Tagged: financial aid packages

Rising Discount Rate Means Lower College Tuition

The cost of a college education can be daunting to say the least. Many college hopefuls are deferring applying or, once enrolled, find the costs overwhelming.

Each year the demographics of the applicant pool change and one current trend is favoring applicants. We are in a period in which the size of high school classes is decreasing so that the number of potential college students is also declining.

Colleges need to fill seats and beds in order to have enough income to keep the lights on and the professors paid. Competition for students who will enroll has increased substantially in the last couple of years. The discount rate is the difference between the published Cost of Attendance or tuition and what students are actually asked to pay. Many students are finding that the discount can be up to 50%.

To attract students, financial aid packages have been beefed up and other perks are being offered. Some colleges have frozen tuition. In addition to not raising tuition for this year, some guarantee keeping tuition the same until a student graduates.

In the past it has been difficult to get one of your colleges to increase the merit aid in your package but that may be changing. If you have a better offer from College B but want to attend College G, you can try by showing the award letter from B and asking if G can match.

Prepare to apply to multiple colleges, looking for those where you will be highly desirable. Choose those where your credentials are in the top 25% of the applicant pool or where they need your tuba, experience, your interest in an under-subscribed major or to fill a demographic slot.

Until the number of high school students begins to increase again, college applicants will have more leverage: take advantage of all of your options.

FAFSA for Financial Aid and Grants

The FAFSA goes live online on October 1, giving you a few weeks to submit the form.  If you are applying ED or EA and submit the FAFSA and/or the CSS  with your application you should get an idea of what your aid package will look like with the college’s decision.  Most colleges have set an absolute deadline for FAFSA as February 1 or February 15 to qualify for aid.

1. FAFSA is a form that allows a computer program to set the EFC, Expected Family Contribution.  The number is based on income and certain assets excluding the primary residence.   I’ve seen EFCs ranging from $125 to $100,000.   The The EFC is what the formula assumes is available to pay for college.  Unless there is a change in family financial circumstances, the EFC is non-negotiable.

2.    The EFC amount is sent to the colleges you designate.  The college decides how to fill the gap between the sticker price and your EFC.    Merit aid in the form of grants or scholarships is one way colleges make up the difference.   The amount of this aid is usually bench-marked by scores and grades and is a rough measure of how much the college wants you to choose them.  When a college is very interested in a particular applicant they will find money to make enrolling attractive.

3. “Financial aid” can be mostly loans.  First year students are eligible for $5500 in federally guaranteed loans; second year students  can take up to $6500, third and fourth years, $7500, fifth years can borrow $4000.  This totals $31,000, the exact amount that many colleges say is the average debt load of their graduates.   Unfortunately, parent loans are in addition to this calculation so we don’t know the total of family debt per student which can be significant.

The Documents you will need include for student and parents: social security numbers, student drivers license number, tax returns for 2017, records of untaxed income, bank and investment records.

4. CSS is another document used by some private colleges to determine how much the family can be expected to pay.  The form is downloaded from the College Board website and has a small fee attached to submitting it.  Both FAFSA and CSS are required by a few colleges so be certain you file carefully and observe deadlines.

If you would like a copy of the documents you will need to complete either of these financial aid forms, I’ll be happy so provide a copy.  I can also give you more information on how financial aid packages are calculated and what you might find included in them. stephanie@accessguidance.com or 610-212-6679.





Important FAFSA Changes for 2017 Grads

tax-468440_640All high school juniors and their parents need to know that the date for submitting the FAFSA for financial aid will change after this year.

In the past parents filled out the form in January of the student’s senior year using data from their tax return for the previous year. Seniors graduating in June, 2016 will be submitting the form in the winter with data from their parents’ 2014 taxes and updating when the 2015 tax return is completed.

In order to give colleges time to prepare financial aid packages to families earlier, juniors who will graduate in June, 2017 will submit the FAFSA in the fall of their senior year, 2016, long before data to file the 2016 taxes is available. The Expected Family Contribution will be calculated on data from the 2015 tax return.

Having the financial aid package earlier will be a help to students in choosing among acceptances.

However, with the help of a financial advisor, families of juniors will need to complete changes in their assets by December 31, 2015.

The documents needed to fill out the FAFSA are:
1. Student and parents’ social security numbers
2. Driver’s License number
3. Alien Registration Number if you are not a citizen
4. Student and parents’ federal tax returns
5. Records of student and parent’s untaxed income such as child support, interest or income
6. Current bank statements or investment records

For more information on FAFSA and financial aid packages, please use the link to my website where you can fill in the contact page. I’ll be in touch as soon as I hear from you.

You can also call me directly at 610-212-6679 or email stephanie@accessguidance.com

Seniors, There is One More Thing You Must Do

Whew!  The end of the year is in sight, and graduation is just around the corner.  You have in hand your acceptances and aid packages and have decided which offer to accept.

You’re not finished with the application sequence yet!  You must contact the colleges where you decided not to attend, especially if you were put on the wait list  This part of the process isn’t about you but is about your behavior as a responsible adult.

Colleges need to know your status in order to make plans that include admission for students on the wait list.  Also, admissions offices form relationships with high schools that can be an advantage for applicants; you may have benefitted from such a relationship.  Don’t spoil a good thing with indifference or attitude.

Below is a link to an article in the DC Examiner giving some good reasons to let all colleges know if you are coming or saying, “No, thank you”.


No Loan Financial Aid Packages

About 125 colleges guarantee financial aid packages that are loan free and others that place an upper limit on the amount of loans that are needed to cover the cost of attendance.

Limiting the amount of money that a student needs to borrow is one way to slice into the problem of the debt owed by college graduates, however for some colleges the loan-free policy only refers to student held loans, not to parent loans.

The loan policy should be investigated for each college that students put on their application list and that includes those who claim to build aid packages without loans.

The following link is to one list of loan-free colleges. https://www.edvisors.com/plan-for-college/money-saving-tips/no-loans-colleges/

Bottom line is buyer and borrower beware!