFSA form. You need to be careful here as there can be a look back period as to how much you contribute to your retirement accounts and that will be added back into your income. This whole FAFSA thing can be challenging as the rules get convoluted very quickly.

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Action Time.

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 The process can be challenging and somewhat frustrating. I know you won’t consider fudging the books as you are too honest to do that. Besides, many of the FAFSA applications are audited and it is considered a crime to cook the books. One helpful website is www. bigfuturecollegeboard.org it offers a variety of useful resources and some valuable answers to some questions for the do it yourself. On the other hand, you can go to a pro. We work with you to prepare the FAFSA. Check out our site at www.lifeprecollegeplanning.com. You will find a button called “Data Form” you will find a Fact Finder that organizes your information. Then, we work with you to determine your current EFC and potential ways to reduce it. Advanced preparation is really important. Be the Early Bird.

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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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photo credit: Internet Archive Book Images via photopin cc

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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