Thanks again to Anthony Becker for once again generously taking the time to present to our students and families about the FAFSA and financial aid application process. The Financial Aid application process can be tedious and confusing, but approaching it with a clear understanding of how the forms work is the best way to maximize your chance of getting aid. Remember, all the FAFSA does is calculate what the government thinks your family can afford to pay toward college each year. This calculation is done assuming that you are going to change your lifestyle in order to accommodate a $5,000-$60,000 purchase (depending on the cost of the college you are looking at). If you want to pay for college and not change a single thing about your lifestyle, be prepared for that to be very very difficult. Look back at your spending for the year. You might be able to identify some of that 'extra money' the government has determined that you have.
I couldn't possibly cover all of the issues that were brought up in a single blog post, but I do want to try and put some key themes below:
1) The FAFSA is required by all colleges if you are applying for financial aid. This is the government's form that determines the estimated family contribution. Colleges then use this EFC to decide how much and what type of financial aid they are able to give you. Only US Citizens and Permanent Residents can submit the FAFSA because it is a federal form. Sometimes international students are asked to fill it out and mail in a hard copy so the college can calculate an EFC, but international students will not be eligible for federal financial aid dollars. The FAFSA is mainly used to determine eligibility for federal and state aid (aka Pell grants, SEOG, Work Study, TAP, etc).
2) Some colleges ALSO require a CSS Profile. This online profile assesses assets in a different way, but is also intended to give colleges a full picture of the financial situation of the family. The CSS also includes a non-custodial parent portion if the parents are divorced. Most colleges that use the CSS are private colleges and it is mainly used to determine eligibility for discounts from the college (aka scholarships and school based grants).
3) Never use fafsa. com - ONLY use fafsa.gov - you should never pay to submit a FAFSA - the first F in FAFSA is free. Do not get your identity stolen.
4) A lot of concern was expressed around 529s. Having a 529 is a great idea for families with high income and lots of assets. For these families that are not eligible for need based aid, a 529 is a fabulous idea to make dollars go the farthest when it comes to education. Unfortunately, for the majority of families though, having a 529 just means that you have an asset with huge red letters on it that says 'money for college.' The college is going to expect you to draw down that account first before they go into their own pocket to give additional financial aid. If you think about it, it makes sense because it is hard to tell a college that you can't pay the tuition when you have an account sitting there that can only be used for said tuition. In a perfect world, a crystal ball 18 years ago would have let people know how quickly tuition was going to increase, but it is what it is. If your child is young, you may still be able to unwind the 529 with the help of a professional to move that asset somewhere to protect it. If this isn't an option, don't be too upset though because many colleges still gap in their financial aid packages regardless of if a family has a high EFC or low EFC. In other words, don't spend too much time lamenting the fact that you tried to save for college. The grass on the other side is most definitely not greener.
5) You must submit your FAFSA in January of the student's senior year. If your child is not a senior, you cannot fill anything out now. You should fill out the FAFSA with estimates of things like income and taxes, then complete your taxes as quickly as you can (read: NOT in April, way before April), then log back in to the FAFSA and update your numbers with your final tax information. Do not wait to start the FAFSA until your taxes are done. Being last in line for financial aid is not a good place to be.
6) Just like all the different types of people out there in the world, there are also lots of different types of colleges, each with their own financial aid methodology. Some schools give no merit aid whatsoever but meet 100% of demonstrated need. Other schools gap some families tens of thousands of dollars, but award very generous merit scholarships to students with the top grades and test scores in their applicant pool. Others still don't give tons of aid, but have a lower total cost which makes them most affordable even though they have low discount rates. How can you sort through it all? Start by filling out the net price calculators on the college's individual financial aid websites. This will give you a preview of the type of aid you might be able to expect.
7) As I mentioned earlier, part of paying for college will probably mean changing your lifestyle. Every dollar that you can avoid taking in a loan is a dollar that your future self will thank you for. I know many people feel like they are already living paycheck to paycheck, but what sacrifices are you making to improve your financial situation during the years that there is a tuition bill? For example, at ElRo we are having a lunch crisis where so few students are eating in the school cafeteria that the city told us that we might no longer be able to staff the kitchen. Almost every ElRo student leaves school mid-day to buy lunch outside. At one of the cafes nearby (that I admittedly also go to) it is easy to ring up a bill of over $10 a day. Multiply that by 5. Now by 40. That is about $2,000 on lunch per year. Full price school lunch is $1.75. That comes out to about $350 per year. Yes, it is a sacrifice to not get the cafe lunch. But the colleges are expecting that you are making sacrifices in order to invest in education. (Other common sacrifices might include things like: taking public transit instead of cabs, eating dinner out less often, canceling cable, eliminating Starbucks, etc).
When looking into financial aid always read the directions clearly and always stick to advertised deadlines. It is a system that can be navigated, but it does take time an effort. We didn't talk about outside scholarships last night, but that is another thing that far too many students ignore. It is hard to tell a college that you are broke and then have a student who has applied to zero outside scholarships. It is true that scholarships usually can't pay for all of college, but it is often possible to piece together a few hundred or a few thousand dollars.