January 2017 College Financial Aid Update

2017 College Financial Aid Advice

This is our January 2017 financial aid update.  This information is inspired by the last couple of weeks and the many families we have spoken to that did not know some of their child’s college(s) had a January 1st deadline for financial aid. The result, some of these families missed the deadline. One common mistake is that families will go by the Federal deadline for FAFSA, not the college’s deadline. Big mistake. In addition, families are being misinformed by various sources including high school guidance counselors pertaining to the financial aid process. For example, they are being told that the FAFSA is the form that needs to be filed to be considered for financial aid. For many families this is simply not true.

There is another form that is required at many colleges called the CSS Profile (please see my earlier blogs on Profile). If the profile is required, the college will utilize the information solely for the purpose of awarding gift-aid (FREE money). So if Profile is not filed or if one misses the deadline, the student will lose out on good aid.

The bottom line here is that families should not always rely on the system for the correct and appropriate information. These resources will not assure them of complete success in the process. What families should do is seek out a proven and trained expert. They will provide families with invaluable information, advice, and insurance that they will receive the best financial aid award(s) possible.

If you have missed a deadline, please contact our office for appropriate advice. In addition the next two hard deadlines at some colleges for Profile are Jan 15th and Feb 1st.

Top 5 Tips For High School Sophomore Parents Looking For College Financial Aid

Sophomore Financial Aid

These are our top 5 tips for high school sophomore parents looking for college financial aid.  If your child is a sophomore in high school, you may be able to save yourself thousands of dollars on college tuition if you take this advice before the end of this year.

We feel the sophomore year is when you should set the stage for college financial aid under changes adopted recently. If you get busy with the holidays and slide towards New Year’s Day without examining and adjusting finances, you could lose an opportunity for aid that won’t return once 2017 arrives. College could end up costing you thousands more than it would if you were alert early enough.

Most people have inaccurate assumptions about getting financial aid. They figure if they need aid they will get it if they simply fill out the financial aid forms required, which includes the Free Application for Federal Student Aid (FAFSA) and the CSS Profile. By the time they sit down to do the forms, they’ve taken actions with their money that permanently will undermine the aid they will get and they are shocked when the college sees them as a lot wealthier than they are.

By Jan 1st, much of your fate will be sealed because your tax return for the 2017 tax year will become the key factor for computing aid. And just as people try to adjust income so they get as many tax deductions as possible, financial aid takes the same diligence.

Please be aware that many of the adjustments you make to enhance financial aid are the opposite of those you use to cut your taxes. So if you go to a tax expert, make sure it’s one of the few who understand the unique financial aid formulas that leads so many families off course.

It is important to get an early preview of your 3 EFCs, Expected Family Contribution and the (Estimated Family Contributions). These 3 calculations are an estimate of what the family will be asked to pay for the year. Families should get an accurate preview from a trained expert.

Here are top 5 tips for high school sophomore parents looking for college financial aid.

  1. Shift Your Income

    If aid is likely, try to move any income you might have coming in 2017, or during the college years, into the remainder of this year. That’s easier said than done. But this is the last year you can have a sizable income and not lose financial aid. In 2017 and during the college years, you want to keep your income as low as possible not by turning down work, but by being as savvy about financial aid as you are with tax deductions.

    So if, for example, you are going to get a big bonus at work next year or get a big payment from your business, you will want to try to get that done in 2016.

  2. Plan Investments

    If you’ve planned to sell stocks, bonds, mutual funds or other investments to pay for college, this is the last year you will be able to do it without cutting into your financial aid. By the time your child is a junior in high school, capital gains from selling investments will increase your income unless you can sell other investments at a loss large enough to wipe out the gain. So consider selling investments while your child is a sophomore. However, please note there could be tax and investment consequences from this action, so get advice from an expert who understands the entire picture including financial aid. And remember, don’t start selling investments if your calculation shows you won’t get aid.

  3. Max Your 401k

    Although you cut your taxes when you put money into a 401(k), 403(b), IRA or other retirement saving account, the savings can work just the opposite for financial aid. If you stash money into retirement savings accounts during your child’s high school junior year or during the college years after that, your taxes will be low, thus making it look like you are able to pay more for college. As a result, colleges may cut back your aid.

    So for those families who aren’t going to be able to maximize their retirement savings each year and handle college costs too, they may want consider stuffing retirement savings accounts as full as possible during your child’s sophomore year rather than later. Also,

  4. Give To Charity

    Rather than giving to charity each year, give a big chunk this year, telling the institution it’s for now and the upcoming years.

  5. No Accounts In Student’s Name

    Any investments or savings in an account that belongs to your child will poison financial aid eligibility. That is why families that need financial aid shouldn’t use Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts. One can move money out of these accounts and save instead in 529 plans kept in parents’ names. Parents may be able spend down UGMAs on a high school student’s immediate needs like computers, upcoming summer camp or private high school expenses, while adding equivalent savings to 529 accounts. But please be warned, parents need to handle this cautiously since the money does belong to the child.

    Here is why UGMAs and UTMAs are not good. Under the unfair financial aid formulas, colleges except a student can use almost anything they have saved for college, so the college taps 20 percent of the student’s savings right off the bat or 25 percent at private colleges. But the identical savings in a parents’ name only would be tapped up to 5.65 percent.

The logic behind this may seem sound: Parents have many expenses to cover and not just college. Yet, students should contribute money to their education. The problem with this logic is most families don’t have nearly enough saved for college and if they’ve made the mistake of saving for college in their child’s account rather than their own, they will have to pay a lot more.

Consider parents with a $40,000 college fund saved in their own account. The college would require them to use up to $2,260 for the first year of college. But if the same account is in the child’s name, the college would require $8,000 be spent that year for college. Aid would be cut substantially because the family would appear to be able to spend $8,000 that year for college.

So a parent would have to dig more than $5,000 extra out of their pocket to pay for college that year, compared with what they would have paid if they’d saved in their own account. And $40,000 is a modest example when four years in college can easily top $100,000.

If you would like more valuable information and calculations on your family’s EFCs, please contact our office.

Positive And Negatives Of Private Loans For College

Private Loans For College

Our office get a number of questions on private student loans for college as parents and students evaluate financial options. We believe the drawbacks are as following:

  1. Interest is often variable
  2. Less flexible repayment options
  3. Student may have to start making payments while they are still in school
  4. Higher limit on lending which will mean the student will be paying more interest
  5. The loan will be dependent on the student’s credit score
  6. If the lender requires a co-signer, the student may putting that person at financial risk.

However, there is a positive in considering a private loan. Friendly terms! Over the last 2-3 years I have been learning from some of our clients that they have secured a private loan with a lower interest rate then a Federal loan. For example, I talked to a client last week that retained a private loan at a 3% rate.

In summary, I recommend the student and or the parent should contact local banks and credit unions to learn what they have to offer before utilizing any unsubsidized Federal loan and should never turn down a subsidized Federal loan.

If you have additional questions or need information on how to lower college costs, please contact our office.

7 Tips On Lowering College Costs

7 Tips On Lowering College Costs

We all know that the cost of a college education is off the charts and for many families affording a college education can be a real challenge. Here are 12 tips that families can use to save money in the process:

  1. Compare housing options
  2. Don’t buy new textbooks
  3. Consider dual enrollment
  4. Get a tuition discount
  5. Attend a college with fixed-price tuition
  6. Utilize a work study program
  7. Graduate on time

Two bonus tips…

  1. Consider a community college in the first year or two
  2. Consider being a resident advisor. Many colleges will offer free or reduce room and board

Explore all of your aid options. With that said, parents need to be savvy when it comes to the financial aid process. The more they know about the process, the more likely they will retain more gift-aid. The more gift-aid, the less loans needed. Regarding loans, never turn down a subsidized loan(s) if offered and more importantly if needed.

Parents should consider retaining professional guidance. A trained expert will assure the family will retain the most financial aid possible. Also students should always pursue outside scholarships which will help to lower their out of pocket cost for a four education. Once on campus, the student should walk into the financial aid office to ask if there are any “in house” scholarships that they can apply for. Parents should set up a 529 plan early on.

If you wish more tips or information on how to lower college costs, please contact our office.

What a Trump presidency could mean for student loans?


Trump presidency could mean for student loans

What will a Trump presidency mean for student loans? He has rarely mentioned higher education on the campaign trail, so the future is somewhat up in air.

With so much still unknown and to be worked out during the transition over the next few months, it’s too soon to know what student loan borrowers can expect. But here are a few items that could be possible priorities in the Trump presidency and Republican-controlled Congress.

During the campaign, Trump proposed slightly modifying income-based repayment for federal student loans by allowing borrowers to pay 12.5 percent of discretionary income with any remaining balance forgiven after 15 years.
Current income-based plans allow for payments of 10 to 15 percent of discretionary income and forgiven balances after 20 to 25 years. Unless the proposal is meant only for existing borrowers, it is unclear how he would carry this out since earlier in the year his campaign said he wanted to reduce or remove the government’s role in student lending.

In May, Sam Clovis, the national co-chairman and policy director of Trump’s campaign, stated that the Trump team wanted to remove the government from student lending and restore that role to private lenders. Prior to 2010, federal student loans were either originated directly by the government or they were made by private banks with the backing of the federal government.

The Trump administration has not said it would fight to remove all federal involvement from student loans, making it a system of only private loans advocate for a federally insured program similar to the previous FFEL. Either way, student loan experts thinks it would be incredibly difficult – and likely very expensive – to walk back the transition to 100 percent direct lending that’s occurred over the past six years, given that the Republicans don’t hold a filibuster-proof majority in Congress.

It is also worth mentioning here that Republican Presidents going back to the Reagan days have stated that they would like to abolish the Department of Education which would have a major affect in education in our country.

Regardless of what happens, know that College Aid Consulting Services can help you reduce the out of pocket expense for your family utilizing our 26 years of experience.  Besides advising clients on FAFSA and the CSS Profile, we know many other ways to make college more affordable.   Contact our office today to learn more.

Why Student Campus Visits Are An Important Factor In Choosing A College

Student campus visits are a key part in deciding which college or university is a good fit. There is a feeling that a student experiences here. I have been told by many students over the years that they love a campus, or do not love a campus when they first arrive. While a student can find out basically all he or she needs to know about a campus via the Internet, until a student takes a trip to that campus, they will not know the real feel of the campus setting. The feeling once a student arrives is very personal, and it is one all students need to have experienced before deciding which school is right for them.

A campus visit allows the student to experience the trip involved to get to the school, the people who are there, and the actual learning environment on campus. Seeing the dorms and dorm rooms, the library, the career center, the fitness center, the bookstore, tasting the food, walking around the campus. All of these factors are important to understand if a student will actually be happy once he or she is a student there.

If you would like more information on how to take a quality campus tour, please contact our office.

When Students & Parents Don’t Agree On College

In our years of helping thousands of students and parents we see it’s very common they don’t always agree on college should attend. Some reasons include the cost, location, the student has a friend(s) attending a specific college, academic reasons, the student wants to attend a prestigious school that may not be appropriate or benefit them etc.

One of my suggestions is that the parent(s) and the student take a “time out” and agree to discuss the topic again in the near future. But before doing so, I recommend both the parent(s) and the student take a piece of paper and draw a line down the middle and at the top on one side write Pros and on the other side Cons and list all that come to mind. In their next discussion it becomes more clear to both sides on how to make the best common sense decision.

If the disagreement is over the cost of a certain college, it is the parent’s responsibility to educate the student on the amount of debt he or she will graduate with. Also, the student should be responsible for some of the cost. I have found that the more the student is involved in paying for their education, the more serious they are to achieve the best in their education.

New FAFSA Changes 2017

New FAFSA Changes 2017 are effective as of Saturday, October 1st 2016 now allow families to file their 2017-18 FAFSA and the CSS Profile using their 2015 tax information. It is called prior-prior year (PPY). Many families are being encouraged to file their FAFSA and CSS Profile forms as soon as possible.

However, there can be a problem with this advice is the new timetable when people have changing income levels year to year. The financial aid amount will be based on their older financial data that does not reflect their current economic reality because of either job changes (i.e., losses) or a drastic drop in the value of assets. Financial aid decisions will be based on out of date bank and brokerage account balances, not to mention previous income levels.

Families do have options here. If you would like more information on this topic and or would like the appropriate advice for your family, please contact our office.

Should A Family Hire A College Admissions Consultant?

college admissions consultant
I highly recommend that most families retain a college admissions consultant when their child is looking to get into a top private college or ivy league institution. The college admissions consultant can be of benefit in many ways including test preparation and college selection, to essay and interview coaching and providing a strong application package. The cost can range from $1,000 to $10,000 depending on the level of services offered, needs of the student and the types of colleges they are pursuing. Ideally like good financial aid planning families should start the process in the Sophomore or Junior year in high school.

In addition most students will benefit from college admissions assistance even though they may not be a top student.

It’s important to differentiate that a college admissions consultant and financial aid consultants have different areas of expertise.  If you would like us to recommend a top college admission consultant for your son or daughter, please contact one of our staff.

New 2016 FAFSA Financial Aid Changes

Here are some new 2016 FAFSA financial aid changes you need to be aware of. Families can now file the FAFSA as early as October 1st 2016 for the 2017-18 academic year using the “prior-prior” tax information. So next year students will file two FAFSAs using 2015 tax information. In addition, The College Board is also on board (pun intended) with the new date pertaining to the CSS Profile which is required at many private colleges. A couple of things to note here.
One is that the new change may not benefit some families and two, families need to know that different colleges will have different deadlines for both FAFSA and Profile. In addition, families should never go by the Federal deadline for the FAFSA which is June 30 2017. If they do, they will miss out on the good aid.

If you would like more information and clarification on these changes, please contact our office.