| - How much will college cost?
- What is a family contribution?
- What parameters are used to calculate the family
contribution?
- What is the gap?
- How can we eliminate the gap?
- What can be done to lower the family contribution?
- What can be done to lower the cost of higher education
to the family?
- What is the time line of events that will maximize
the amount of financial aid my family can receive if
the student is worthy of assistance?
- What are assets in the financial add formula?
- I am self-employed. Is my business considered an
asset?
- Can participating in AP courses offered by my high
school reduce the cost of my higher education?
- Do SAT/ACT prompter courses really help?
- As a student, how do my assets affect the formula?
- As a student, how does my income affect the formula?
- As a student, how does my non-custodial parent's
child support affect the formula?
- As a student, how does my social security payment
affect the formula?
- Can attending summer semesters reduce the total cost
of education?
- Can attending a two-year college reduce the total
cost of education?
- My grandparents want to gift money to me for college.
Will this affect my family contribution?
- Do the formulas take into account a high level of
consumer debt?
- I did not know about the income allowance as a student
and managed to make $5,000.00, is there anything I can
do?
- As a student how much debt should I budget for during
the college experience?
- How many colleges should I apply too? I already know
where I want to go.
- We live on a farm, how do we list the farm on the
financial aid forms?
- How much is my asset protection allowance?
- I have a property that I hold the mortgage on. How
does this affect the formula?
- We intended to use our home as a source for college
expenses. What should we do?
- Given the choice, should I borrow needed funds from
my primary residence or from my second property?
- How do medical expenses affect the formulas?
- What should I do with cash, or monies in my savings
and checking accounts?
- How much is my asset protection allowance?
- I have a property that I hold the mortgage on. How
does this affect the formula?
- We intended to use our home as a source for college
expenses. What should we do?
- Given the choice, should I borrow needed funds from
my primary residence or from my second property?
- How do medical expenses affect the formulas?
- What should I do with cash, or monies in my savings
and checking accounts?
- How much is my income protection allowance?
- I have decided, as a non-working parent currently,
to go back to work to help defer the cost of our child's
higher education. Is this a good idea?
- Should we apply for state aid?
- What are other resources in the financial aid process?
- I have more than six colleges to have the FAFSA information
sent to. How do I make sure that all the colleges get
the information?
- What is the Student Aid Report?
- What qualifications must students meet to be eligible
to receive federal financial aid?
- What qualifies a student as an eligible non-citizen?
- What disqualifies a student as a citizen or an eligible
non-citizen?
How much will college cost?
College will cost your family the amount calculated
and identified as your family contribution plus your
gap times the number of children your family will put
through college times the number of years that it takes
each child to accomplish the first bachelor's degree.
Top
What is a family contribution?
Your family contribution is a calculation or snapshot
of your financial parameters that determine the amount
of money your family will be expected to pay for one
year of higher education for that student applicant.
There are two types of calculations that will determine
your family contribution. The one used by all college
that offer federal financial aid is the FAFSA (Free
Application for Federal Student Aid) and this is called
the federal methodology. The second one used by some
colleges is the institutional methodology, which determines
the amount of institutional aid offered by those colleges.
This institutional methodology is almost always accomplished
by the use of the CSS Profile. The colleges that use
the CSS Profile still use the FAFSA to determine the
amount of federal aid offered by that institution. The
colleges that do no use the institutional methodology
for institutional aid use the FAFSA for both the institutional
and federal aid.
Top
What parameters are used to calculate the family contribution?
The family contribution has many variables that fall
into four major categories. The categories are:
1) The parent's income
2) The parent's assets
3) The student's income
4) The student's assets
5) Resources.
Top
What is the gap?
The gap is the amount of need-based monies not covered
by the college's financial aid offer and your family
contribution. Example: The cost of attendance is $20,000,
your family contribution is $10,000, the financial aid
award is $8,000, and therefore the gap is $2,000. The
family will be required to fund the gap. The total cost
to the family will then be your family contribution
plus the gap or $12,000 in this example.
Top
How can we eliminate the gap?
The gap cannot always be eliminated but can be minimized
by applying to the right school, early. The right school
would simply be defined as one where your academic abilities
match what the school programs offer. Example: if your
SAT/ACT and other factors are below the average for
the incoming freshman class of the previous year at
a particular college then you will only receive federal
and state aid which will generally create a large gap.
The opposite is also true. If your SAT/ACT and other
factors are above that same average then you are a desirable
freshman for that college and you have an excellent
chance to have no gap.
Top
What can be done to lower the family contribution?
Proper financial & tax planning can mitigate the
family contribution but the family must understand that
the responsibility for the cost of higher education
belongs to the parents of the student.
Top
What can be done to lower the cost of higher education
to the family?
There are three major areas that will lower the cost
of higher education:
1) 1) The student should do all that he/she can do to
learn during high school,
2) 2) College searches and visitations to find the right
match of college to the student's abilities and major,
3) 3) Proper prior financial and tax planning.
There are other ways not listed here that deal with
athletic or special abilities. The three ways listed
above are the answer for the masses and should be planned
on, even if the student does have special abilities.
Top
What is the time line of events that will maximize
the amount of financial aid my family can receive if
the student is worthy of assistance?
· · PSAT in the sophomore and junior school
years.
· · SAT/ACT Test in spring of the junior
year.
· · College searches and visits starting
in the spring of the junior year until the final six
are decided on.
· · SAT/ACT Test in fall of the senior
year.
· · Decide on the colleges to apply to.
· · Apply to college in the month of November
& December.
· · Complete the CSS Profile if required
in December.
· · Complete the FAFSA in January.
· · Complete institutional financial aid
forms if necessary in December & January.
· · In March, April, respond to housing
deposits early as most are refundable if not used.
· · In March, April & May, respond
to award letters as soon as possible and ask questions
of the financial aid department. Ask questions so that
you understand why your award is what it is.
· · Complete your loan applications if
they were necessary in May or June.
Top
What are assets in the financial add formula?
· · Assets in the federal formula (FAFSA)
are cash, savings, checking, certificates of deposit
(CD), bonds, trust, money markets, mutual funds, additional
real estate and stocks that are not wrapped inside retirement
financial vehicles like 401-K, IRA, Pension Plans, Annuities
and Life Insurance products that are held by the student
(student's spouse) and or parents or legal guardians.
· · Assets in the institutional formula
(CSS Profile) are cash, savings, checking, certificates
of deposit (CD), bonds, trust, money markets, mutual
funds, additional real estate and stock that are not
wrapped inside retirement vehicles like the above. In
addition to the above, the assets of the student's siblings
are considered in a weighted formula and the equity
of your home are considered as an asset.
Top
I am self-employed. Is my business considered an asset?
The value of your business minus debt goes through a
weighted formula and is then considered as and asset.
Top
Can participating in AP courses offered by my high
school reduce the cost of my higher education?
Yes, successfully completing AP courses will allow a
student to achieve college credit at high school prices.
Not all colleges accept AP courses so check with the
colleges during your college search period to see if
this plan of action will work for you.
Top
Do SAT/ACT prompter courses really help?
The prompter courses appear to help most students. Taking
the SAT/ACT tests multiple times may be a cheaper way
to accomplish the familiarity that a prompter course
will give you. Recommendation: during the junior year
do at least one crossword puzzle once per week for at
least six months prior to the exam.
Top
As a student, how do my assets affect the formula?
· · The FAFSA multiplies all of your assets
by 35%. Example: $5,000.00 of assets will increase your
family's contribution by $1,750.00 for every year the
money is there.
· · The CSS Profile multiplies all of
your assets by 25%. Example: $5,000 of assets will increase
your family's contribution by $1,250 for every year
the money is there.
Top
As a student, how does my income affect the formula?
· · The FAFSA multiplies all income over
$2,200 (W-2) income by 50%. Example: I make $4,000.00
my income will contribute to the family contribution
by ($4,000.00 -$2,200 = $1,800.00 * .50 = contribution
increase) $900. The freshman year in college will be
affected by the income from January 1st of the junior
year to December 31st of the senior year.
· · The CSS Profile multiplies all income
over a variable number and therefore the income limit
for freshman is roughly $2,500.00 and for all others
about $2,800.00
Top
As a student, how does my non-custodial parent's child
support affect the formula?
The child support does not affect the student's contribution
to the family contribution. It is calculated on the
parent's side off the formula.
Top
As a student, how does my social security payment affect
the formula?
You are the beneficiary of the social security check;
however the check is cashed by your parent and therefore
will be calculated on the parent's side of the formula.
This can be a costly mistake considering the 50% multiplication
factor for income as opposed to the 12% multiplication
factor for parents.
Top
Can attending summer semesters reduce the total cost
of education?
Maybe, summer sessions will allow you to graduate early
thereby getting you in the work place sooner and additionally
summer session credits may be less expensive at many
colleges. The total cost for your degree will be about
the same.
Top
Can attending a two-year college reduce the total cost
of education?
Yes it can. You must check with the college you are
ultimately going to transfer to for transferability
of credits. The cost per credit hour at a two-year college
will be less than a four-year college. In some cases
the savings could be in the tens of thousands of dollars
saved depending on what college you are transferring
to.
Top
My grandparents want to gift money to me for college.
Will this affect my family contribution?
Yes it will. There are two considerations: First, the
grandparent's should wait until later to gift the student.
You could, if necessary, borrow all of the money you
need for college from many sources and then ask them
to gift you the money when repayment time comes after
graduation. If you have done calculations on your family
contribution and you know you will not receive financial
aid then gifting and trusts that help tax situations
works for the best of all concerned. Second, the grandparents
could gift the parents instead of the student. The worst
case for this gift would be a 5.6% assessment times
the gift as opposed to the 35% assessment times the
gift for the student.
Top
Do the formulas take into account a high level of consumer
debt?
· · The FAFSA does not have a question
on debt but a separate document can be written up and
sent to the financial aid directors of the colleges
of choice. Do not send the separate document to the
Department of Education with your FAFSA.
· · The CSS Profile has a block on its
application where one can note special circumstances
such as high consumer debt.
· · The absolute way to address this debt
is to consider a home equity loan for college and debt.
This action will now put the debt into view and in some
cases actually lower your family contribution. In lieu
of home equity for this kind of debt, you may want to
consider lowering assets and paying off consumer credit.
This also makes the credit visible and yet lowers the
asset side of the formula.
Top
I did not know about the income allowance as a student
and managed to make $5,000.00, is there anything I can
do?
The results for this year are an increase in the family
contribution of $1,400.00 as per the formulas calculation,
but there are two things to remember. First, college
is a multiple year program and you will be eligible
for more aid in the following years. Second, documenting
that this level of income will not be available during
the first and subsequent years with the college may
result in a better award in the first and subsequent
years.
Top
As a student how much debt should I budget for during
the college experience?
None! Debt will however be a reality for almost all
college students. Your debt load, as a graduating senior
from college should be 8%-10% of your total projected
income for the job represented by your degree field.
Example: You have a degree in engineering. Your starting
wage is $35,000. The budget then is 10%, which comes
to $3,500 per year, $291 per month starting six months
after graduation. The cost per thousand per month for
ten years is approximately $11 (depending on what interest
rate and type of loan you acquire). The amount of money
that the student can borrow then is approximately $26,500.
The rest of the cost of your education will be from
awards from colleges and your parents or other sources.
If the combination of your major, grades, community
involvement, SAT/ACT scores and ability to pay cannot
combine to go to the college you want you may need to
consider the second college you want instead. If you
start the process with only one college in mind you
may be making a mistake in judgment.
Top
How many colleges should I apply too? I already know
where I want to go.
You should apply to one to two reach schools, ( a reach
school would be one that the average SAT/ACT scores
of the freshman class and or the cost of the school
is above what you believe you can get into ) three to
four peer schools and at least one school where your
academic and financial ability assures an absolute enrollment
opportunity. Excellent opportunities are available to
students who also consider enrolling into schools outside
of their region.
Top
We live on a farm, how do we list the farm on the financial
aid forms?
· · The equity of a farm is not listed
in the FAFSA if you live and "materially participate
in the farm's operation".
· · The CSS Profile does count the assets
of your farm equity. A word of caution, do not list
the home part of the farm twice in the CSS Profile under
home and part of your farm property.
Top
How much is my asset protection allowance?
· · The asset protection allowance under
the FAFSA is that amount of an annuity, which at age
65 combined with the social security benefits would
equal a moderate standard of living. The definition
of a moderate life style will vary from person to person
especially when compared to the governments above definition.
The allowance is $55,400 at age 55 for two parent families
and $33,900 for single parent families. For the exact
amount see a qualified financial aid professional. If
your birth date is in January or early February it would
help to wait and sign the completed FAFSA after your
birth date to take advantage of the additional year
of asset protection allowance. If you do not have enough
assets to worry about then complete the FAFSA as early
as possible in January.
· · The CSS Profile asset protection allowance
is arrived at by a sliding scale formula. This formula
does count all assets including home/farm equity.
Top
I have a property that I hold the mortgage on. How
does this affect the formula?
When you have sold a piece of personal property to someone
where you are the bank and you hold the mortgage then
you have and asset. This asset is equal to what is owed
to you or equal to what you could sell the mortgage
for on the secondary mortgage market whichever is less.
Check with your local real estate professional for the
value of the held mortgage.
Top
We intended to use our home as a source for college
expenses. What should we do?
A home equity loan is much better way to do this then
a second mortgage. The total second mortgage borrowed
will be an estimate for the total cost of all four years
of college which you will be immediately paying interest
on. This effectively requires that you pay interest
on money you have not yet used. The better way would
be the home equity loan where you borrow as you need
it and pay interest only on the amount that you borrow.
A special note is needed here in regards to interest
rate differences between home equity loans and the PLUS
loans offered by the federal student aid programs. Check
with your local bank for comparison of the interest
rates and forbearance issues, then decide which to use.
The interest charged might be tax deductible either
way you go depending on your total household income
and or other issues. Finally, the use of your home equity
loan reduces your assets on the CSS Profile formula
for subsequent years.
Top
Given the choice, should I borrow needed funds from
my primary residence or from my second property?
· · You should borrow against the second
property if the colleges you have chosen use the FAFSA
exclusively.
· · It will make no difference which property
you take a loan out on in the CSS Profile as all assets
are treated by a sliding scale formula.
Top
How do medical expenses affect the formulas?
· · The FAFSA has no questions on your
family's medical bills and therefore no affect on the
family contribution. If your medical bills are larger
than 4% of your total income then a separate written
form documenting these expenses should be sent to the
financial aid officer of the college you have chosen.
Do not send this form of documentation to the federal
government with the FAFSA or it will be discarded and
the financial aid officer will not see it.
· · The CSS Profile has a question that
covers this part of your family's contribution calculation.
You do not need to send the above-mentioned form to
these colleges.
Top
What should I do with cash, or monies in my savings
and checking accounts?
· · For students, if you are planning
on making cash purchases anyway, now is the time. This
is not the green light for a shopping frenzy but it
is better but now then let the money be assessed by
the formulas.
· · Parents, if your assets are below
the asset allowance it will not matter, therefore leave
it. If your cash is above the allowance then again as
above now is the time to buy that item that is needed.
Top
How much is my asset protection allowance?
· · The asset protection allowance under
the FAFSA is that amount of an annuity, which at age
65 combined with the social security benefits would
equal a moderate standard of living. The definition
of a moderate life style will vary from person to person
especially when compared to the governments above definition.
The allowance is $55,400 at age 55 for two parent families
and $33,900 for single parent families. For the exact
amount see a qualified financial aid professional. If
your birth date is in January or early February it would
help to wait and sign the completed FAFSA after your
birth date to take advantage of the additional year
of asset protection allowance. If you do not have enough
assets to worry about then complete the FAFSA as early
as possible in January.
· · The CSS Profile asset protection allowance
is arrived at by a sliding scale formula. This formula
does count all assets including home/farm equity.
Top
I have a property that I hold the mortgage on. How
does this affect the formula?
When you have sold a piece of personal property to someone
where you are the bank and you hold the mortgage then
you have and asset. This asset is equal to what is owed
to you or equal to what you could sell the mortgage
for on the secondary mortgage market whichever is less.
Check with your local real estate professional for the
value of the held mortgage.
Top
We intended to use our home as a source for college
expenses. What should we do?
A home equity loan is much better way to do this then
a second mortgage. The total second mortgage borrowed
will be an estimate for the total cost of all four years
of college which you will be immediately paying interest
on. This effectively requires that you pay interest
on money you have not yet used. The better way would
be the home equity loan where you borrow as you need
it and pay interest only on the amount that you borrow.
A special note is needed here in regards to interest
rate differences between home equity loans and the PLUS
loans offered by the federal student aid programs. Check
with your local bank for comparison of the interest
rates and forbearance issues, then decide which to use.
The interest charged might be tax deductible either
way you go depending on your total household income
and or other issues. Finally, the use of your home equity
loan reduces your assets on the CSS Profile formula
for subsequent years.
Top
Given the choice, should I borrow needed funds from
my primary residence or from my second property?
· · You should borrow against the second
property if the colleges you have chosen use the FAFSA
exclusively.
· · It will make no difference which property
you take a loan out on in the CSS Profile as all assets
are treated by a sliding scale formula.
Top
How do medical expenses affect the formulas?
· · The FAFSA has no questions on your
family's medical bills and therefore no affect on the
family contribution. If your medical bills are larger
than 4% of your total income then a separate written
form documenting these expenses should be sent to the
financial aid officer of the college you have chosen.
Do not send this form of documentation to the federal
government with the FAFSA or it will be discarded and
the financial aid officer will not see it.
· · The CSS Profile has a question that
covers this part of your family's contribution calculation.
You do not need to send the above-mentioned form to
these colleges.
Top
What should I do with cash, or monies in my savings
and checking accounts?
· · For students, if you are planning
on making cash purchases anyway, now is the time. This
is not the green light for a shopping frenzy but it
is better but now then let the money be assessed by
the formulas.
· · Parents, if your assets are below
the asset allowance it will not matter, therefore leave
it be. If your cash is above the allowance then again
as above now is the time to buy that item that is needed.
Top
How much is my income protection allowance?
· · I have talked to very few parents
who agree with this number. Let me give you a couple
of examples of how much money the federal government
believes your family needs for the necessities like
food, shelter and clothing. As per the formula:
· · A family of 5 with one child in college
can do it on $22,240
· · A family of 4 with one child in college
can do it on $18,850
· · A family of 3 with one child in college
can do it on $15,260
· · A family of 2 with one child in college
can do it on $12,260
The number is determined by the U.S. government figures
for the poverty line and does not take into account
the cost of living in your part of the country. Your
mortgage and car payments are not deducted from this
figure, they are in the figure. The result can therefore
be skewed against you. You could attempt to make the
financial aid officer aware of your part of the country's
cost of living by documenting your budget for food,
shelter and clothing. Send your document to the financial
aid officer of your chosen college. Word of caution,
it is not the responsibility of the financial aid officer
to fund your life style, therefore stay away from complaining.
Be factual and reasonable if you want the financial
aid officer to be factual and reasonable. Remember do
not send this document with the FAFSA or the department
of education will discard it.
Top
I have decided, as a non-working parent currently,
to go back to work to help defer the cost of our child's
higher education. Is this a good idea?
The idea is a very good idea. The amount of income you
bring into the household is an important figure to analyze.
You will receive an allowance of 35% of the lower rage
earner income to a limit of $2,800. The optimum second
wage earner range is six to nine thousand dollars per
year.
What are the sources of money for a college education?
There are seven major sources of money for a college
education. They are:
1. College athletic based awards
2. College academic based awards (some are only given
if there is need)
3. College need based awards
4. Federal Programs
5. State Programs
6. The family's contribution or EFC
7. Outside scholarships (Local, Public, Private)
Top
Should we apply for state aid?
Almost everyone should apply for state aid programs.
All the fifty states have programs that are as different
in nature as are the states. You should acquire the
brochure for your state programs early in the senior
year for planning purposes. You should be able to get
your necessary forms from your local high school guidance
counselor or your city library. If not available at
these locals then get the phone numbers for the state
programs from the white pages or check with your local
telephone operator.
Top
What are other resources in the financial aid process?
Resources, as defined by the Higher Education Act, are
not income or assets. Resources are also called estimated
financial assistance and are not considered in the calculation
of a family's contribution. By law, resources and financial
aid may not exceed the amount of a student's calculated
need. Therefore resources are assessed at 100%. Examples
of resources are outside scholarships, tuition or fee
waivers, veteran's educational benefits, payments from
a prepaid tuition plan and money paid directly to the
college from a relative or friend.
Top
I have more than six colleges to have the FAFSA information
sent to. How do I make sure that all the colleges get
the information?
Rank the colleges you applied to from most important
to least important. If you have sent applications to
12 colleges, with 4 of them being reach colleges and
four of them being peer colleges and four of them being
safety schools then do not put all four of your reach
schools on the first FAFSA. You should put all of your
peer schools in the order of preference and then put
your reach schools and then your safety schools on the
first FAFSA. When the Student Aid Report (SAR) comes
back, you can then call the Department of Education
and have the second list added to receive the FAFSA
report. You will need the title IV codes or names of
the schools and the Data Release Number (DRN). The DRN
is a four digit number found in the first page of part
two. Remember, you want the schools to receive the data
as soon as possible so complete this work item the same
day you receive the SAR in the mail.
Top
What is the Student Aid Report?
The Student Aid Report is the Department of Education's
response to your FAFSA and comes in two parts. Part
one will have important information and instructions
that you must read and if necessary react to. Part one
will also have a block-by-block list of the answers
you gave on the FAFSA sent to the Department of Education.
Part two will be four pages long and will again have
a block-by-block description of the questions and your
answers with blank boxes for corrections of answers
that are not correct.
Top
What qualifications must students meet to be eligible
to receive federal financial aid?
To be eligible to receive federal financial aid students
must be:
U.S. citizen or eligible non-citizen
Registered with a selective service (if required)
Obtain a high school diploma, GED (General Education
Degree), or have the ability to benefit according to
federal regulations
Be enrolled in a program leading to a degree, certificate,
or transfer program and be taking courses applicable
to the program
In the process of making satisfactory academic progress
Not owe a refund on a Federal grant or be in default
on a Federal educational loan
Have financial need as determined by the U.S. Department
of Education need analysis system
Top
What qualifies a student as an eligible non-citizen?
To qualify as an eligible non-citizen, the student
or the parent must be one of the following:
A U.S. permanent resident who has an Alien Registration
Receipt Card I-551 or I-151 (green card)
A conditional permanent resident with a I-551C
A non-citizen with a Departure Record (I-94) from the
U.S. Immigration and Naturalization Services (INS) showing
any one of the following designations: 'Refugee', 'Asylum
Granted', Indefinite Parole', Humanitarian Parole',
or 'Cuban-Haitian Entrant'.
Top
What disqualifies a student as a citizen or an eligible
non-citizen?
F-1, F-2, or M-1 student visa
J-1 or J-2 exchange visitor visa
B-1 or B-2 visitor visa
G series visa (pertaining to international organizations)
H series or L series visa (allowing temporary employment
in the U.S.)
"Notice of Approval to Apply for Permanent Residence"
(I-171 or I-464)
I-94 stamped "Temporary Protection Status"
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