Whether it’s questions about admissions, funding, or the countless other steps involved, we know that the entire college planning process can oftentimes be overwhelming.
Where do you turn for answers? Is the information you are getting from your family’s point of view? Are all the information sources reliable? How can your family effectively formulate a plan?
To help with answers from your perspective, we have put together an in-depth list of the most Frequently Asked Questions, which we have received from parents over the years.
Answers From Your Perspective …
Who really receives the most money for college and why?
Although college financial aid was originally intended to go to those students who needed it the most, in many cases, it may actually go to those who know the most about the process. Colleges now use financial aid as a marketing tool to attract the students they would most like to enroll. The more you know about the overall process, and the more you are able to implement what you know into a workable plan, the more likely you are to receive the best education at the best price.
What is the most important part of the college planning process?
Understanding the fact that college is not only essential and expensive, but it is also a business. Colleges consider themselves communities and look for a wide range of students to diversely fill each community.
Keep in mind that colleges typically offer admission to 3, 4, or even 5 times as many students as they need to keep their seats filled. Being accepted for admission is, in most cases, only the beginning. The institution making the student’s attendance possible by offering adequate funding is the real key.
Do we make too much money to qualify for any type of college funding?
One of the biggest myths is ‘we make too much money’ to qualify for college financial aid, or what is more commonly referred to as college funding. Colleges are now willing to offer funding (basically a discount off their advertised cost of attendance) to families with higher annual incomes and greater net assets.
Don’t automatically disqualify yourself because you think you make too much money. By offering funding (discounting their prices), colleges are investing in the student and most look well beyond parents’ income and assets when considering their ‘investment’ options.
What funding application forms are required from our family?
The FAFSA (Free Application for Federal Student Aid) is a federal form administered by the Department of Education and is required from all students seeking funding for college.
In addition to the FAFSA, the CSS/Profile is also required by approximately 10% of schools. The CSS/Profile is a fee-based application that is administered by the College Board and is essentially a more detailed version of the FAFSA asking more in-depth income and asset-related questions to help better determine the overall financial stability of the family. College and universities that require the CSS/Profile.
Will the colleges help us complete forms and report our financial information?
Colleges are obviously central to the entire funding process so it stands to reason they would certainly be able to lend a helping hand when it comes to the completion of the FAFSA (Free Application for Federal Student Aid) and CSS/Profile, doesn’t it?
Although a car dealer may help you buy a car and a real estate broker may help you buy a house, who are they ultimately helping? Is a college a car dealer or a real estate broker? No, absolutely not. They are, however, a business.
If colleges and universities have the final say on who is admitted and who receives the majority of the free money (money that is given and does not have to be worked for or repaid) AND awarded free money is significantly impacted by the strategic reporting of the family’s income and assets, wouldn’t it be reasonable for families to first consider just exactly who is helping them with the process? Are those with a ‘vested’ interest likely to be the best source? Most likely not! Even if they would like you to believe they are …
Even more importantly, if the awarded gift aid is primarily determined by the colleges, schools also have a tremendous impact on the net cost to the family and the student’s and parents’ overall debt. Families receiving guidance from their perspective is vital.
Do different types of assets have a different impact on our student's funding eligibility?
Yes – assets that are more traditional retirement vehicles are not assessed on the FAFSA (Free Application for Federal Student Aid) and therefore not typically expected to be contributed by the family towards the student’s higher education.
Non-qualified assets of both the parents and student are calculated using two rather complex algorithms – Federal and Institutional Methodologies.
Parent assets are assessed at approximately 5% after an Asset Protection Allowance (APA) based on the age of the oldest parent. Student assets, on the other hand, are assessed at a rate of 20% in the Federal Formula and 25% in the Institutional Formula from the first dollar with no Asset Protection Allowance considered.
Can we pre-plan to more effectively report our income and assets on the FAFSA, CSS/Profile?
Yes – absolutely. Just like there are strategies involved when completing your tax return, there are also strategies that may be employed when completing your required funding applications, namely the Free Application for Federal Student Aid (FAFSA) and the CSS/Profile, which is a more detailed version of the FAFSA required by approximately 10% of the colleges and universities.
With the college funding process, honesty is premier. Remember, however, that the FAFSA and CSS/Profile are taking ‘snapshots’ of data – income from the base year and assets as of the time the forms are completed, for example. Prior strategic allocation can have a major impact on what the student is ultimately awarded and the family’s final cost. The FAFSA and CSS/Profile are not simply generic forms that may be completed in a few minutes with what families ‘think’ are the correct answers. They are both far more complicated than that – far more.
Should we talk with the colleges or should we let our student?
The student should be at the center of the process – especially the attendance decision-making process. Parents, however certainly play a very important role – guidance, suggestions, and support are essential. Colleges love to see the student who has a great support structure, but the student’s ability to “stand on their own two feet” is also very important.
We are divorced and remarried. What parents' information needs to be reported?
The FAFSA (Free Application for Federal Student Aid), which is required from all students seeking funding for college, asks questions specifically about the student’s current household. This could be natural parents, step-parents, or a combination of both. The CSS/Profile, which is a more detailed version of the FAFSA and is required in addition to the FAFSA by approximately 10% of the schools, may also ask questions about the non-custodial parent if the natural parents are divorced.
What is the difference between a subsidized and unsubsidized student loan?
An unsubsidized loan accrues interest while the student attends college; whereas, the government pays the interest on a subsidized loan during attendance. Please note that a student must demonstrate financial need to qualify for a subsidized loan.