Before College: Strategies for Your College Finance Plan

It’s best to begin your College Finance Plan’s (CFP’s) “Before College” phase when your child is born, if not before. But don’t give up if you didn’t. Instead, get going as soon as you can.

Consider initiating these strategies as your student gets closer and closer to college:

Birth through Junior High:

  • Invest and Save. Let time multiply your money, even if you can only put away a little. For example, a $50 month deposit into a 1% savings account beginning at birth will yield $14,820 through college commencement.
  • Prepare Your Child to Pursue Scholarships. Some scholarships are awarded IMG_9375based on grades and test scores, some stress essay and interview responses, and others go to students with strong resumes. So help your student do well academically, develop verbal and written communication skills, and persist in extracurricular and leadership activities she enjoys.
  • Identify a General Career Direction. He needn’t decide on cardiovascular surgery by age 15, but helping him develop in broad subject areas about which he’s passionate can save your student from being among the 80% who change majors — some two or three times — generating extra costs for extra courses.

High School through Junior Year

High School Senior Year:

  • Apply for Aid. Filing the FAFSA is a necessity. If your student’s seeking institutional or state aid, too, other application forms may be required.
  • Analyze Affordability When Selecting a College. Public data can help project what you’ll pay for a degree from each school to which your student is accepted.
  • Select a Good Fit. Fit helps reduce the chances of your student transferring, which amplifies tuition costs for repeating courses not accepted by his new school.

Why implement a College Finance Plan? Go to “Before, During, and After College: You Need a Plan!” for answers. A review of “During College” strategies will be posted on this website October 2, and “After College” strategies will be outlined here October 9. More in-depth discussions of individual strategies can be found here through the end of academic year 2017-18.

Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com for free help if you have questions about your CFP.

Advertisements

Before and During College: Beginning October 1, File Your 2018-19 FAFSA ASAP!

IMG_8872If you’ll have a student in college between July 2018 and June 2019, apply for financial aid on October 1 or as soon thereafter as possible. That’s when the 2018-19 Free Application for Federal Student Aid (FAFSA) first becomes available to you on the government’s secure FAFSA website.

Why hurry? Regardless of institutional FAFSA deadlines, some schools quietly use FAFSA submission dates to determine the order in which they award institutional grants and scholarships, so those submitting FAFSAs early may have a better shot at these limited funds. Also, if your FAFSA data are selected for verification, early submission gives you more time to gather and supply documents you need.

No worries if your student doesn’t yet know where she’ll attend college next year. She can direct her FAFSA to 10 different institutions, and more later if needed.

The 2018-19 FAFSA needs 2016 federal 1040 data. The easiest, most accurate way to get this is to use the IRS Data Retrieval Tool (DRT). For 2018-19, there’ll be an opportunity to do this in the FAFSA’s student and parent Financial Information sections.

If you previously submitted a FAFSA but your student qualified for nothing but federal loans, why submit again? Two reasons. First, even small changes in your family and financial situations can impact eligibility for need-based grants, scholarships, and part-time work study jobs. Second, your student won’t re-qualify for past loan awards without a new FAFSA.

There are online answers to various FAFSA questions you may have including, but not limited to:

All colleges require the FAFSA, but some may require other forms to apply for state or institutional aid. Check on this with the financial aid office wherever your student may attend.

Two final notes:IMG_8873

  • If you don’t yet have an FSA ID, you’ll need it to do the FAFSA. Establish it at FAFSA.ed.gov.
  • Be sure to do your FAFSA at FAFSA.ed.gov. Otherwise, you may get scammed into paying a fee to submit this free form.

Hard to believe it’s already time to apply for next year’s financial aid, isn’t it? But remember, the early bird gets the worm . . . and better yet, the financial aid!

College Affordability Solutions brings 40 years experience to advising families on issues related to financial aid. Got questions? Call (512) 366-5354 or email collegeafford@gmail.com for a no-fee consultation.

Special Bulletin: Tell Your Congressperson to Increase Federal Student Aid Appropriations

The U.S. House of Representatives’ Committee on Appropriations recently voted to send HR 3358 to the full House for debate and a vote. This bill appropriates funds forIMG_7979 federal student aid programs for federal Fiscal Year (FY) 2018.

Here’s a summary of HR 3358’s key financial aid provisions as currently written. But they’re not final yet, and you should tell your congressperson what you think about them. Visit during their August recess, or call or write them. For their contact information, go here and enter your zip code.

Federal Pell Grant

This program provides grants of $600 to $5,920 to the nation’s neediest students. It has a $4.3 billion surplus that could be used to increase the size of these grants or provide grants to additional needy students.

HR 3358 would reduce this surplus by $3.3 billion and keep Pell Grant amounts the same as they were in FY 2017. With inflation, this would reduce the Pell Grant’s “purchasing power” — the portion of college-related expenses covered by Pell. Furthermore, it would not provide Pell Grants to any more students.

Federal Supplemental Educational Opportunity Grant (FSEOG)

FSEOG goes to the poorest Pell Grant recipients — mostly those with family incomes below $30,000 per year.

HR 3358 would put the same amount into FSEOG for FY 2018 as that program received for FY 2017. FSEOG would be unable to help any additional students and its purchasing power would diminish

IMG_7978Note: As Pell Grant and FSEOG purchasing power decline, it’ll be necessary for colleges and states to divert more of their grant and scholarship dollars to help Pell and FSEOG-eligible students. This would reduce the numbers of college and state awards available to students who are not needy enough to receive Pell and FSEOG, but who still need plenty of financial assistance to go to or remain in college.

Federal Work-Study (FWS)

Hundreds of thousands of needy college student get part-time jobs through FWS. Most of these jobs are on-campus and many are related to students’ majors.

The administration proposed to cut FWS appropriations by 50%. But HR 3358 rejects this proposal and keeps FY 2018 FWS funding the same as it was for FY 2017. Still, there would be little or no opportunity for additional numbers of students to secure FWS jobs unless the program receives more funding.

Time to Act!

HR 3358 could affect your student’s financial aid even if he doesn’t receive Pell Grant, FSEOG, or FWS. So don’t sit on the sidelines! Make your voice heard!

Before College: College “Sticker Prices” Aren’t Necessarily Their Final Prices

This summer is the time for rising high school seniors to begin researching colleges they may want to attend. There’s much check out, including each school’s costs.

To get an idea of what it’ll cost to attend different colleges and universities, go to their websites and search for “Cost of Attendance 2018-19.” You might also want to use College Navigator from the National Center for Education Statistics, opening its IMG_6849“Tuition, Fees, and Estimated Student Expenses” page to track cost increases over the last four years.

Here’s an important point — 2018-19 college prices you see on websites and College Navigator are “sticker prices” and not necessarily final. Schools generally engage in “discounting” their tuition and fees and, sometimes, other student expenses.

Colleges offer discounts differently than auto dealers, although the end result is the same. Rather than reducing a student’s tuition and fees, they give him grants and especially scholarships to pay these charges. For recruiting purposes, prestigious institutional scholarship offers often impress families and help bring in students.

Public and private colleges both discount. A new study by the National Association of College and University Business Officers found that private non-profit colleges and universities provided institutional grants and scholarships to 87.9% of new freshmen and 78.5% of all undergraduates in 2016-17. Collectively, these awards discounted tuition and fees by 49.1% for freshmen and 44.2% for all undergraduates.

Why discount? One reason is increased price sensitivity by families still recovering from the recession. It’s also related to decreased numbers of traditional college-age students and increased competition from other institutions for, like all businesses, colleges must bring in customers to survive.

IMG_6850Not every student should expect grants and scholarships equal to the discounting percentages noted above. Financial need plays a role. So do the characteristics of students an institution seeks to enroll; some want higher SAT scores, or certain types of musicians, or students likely to succeed in various academic programs. Your student won’t know his actual discount rates until winter or early spring, when he receives official financial aid offers from the colleges to which he’s applied.

The important thing is this — don’t let a institution’s “sticker price” discourage your student from putting it on the list of colleges to which he’ll apply. If that price gets discounted, it may be much more affordable than he thinks.

Special Bulletin: Proposed Federal Budget Would Reportedly Makes Big Cuts in Programs for College Students and Graduates

The Washington Post reports it has received what a U.S. Education Department staff member described as “near final” documents showing the administration will IMG_6510recommend a 13.6% reduction in federal education spending next week. The budget proposal would reportedly affect federal financial assistance for college students as follows:

  • Child Care for Enrolled Parents: End a $15 million program helping to make child care affordable for low-income parents attending college.
  • Federal Direct Subsidized Loans: Make as yet unannounced cuts that could end this program, which currently serves financially needy students. If this happens, all federal loans for such students would be unsubsidized and begin compiling interest the day they are made — significantly increasing student borrowing costs.
  • Federal Pell Grants: Hold Pell Grants for the nation’s neediest undergraduates at their current levels ($606 to $5,920 for fall and spring combined). Due to inflation, this would decrease Pell’s future “purchasing power.” Some good news is that the budget would fund an extension of 2017’s summer Pell Grants in future years.
  • Federal Work-Study (FWS): Cut FWS funding by $490 million (almost half), significantly reducing federally subsidized on and off-campus jobs that financially needy students use to pay for college.
  • Income-Driven Repayment: Close down all current income-driven repayment plans available to federal college loan borrowers. These plans offer loan forgiveness for balances remaining after borrowers pay 10% to 20% of their incomes over 20 to 25 year periods. They would be replaced with a new income-driven option requiring payments equal to 12.5% of income and limiting loan forgiveness to balances still outstanding after 30 years of such payments.
  • Public Service Loan Forgiveness (PSLF): Eliminate PSLF, which offers tax-free debt cancellation on federal student loan balances owed by ex-students in public service jobs after 10 years of on-time payment. Over 550,000 federal, state, local, and nonprofit employees are already registered for PSLF. It’s not yet clear whether they or public servants not yet registered would be cut off from It.IMG_6511

Presidents propose federal budgets, but Congress ultimately decides them. So if you support or oppose any of these proposed cuts, call or write your U.S. representative and senators to tell them how you feel.

College Affordability Solutions will post more bulletins on this website as additional information becomes available.

During College: Pell Grants Can Help Pay for Summer School 2017

Got an undergraduate who could benefit from summer school? Did she receive a Federal Pell Grant in the fall/spring? If so, here’s good news — Pell Grants will be available this summer!

Undergraduates who earn bachelor’s degrees in 4 years or less borrow 35% less in student loans, so this presents an opportunity for your student to speed her time to degree and reduce her college debt.

A new law funding the government through September includes an exception toIMG_6269 rules prohibiting Pell Grants for most summer students. So summer Pell recipients may get up to the same amount they received for a single semester or quarter earlier this academic year.

Summer Pell Grants rules are due by July 1, so we’ll have to wait for the actual terms and conditions of these grants. Also, Pell funds may not be available until early July, so your student should contact the financial aid office to explore short-term options (emergency loans, payment plans, etc.) for covering summer expenses until then.

Other things to remember about Pell and summer school . . .

Enrollment Status: To receive federal student aid for which she’s eligible, including Pell, your student must be a regular student in an eligible program of study. So she probably needs to take summer classes at the institution where she’s pursuing her degree, not at a community college as a “transient” student.

Grant Amount: Pell amounts are based on enrollment status — i.e. undergraduates enrolled full-time (generally 12 or more hours) get 100% of what they qualify for; students enrolled three-quarter time get 75%; half-timers get 50%; and those enrolled less-than-half-time get 25%.

IMG_6270Summer Costs and Other Summer Aid: Make sure your student avoids the trap of enrolling in summer courses but lacking sufficient funds to finish them despite her Pell Grant. The aid office’s website displays summer costs. Check out whether your student can get federal loans or other aid for summer — many Pell recipients use up their annual loan eligibility during fall/spring and some schools award all their work-study and state/institutional aid during fall/spring. Have your student call the aid office to see what’s available for summer.

This Summer Only: Summer Pell is currently available for 2017 only. Whether it’s there for future summers depends on what Congress does.

Affordable summer enrollment where she’s getting her degree may benefit your student more than summer employment or community college summer school. Check it out!

For strategies on getting the most out of the financial resources available to your student, contact College Affordability Solutions at collegeafford@gmail.com or (512) 366-5354.

Special Bulletin: Status of IRS Data Retrieval Tool

A key tool used by students seeking financial aid borrowers applying for income-driven repayment plans on their federal student loans is still offline. However, a new government announcement outlines a schedule for getting it back up and running.

In March, the government shut down the IRS Data Retrieval Tool (DRT), expressing concerns about the need for extra system security. Here’s where things are now according to a recent status announcement from the U.S. Department of Education —

DRT in October for Student Financial Aid Applicants: For the next 5 months, students will need to keep finding and using recent federal tax returns for themselves and their parents in order to accurately complete their Free Applications for Federal Student Aid (FAFSAs). The government’s announcement says it’ll be October 1 when a new, more secure DRT will become available to them.

DRT on May 31 for Student Loan Borrowers: Parents and ex-students seeking to certify their eligibility for one of the 4 federal student loan income-driven repayment plans will again be able to access to the DRT beginning May 31, the announcement says. Until then, they’ll need to keep submitting alternative documentation when applying for these plans. Alternative documentation could be paper copies of their federal tax returns or pay stubs.

If and when more information about this problem becomes available, College Affordability Solutions will post another bulletin.