Greetings Students & Families!
It's been an amazing summer as students have embraced research projects, study and travel abroad, responsibilities as camp counselors, the challenges of navigating a college campus and eye-opening local internships. BRAVO!!!
A few times a year I update and share my detailed newsletter about all things "Financial" and I know families of students at all grade levels will find the information invaluable to choices ahead.
The past few weeks I've been speaking with parents of rising seniors as we finalize their list of colleges. One of the questions most often raised is whether a student should be applying to private colleges if a family has participated in their state's pre-paid tuition plan?
The short answer to the question is that there are many outstanding universities offering both financial need-based and merit based assistance.
In this newsletter, you'll learn about how to evaluate your financial situation and how to plan your high school student's academic path in a way that creates scholarship opportunities.
As all my newsletters emphasize,
each school year is an opportunity for further exploration into academic areas of interest and strength, as well as enhancing existing learning and time management strategies. Please CONTACT ME t
o schedule your Back-to-School Educational and College Admissions Assessment.
Parents can help students continue to find their passions both within and outside the classroom. Good grades are essential, but they don't supplant the importance of having a fulfilling and connected life both at school and within "communities".
Links to some of my recent newsletters this past year you'll enjoy:
A discussion of the value and importance of early academic and college planning so that each young adult enjoys a meaningful high school experience leading to a seamless transition to their undergraduate college.
No student should be enrolled in seven AP classes. Please review this note discussing the balance between selected classes and your extracurricular life to increase your chances of a successful undergraduate experience.
COLLEGE ACCEPTANCE RATES: MYTHS TO UNDERSTAND
Whether your student is in 7th or 12th- it is never too early to understand how financial aid and merit-based scholarship are awarded thus impacting your actual cost of education. Each family should understand why "college sticker price" is irrelevant but why working towards a specific financial/academic strategy is a multi-year process to begin as soon as possible. Building a plan at the start of high school will impact the choices of colleges your student visits (10th/11th) and ultimately applies to during the senior year.
This newsletter focuses on the process of applying for and understanding how to receive both financial aid and merit based scholarships.
In this newsletter, you'll learn about the FAFSA4CASTER, FAFSA, CSS Profile and Scholarship Search Engines.
Continued best wishes to all students for a sustained strong start to the school year!
Yes you can afford college!
Little known fac
ts....
As an experienced university faculty and admissions committee member, let's begin with a discussion of how colleges determine your financial aid award and some tips to increase your chances of receiving financial aid and scholarships.
Need Blind Admissions
Nearly all colleges practice "need blind admissions" meaning admissions decisions are unrelated to your request to be considered for financial aid.
That said, university budgets and financial aid awards are built around "discounting" - a practice of offsetting a college's annual financial aid budget with the dollars received from full paying students to minimize the impact on the institution's endowment. As a full-paying family, you may be surprised to know that as much as a quarter to a third of your tuition dollars are used to award financial aid to another deserving student.
I'll have more to say about this below.
Where is the Money?
Universities more able to provide significant undergraduate grant money (as opposed to loans) have:
larger endowments, a higher percentage of alumni "giving" and significant numbers of full-pay students (often achieved by higher-than-average percentages of foreign students). All of these data are available for review and should be on your radar when selecting colleges.
While within-state public tuition is the least costly "sticker price" in your home state, public universities also have significantly less funding available for grants than do private colleges. If your college list includes several public universities in other states, don't expect much in the way of financial aid or merit aid from these institutions. Your choice of colleges should be
focused on private institutions with available funds and a commitment to meet your need. That commitment will be expressed on admissions and financial aid web pages.
Matching Funding
Universities have the discretion to consider competing financial aid offers for admitted students from recognized competitor institutions (selectivity, size, etc.).
By agreement, Ivy League universities will NOT match a financial aid offer. That said, Ivy League colleges have some of the largest endowments and greatest number of contributing alumni enabling the Ivy League to meet your financial need (see below). Many private institutions do meet full financial need.
Ivy League universities have very little (hidden) merit-based aid. Some of the heavily endowed Ivies have committed to maximum percentage out-of-pocket models relative to "sticker price". Many of the families I serve earn too much to receive significant financial aid at the Ivy League yet feel unable to afford the sticker price.
If your student has the scholastic & extracurricular record to be a viable candidate for the Ivy League consider instead excellent universities that do offer substantial merit based scholarships.
A Strategic Academic & College Admissions plan early in high school makes this dream a reality.
Based on actual research and client experiences, I maintain an extensive data base to match each student's academic interests with colleges more likely to provide an attractive financial aid package and/or merit-based package. Contact me to schedule an "Educational and College Admissions Assessment".
Let's talk about your college short list relative to your admissions portfolio and intended major areas of study. For example, males applying to historically "female dominated" majors in liberal arts colleges will not only have a greater chance of admissions, but often receive attractive financial and merit based awards. There are admissions/financial aid "bumps" in many majors and colleges by gender and other student demographic characteristics.
How does all this impact your out-of-pocket costs?
Where should your student apply to receive the most financial aid?
In order to realize your educational goals, it's important to understand how your financial aid award is determined.
What is the real cost of a four-year undergraduate degree? The short answer is to avoid sticker price misconceptions.
The
sticker price of a four-year private undergraduate education is approaching a quarter of a million dollars. Families are often misguided and too easily take private colleges off their radar opting for seemingly less pricey in-state public tuition. While we don't have enough time in a day to discuss why the cost of an undergraduate degree has reached the point where the sticker price now exceeds what most families set aside in their family budget for retirement savings or even their annual mortgage payments, I want to explain how your financial aid is actually determined to reduce confusion and keep your focus on educational goals.
Let's start with the basics:
As noted, College Admissions is "need-blind". There is no adverse impact on admissions if you apply for financial aid. Likewise, you don't increase your chances of admission being a full-pay student.
There are two sources of funds:
Need based financial aid
and
Merit based Scholarships.
Financial assistance can originate with the college or from a third party (federal/state governments or private scholarships).
Need Based Aid - Financial aid is awarded directly from the college based on your demonstrated financial need as determined by your FAFSA Estimated Family Contribution (EFC). Details follow below.
A number of privately funded merit-based scholarships are also need-based, including the prestigious
QUESTBRIDGE full scholarship for students with demonstrated financial need and outstanding academic achievements.
Low income families are encouraged to explore Questbridge. Applications begin during the Junior year!!
Merit Based Aid - These awards are based on a competitive review of the student's academics, athletics, community service, etc. The awards are unrelated to financial need (or lack thereof). Merit aid is awarded by colleges and also by private scholarship funds.
- There are scholarships for a variety of majors and these are VERY competitive.
Ron Brown Scholarship is an example of a private scholarship.
Some competitive colleges offering full-rides include Penn State, Miami, Boston, Washington University, Emory, Vanderbilt
- The chances of receiving a lucrative scholarship increase with higher GPA and demonstrated research/competition in your intended field of study.
This is just one of the reasons why I encourage students in 8th-10th grades to focus on setting their educational goals early and taking steps to realize these goals.
Earning a 4.0 GPA is impressive but insufficient to earn prestigious merit based awards! Scholarships are given to students with impressive accomplishments both within and outside the classroom.
- Private colleges will offset and reduce some or all of any grants awarded by the amount of external scholarships received.
The scholarship offset is typically 25 to 50%. For example, if a university included an annual $20k merit based award in your financial aid package and you receive an external grant of $5k, you should expect to see a reduction in the $20k award. Despite the offset, the incentive to apply for these scholarships still remains, as any award is another noteworthy accomplishment on your resume increasing your chances of external scholarships in subsequent academic years.
Applying for Financial Aid:
Forms, forms and more forms....
Each university will provide specific instructions for incoming freshman.
***SENIORS!!! Please read the financial aid page at each and every college you're applying to so you don't overlook any required forms and due dates.
The process will include submitting a
FAFSA (Free Application for Federal Student Aid).
I am available to assist with any unusual or complicated situations. Some of questions I often address deal with how to report business assets or dealing with divorced/blended families.
Several colleges will also require submission of a CSS Profile through the College Board portal and IDOC forms.
Several colleges also include college specific forms; this is especially true for gathering information about a non-custodial parent (divorced parents).
As I said, forms forms forms....
Deadlines are strict. It is very difficult to receive any financial aid if you submit your FAFSA after the due date.
THERE IS NO RUSH - but I highly recommend submitting the forms by December 31 of the senior year. Many colleges accept the forms early into March. Don't wait! Delays can cause your student to miss out on funds.
*** Good news (LOL) - you will be reapplying for financial aid each and every year your student attends college and the aid your student is awarded will increase or decrease as your income and assets change.
??? TIP: Thinking of selling your home and downsizing? -
DO NOT DO THIS!
The cash proceeds from a home sale are included in determining the EFC. In sharp contrast, the value of your primary home and retirement savings are both excluded
in calculating your EFC! Don't sell your home until after your youngest child starts the senior year of college. A second mortgage has the desired impact on your EFC. You might ask me if you should take savings and buy a large home - NO, because the question on the FAFSA and CSS Profile asks "year of purchase". The senior year is too late to move savings into home assets for financial aid planning.
Most important- your home is your asset - and financial planners would clearly discourage you from handing your home to your child to pay for college!
High School Juniors and Seniors
While you don't yet have to file your FAFSA until after October 1 of your senior year, now is the time to initiate the request to establish a FAFSA account. The student and the parent should submit a request for a FAFSA ID:
THE FORM ITSELF:
You'll be asked to submit information about both student and parent income and assets. For seniors enrolling as freshman in 2019-20, the 2017 tax return will be used to determine your eligibility. The EASIEST way to complete a FAFSA is to utilize the IRS Data Retrieval tool:
Please contact me for assistance if your family income in 2017 was at least 10% higher than it was for 2018. I'll show you how to formally reduce your EFC and increase your aid. Reduced income from 2016 to 17 to 18 from job loss, disability, retirement, business loss etc. should be included on your financial aid application.
Selective Service: As noted in previous newsletters, all males over the age of 18 must register for selective service to remain eligible to receive any federal funding, including student loans.
The FAFSA not only generates your EFC for colleges to determine whether to provide you with scholarship awards, but the FAFSA is also is used to determine your eligibility for federal grants and loans. Males must be registered with selective service to receive these funds.
There's a ton of information on the FAFSA government webpages, and much of it is clear but just overwhelming to find what you might need to know. I provided some basic information to get you started and invite you to contact me to discuss your concerns and unusual circumstances.
***!!!
If you would like to understand the algorithm behind the calculation of the EFC - this detailed government publication explains the process. Pay particular attention to page 9. With proper financial planning early in the high school path, the EFC can be reduced. I can partner with you and your financial planner/accountant to clarify this process.
Nearly all undergraduate public and private universities utilize the FAFSA financial model to determine the extent of private institutional aid awarded, if any.
The FAFSA approach seeks to estimate the "Estimated Family Contribution (EFC)" towards the "Cost of Attendance".
The Cost of Attendance for each student is unique to each college and includes tuition, room & board, books, supplies, personal expenses, travel and applicable fees. The range across private institutions for 2017-18: $40 to $70k+.
Keep in mind that this is a budget of sorts, whereby the first two items are billed through the College Bursar and paid directly to the institution. These are the two largest items comprising COA. The remaining items are out-of-pocket expenses leaving quite a bit of room for a student/family to minimize costs with reasonable effort to do so.
The key piece of information we need to focus upon is your family Estimated Family Contribution (EFC).
The difference between the COA and the EFC is your family's Unmet Financial Need.
How a college meets that difference is determined by all the factors noted at the outset of this newsletter: size of endowment, alumni giving, etc and the strength of the student's application.
Let's be crystal clear. While admissions is need-blind, once admitted, if you are eligible for financial aid (COA-EFC= Unmet Need), institutional financial aid can be in the form of grants, work-study, student loans and parent loans. The mix of that aid is subject to negotiation which will be discussed in a subsequent newsletter/blog.
I've seen financial aid award letters including $60k of grants where the same student receives a package of $50k in parent and student loans at another university!! What does this tell you about how attractive a college finds your student? What does this tell you about how to target and select colleges? If you want more money-- your admissions strategy is to be the top end of the applicant pool. e.g. If your student has a 3.6 GPA, you'll receive more grant money at colleges that seek out students with a 3.3 GPA.
COLLEGE APPLICATIONs
and FINANCIAL AID:
Your unmet need is certainly subject to negotiation depending on a number of factors that relate relate to the strength of the student's profile, gender, selected major, location to name a few.
The stronger your admissions portfolio and in particular your common application essay(s) where you clearly demonstrate how you will contribute to the institution and show "informed interest", if you're eligible for aid, the greater are your chances of receiving an award letter with more grants and less of an amount in loans.
It is heartbreaking to receive a well-earned acceptance letter only to open the financial award letter and see LOANS rather than grants.
Loans are what public universities offer.
DETERMINING YOUR EFC?
Factors that determine an EFC include parental AGI, assets in the student's name, unusually high medical expenses, divorce/separation status and the number of children in college at the same time.
You can experiment and plug in a few different scenarios. Maybe you can defer a large bonus or contract? Maybe it doesn't pay for one spouse to work outside the home while the children are enrolled in college. Maybe you can still move assets in the children's name into the parents' name (this is only a strategy for freshman and sophomores-- consult your tax accountant for advice).
DIVORCED and FINANCIAL AID: I've worked with several divorced and blended families and I am able to sit down with you one-on-one to discuss your situation so we can ensure that the college choices are supported by what your family can afford and how financial aid works. Regardless of what your divorce decree indicates, the lower earning parent should claim the student as a dependent on the 1040 - thus becoming the custodial parent for FAFSA purposes. I also maintain a database of colleges that request and overlook the non-custodial parent income.
My Comprehensive College Admissions package provides guidance in selecting colleges not only where your student will thrive academically and socially, but also to select colleges to maximize your chances of receiving financial awards. You'll also receive guidance in submitting your FAFSA, CSS Profile and IDOC filing, interpreting your financial aid award letter(s) and assistance with negotiating/appealing your award letter.
Please CONTACT ME to answer your financial aid and admissions planning concerns. The two topics are connected and early planning will result in an acceptance letter and with the financial package you require.
Each situation is unique and I will work on your behalf to minimize the pain of applying for and understanding financial aid. The most important consideration for all students is to ensure you haven't eliminated colleges on your radar given misconceptions about financial aid. For many families, there is often more financial aid funding available to you at private colleges than public institutions.
Again, best wishes for a strong and amazing start to the school year! Please reach out with questions!
Bonnie
SENIOR REMINDERS:
