I worked in college admission for 12 years, and I’ve handed enough Kleenexes to worried moms and calmed the nerves of anxious dads to know that people really, really worry about the cost of college. I mean, really worry. Unfortunately, most of those who worry didn’t do enough (or weren’t able) to save for college ahead of time.
Following is a list of tips to prepare your family, whether your child’s a freshman in high school or getting ready for senior year. (It doesn’t hurt for parents of younger students to take note, either!)
1. Pay attention to deadlines.
Knowing financial aid deadlines at each school remains one of the most important parts of understanding the financial aid process.
For example, June 30 marks the federal Free Application for Federal Student Aid deadline, and various schools all have different suggested deadlines for filing the FAFSA. The FAFSA opens on October 1 every year and helps students qualify for financial aid for college from the federal government, state governments, and most colleges and universities.
You also want to know when scholarship deadlines exist for various schools. For example, if your child, a talented flautist, knows she wants to audition for music scholarships, you want to know when to go to those auditions!
Tip 2: File the FAFSA (even if you think you won’t receive aid).
Filing the FAFSA helps colleges and universities determine how much financial aid your child should receive, based on you, the parents’, income. (Yes, even if you don’t think you can chip in much to help your child through college!)
Even if you think you earn too much to file the FAFSA, you should do it anyway.
Why? You may qualify for other types of aid, such as federal student loans, which offer the lowest interest rates on any type of student loan your child can borrow.
Families spent an average of $30,017 on college in the 2019-20 school year, according to Sallie Mae.
Tip 3: Understand reportable and non-reportable assets.
Do you understand the difference between reportable and non-reportable assets on the FAFSA? It’s a really good idea to know the difference because shifting an asset from a reportable category to a non-reportable category can help shelter that asset on the FAFSA.
In other words, you can funnel money from one type of account into another. Take a look at a few reportable and non-reportable assets, though this doesn’t represent an exhaustive list.
|Reportable Assets||Non-Reportable Assets|
|Bank accounts||Principal residence|
|Brokerage and money market accounts||Family farms|
|Investments||Small family business with fewer than 100 employees|
|UGMAs and UTMAs||Qualified retirement plans|
|College savings plans||Life insurance policies|
|Real estate other than your primary residence|
One of the most misunderstood parts of filing the FAFSA involves understanding the nuances of the same asset and how it’s reported on the FAFSA. For example, let’s say you have money in a 401k. The money in the 401k does not count as an asset on the FAFSA, but any distributions you take will count as income on the FAFSA.
Another example: A mortgage on your family home does not count as a reportable asset. However, real estate investments, such as a second home or rental property, count as reportable assets.
You might want to get a financial advisor to help you navigate these distinctions. Understanding reportable and non-reportable assets can help you maximize the amount of money you receive through the FAFSA.
Tip 4: Fill out the CSS Profile in detail.
Certain institutions require you to fill out the CSS Profile. The CSS Profile covers financial questions beyond the FAFSA. It’s more detailed than the FAFSA and may take more time to complete, but it can also result in additional financial aid.
Complete the application as soon as possible to take advantage of financial aid distributed on a first-come, first-served basis.
Tip 5: Use a special circumstances form.
Many schools allow you to fill out a special circumstances form if you’ve faced a tough financial setback. No matter what, you want to talk with the financial aid office about financial difficulties you’ve had during the past year or currently experience, such as:
- Lost job or employment reduction
- Loss of untaxed income or benefits, like Social Security or alimony
- Separation or divorce
- Death of a parent or spouse
- Unusually high medical expenses
- Caring for a special needs child or elderly parent
Schools will ask you to fill out a special circumstances form, provide supplemental information, and submit the completed form to the college’s financial aid office.
Tip 6: Know that financial aid awards can be sneaky.
Unfortunately, for unsuspecting families, sometimes the financial aid awards for colleges and universities aren’t as transparent as they should be. I’ve written about this in detail, but here’s a quick synopsis of tricky financial aid award tactics:
- Many financial aid awards don’t separate gift aid from work-study or loans. Work-study and loans must be earned or paid back, unlike gift aid.
- Some financial aid awards don’t include the total cost, which forces you to hunt around for the costs on the financial aid webpage or make it really, really hard for you to find.
- They often don’t show the fees but include those later, on the bill. For example, let’s say your child plans to major in biology. You might not see anything on the financial aid award about lab fees but those could show up later, on the bill.
- You won’t learn about loan terms and interest rates on your financial aid award.
- College aid awards will never discuss future tuition increases — because they don’t know what the increases will amount to in the future. Most tuition increases are decided mid-year of the next academic year.
Your best bet? Discuss these loopholes with the financial aid office and find out if you can exempt your student from certain fees that won’t apply to him or her.
Tip 7: Ask the college for visit savings opportunities.
It can get expensive to visit colleges, especially if you criss-cross the country to visit colleges! Some schools help finance on-campus visits for students. Check with colleges and realize that you must demonstrate financial need, excellent academic records and possibly other requirements as well. Programs from schools may cover all or part of students’ transportation, accommodations and even meals.
Tip 8: Consider alternative options.
Don’t forget your own big backyard. Your child might not want to go to college in his hometown, but remember that hometown colleges often give large scholarships to local students. Shopping around in your area can also give your child a starting point for looking at colleges. I saw this happen all the time: Local students would go away to college, then would inevitably end up back at my alma mater — a truly fantastic college!
You never know, your child might just fall in love with a much cheaper school much closer to home, and going to college close to home (without flights or long trips involved) can end up as a mega money-saver.
Tip 9: Check out schools in a less expensive area of the country.
I worked in the Midwest at a fantastic liberal arts college (it was also my alma mater) and it costs a lot less than schools on the East and West coasts.
As you may already know, attending a public college or university in the state in which your child currently resides costs less than attending a college in a different state. However, a couple ways around this:
- Private colleges and universities cost the same for everyone and also often offer robust merit-based scholarship programs.
- You can still tap into in-state tuition rates for schools in neighboring states. For example, the Midwest Student Exchange Program (MSEP) allows residents of Illinois, Indiana, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Ohio, and Wisconsin to attend institutions for the same cost at member schools.
Tip 10: Keep track of your college debt with Personal Capital.
You can use Personal Capital’s free online tools to organize all of your financial accounts in one place. That includes your bank accounts, investments, and loans. With the free tools, you can keep tabs on your spending and create a plan for debt paydown.
When it Comes to Tips and Tricks, Ask!
Finally, don’t forget to befriend the admission counselor and financial aid officer at the schools where your child might attend college. You want to ask all the tough money questions stewing in the back of your mind and get candid responses from everyone you talk to. Developing a relationship with them can help you do just that.
Trust me. It’ll pay dividends — literally! — for your child’s financial future.
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