Financial Aid – Money Myths Dispelled

There are many common money myths that you may encounter when applying to college. The truth is that anyone is eligible for a variety of financial aid options, including scholarships—it may just be a matter of finding out where to find the proverbial "money tree."

Following are several of the most common money myths students fall prey to as well as some facts about these myths:

• Financial aid is only available to low-income families. Why should I even fill out the Free Application for Federal Student Aid (FAFSA)?

Applying for financial aid also takes time and effort. Keep in mind you have nothing to lose by applying. Most aid is need-based and is provided by state and federal governments. The federal programs use a need-based analysis through the FAFSA. Also, the earlier you get your FAFSA filled out and turned in, the better chance you have of meeting your financial need.

While it may be cheaper to attend college locally at a public school, great educational opportunities are available at private schools, both in and out of state. Never rule out private schools solely on the basis of cost, however, because financial aid may make the family contribution manageable.

• My grades are average and I don't play any sports. I know there are no scholarships for me!

Scholarships aren't for valedictorians and star quarterbacks only. Just about anyone can receive various amounts of aid in the form of scholarships if you know where to look.

A good place to start is within your own city or neighborhood. Check with organizations, foundations, labor unions, businesses, or town and city groups for scholarships based on achievement, ethnicity, hobbies, or talents. Include in your search the Chamber of Commerce and civic groups such as 4-H, American Legion, Boy Scouts, Elks, Girl Scouts, Jaycees, Kiwanis, and the YMCA.

Also, don't overlook aid from organizations connected with your fields of interest. These organizations are listed in the U.S. Department of Labor's Occupational Outlook Handbook and are also listed in various directories of associations available at your public library.

The U.S. Armed Forces also offer financial aid opportunities. For example, all branches of the Armed Forces offer the Reserve Officer’s Training Corps (ROTC) Program, a federal merit-based scholarship program that will pay for tuition, fees, and books and provide students with a monthly allowance.  If one of your parents is a veteran, veteran's educational benefits may be available to you as well. Check with a local Veterans' Affairs office for details.

• I have no idea what I want to major in. Why should I waste the money paying for college when I have no idea where I want to go with my life

Of course you should apply to college no matter what. There is nothing to be lost by applying. The majority of students don't know what they want to major in until they take classes their freshman year and determine what subjects they like the best.

Other avenues to aid in your career decision include career assessment tests. These tests help you match your interests and abilities with potential careers.  Campus career centers and college advisors can also help you choose a major by assessing your interests and perhaps giving you a recommended selection of classes they think would best suit you.

• My GPA is high and my test scores were uncharacteristically low! Now I'll never get a scholarship at my dream school.

The first thing you can do is retake the test(s). There are many factors that can contribute to poor test scores. If you retake the SAT or ACT and your scores are still poor, apply to that dream college anyway. A high GPA shows a college recruiter that you can keep your grades consistently high throughout several years of high school, whereas standardized tests only measure your performance on one day.

Also, students with low test scores often have a chance to explain the reason(s) for the low scores on the college application. Of course, a good application essay coupled with a college interview can only add to the positive profile you can create. A recruiter can overlook poor test scores if all the other factors add up.

Now that we’ve dispelled a few of the “money myths”…next month we’ll discuss developing a funding plan.  Until then….Best Wishes!

Randy Stoltz, President

Thoughts on Post-Graduate Education

Dear Parent & Student,

 It used to be that not everyone went to college. Only the very rich and/or very smart reached those upper echelons of education. However, in the 1970s, colleges and universities started popping up all over the place, and for the most part, offering good, solid degrees.

What's the outcome? Now a college degree is almost a necessity in order to begin a professional career where before it was optional. Most students come out of college to find that they don't just need a BA or a BS but an advanced degree as well. But is it worth it? After all, graduate school isn't cheap, especially if you're leaving college with student loans.

 The answer we can give is noncommittal: it depends. If you want to be a doctor or a lawyer, it's a necessity. You can't practice without a degree, and the price is steep, climbing up and over $250,000. The benefit is that we'll always need doctors and lawyers, so there is some sort of job stability, even though the medical field might seem less lucrative because of the rising cost to insure doctors. However, it's a fact, doctors and lawyers must be certified.

What about an MBA? Again, it depends on what you want to do. Most pundits agree that it's a good idea to get a job first and go in with some experience under your belt. Not only will it increase your chances of being accepted into an MBA program, but there's also the possibility that your employer will pay part, if not all, of your tuition and fees. For some employers, an MBA matters. For others, it doesn't. It's best to get advice from those currently making decisions in the field where you want to go.

What about an MA? Depends on what you want to do with your degree. Want to teach art at a community college? You probably need a master’s. Want to just get a more rounded education? It's up to you, really, and the balance between your desire and need to learn and what it's going to cost. No one can answer those questions but you.

As for PhDs, the answer again is: it depends. The jobs for PhD’s on college campuses are on the decline, especially as colleges rely more and more on part time instructors rather than full time, tenured faculty to teach their students. PhD’s, especially in the humanities, might have the toughest road to climb with no guarantee that there will be a job waiting for them.

Again, though, no one can tell one person if it's right for him or her. It depends on each field and desire in each person. Some might think their MA in Literature has helped fuel their career in another related field. Some might say it's worthless. But only that person knows.

The choice is up to you!  Though it might seem like a long way off to be thinking “grad studies”…the time to decide will be here before you know it. 

Until next month…Best Wishes!

Randy Stoltz, President

Loan Info for Post Graduate Studies

Dear Parent & Student, 

In last month’s issue, we discussed post graduate studies. Inevitably, that will raise questions to mind about how to pay for further schooling. I thought this information might be helpful. 

When most people talk about student loans, they’re thinking of undergraduates. This is because a lot of college marketing articles are directed toward parents who are saving money for their children’s college education.

But let’s not forget those who continue their educations after college: doctors, lawyers, MBAs, and people who work on their masters degrees. While some of these students are fortunate enough to work for companies that will subsidize their postgraduate degrees, others are not. Most doctors and lawyers in training must foot the entire bill. 

Never fear. There are loans for them, too, large enough (up to $150,000) to cover the extreme expense that law school or medical school now is.

Students seeking post graduate degrees are eligible for federal money, such as the Stafford loans, just as undergraduate students are eligible. Unfortunately, federal loans might not be enough to cover the entire cost of graduate school. This is why companies like Sallie Mae designed loans specifically for graduate fields. 

For example, graduate business students can take out an MBA Stafford Loan or MBA Private Loan, which are the only kinds of loans sponsored by the Graduate Management Admission Council. Law students may be eligible for LAWLOANS Stafford Loan or LAWLOANS Private Loan. There’s even a LAWLOAN Bar Study Loan, which is money for students studying to pass the bar exam. Not surprisingly, medical students have special loans, too. They may be eligible for Healthier Returns or MEDLOANS Stafford Loan.

Again, though it may seem early to be discussing post graduate studies, it is at this time many students are making decisions that will effect their future educational years.  This information is designed to help you along with the planning process.

Until next month…Best Wishes!

Randy Stoltz, President

Important Information on College Applications

The application process is the most important step students take in getting into the college of their choice.  Your students should start working on their college applications early in their senior year.  Following are several tips to pass along to your student for filling out a college application:

• Research the colleges that you are interested in and check out their acceptance criteria.  Each college has its own admissions policy and procedures.
• Review each application form so that you are familiar with what is required to fill it out correctly.  Take time to thoroughly read the directions and follow the instructions carefully.
• Know each college’s DEADLINE!  Keep a list of each college’s application deadline in a place (e.g., desk, night stand, refrigerator, etc.) where you can clearly see it.  Missing a deadline almost always means missing your chance to apply to that college.
• Have a copy of your SAT and/or ACT test results sent to the colleges that you are applying to.
• Carefully consider your recommendations.  Some colleges have very specific instructions about who they want to write your recommendations.  Check each college’s requirements and then determine who you are going to ask to write you a letter of recommendation.
• Take your time when writing your college essays.  You need to commit both time and energy to do it right.  Start by writing what you know and care about, and then have someone, such as a friend, parent and teacher read what you have written.  It always helps to put the essay aside for a couple of days and then go back and read it again.
• All colleges will want an official copy of your high school academic transcript as part of the application package.  Most colleges require that your high school send your transcript directly to their admissions office.  You should leave plenty of time for your high school registrar to process your request.  Do not wait until the last minute!
• Some colleges prefer that you apply online or are part of the “common application”.  This method allows you to fill out your application at your own pace, and then can return as often as you like until you are finished.  You can also upload your essay directly to your application.  A checklist is provided to ensure that you are completing each step in the application process.
• If you are submitting your application by mail, you will want to refer back to the instructions to ensure all of the proper forms are in the envelope.  Make sure you put the correct amount of postage on the envelope since most application packets will cost more than a single stamp.

The college application process can be a tedious one that requires time, effort and patience.  The worst thing to do is to wait until the last minute and then rush through the process!  Do the best you can, and in the end you will be glad you did!

Randy Stoltz, President

Answers To The Most Common College Funding Questions

Dear Parent, 

When I talk to parents of college-bound children, I hear many of the same questions. Whether their child is heading for an Ivy-League college or the nearest public university, parents seem to have many similar concerns and questions about college funding.

With that it mind, I’d like to present the most common questions I hear, and give you the answers that you can’t get from the guidance and financial aid officers. As the parent of a high school Senior, this is a very important time in the process. 

QUESTION #1: ISN’T IT LESS EXPENSIVE FOR MY CHILD TO ATTEND A PUBLIC COLLEGE INSTEAD OF A PRIVATE ONE?

ANSWER: At first glance, this would seem to be a logical conclusion. But in reality, it’s not necessarily true. Yes, most private schools have higher costs than public colleges and universities. However, your actual out-of-pocket cost may be lower at a private school if it can give you a more attractive financial aid package.

So, my recommendation is to have your child apply to at least four to six schools, and include a mix of private and public institutions. Then, as the financial aid awards letters come in, carefully compare each one. Do the math and determine where your actual costs will be lower, considering the best overall value such as class sizes.

            Remember, too, that the goal is to get as much “free money” as possible—money that you and your child do not have to repay. For example, loans must be repaid, but grants and scholarships do not. Factor this into the equation as you compare the different financial aid packages. Public schools do not necessarily offer the “sweetest” packages; so don’t limit your outlook or your child’s education by applying only to seemingly cheaper public colleges and universities.

QUESTION #2: WHAT DOES “EFC” MEAN?

ANSWER: EFC stands for “Expected Family Contribution.” It is the amount of money your family is expected to pay for one year of college. Your EFC is determined by the information in your Free Application for Federal Student Aid (FAFSA). After we submit the FAFSA electronically, you receive a Student Aid Report (SAR), which prints your EFC.

Many families are shocked at their EFC. The typical reaction is something like “How can we possibly pay that much for college?” Fortunately, there are many things you can do (besides selling all your possessions and moving under a bridge) to come up with the money. And you don’t necessarily have to accumulate a large amount of debt to send your child to college.

QUESTION #3: IN THE WORLD OF COLLEGE FUNDING, WHAT IS MEANT BY THE TERM “NEED”?     

ANSWER: “Need” is the total COA (cost of attendance for one year of school) minus your EFC. Many forms of financial aid, such as grants and loans that do not accrue interest while the child is in college, are based on need. In simple terms, the more need your child has (financially speaking), the better the financial aid offers he or she is likely to receive,

One of the best ways to increase your child’s financial need is to decrease your EFC. Also, your child’s need will be greater at more expensive schools. That goes back to our first question, which stresses that pricey private schools are not necessarily more expensive, in terms of your out-of-pocket costs.

QUESTION #4: MY SPOUSE AND I MAKE A VERY COMFORTABLE LIVING. SHOULD WE STILL APPLY FOR FINANCIAL AID?

ANSWER: Absolutely! Even very well to do families may qualify for financial aid at certain schools. The formulas that the schools use to determine aid take many factors into consideration—not just your income and assets. For example, will you have more than one child in college at the same time? Your Expected Family Contribution (EFC) is divided by the number of children in college at any one time, so each student’s need will be greater—regardless of your high income.

Many other variables, such as family size and parents’ ages, go into the formulas that determine your EFC. So, don’t count yourself out if you have a high income or a lot of assets. Even if your child does not qualify for need-based aid (such as subsidized loans that are interest-free while the student is in college), he or she may qualify for non-need-based aid, such as scholarships and non-subsidized loans.

Professional advice can help families at every income level find their way though the maze of financial aid. If you have a high income and assets, talking with a knowledgeable expert may be especially helpful because your situation may be quite complex. We’ve helped families with very little money as well as those at the upper levels of wealth. Even if you have invested wisely, and adequately, using interest only loans at 3-4% is a better financial planning move than using assets that earn a higher rate of return over the same period of time. My question to you is this: “How much money would you borrow at 3-4% interest, if all you had to pay was the interest for 4-5 years? After that period of time, you had another 10 years to pay it off with no “pre-payment penalties”! For most of us, we would borrow all we could get! Unless you go through the financial aid process, you do not have access to these programs! This is a follow up to last month’s newsletter…

QUESTION #5:  DO WE HAVE TO RE-APPLY FOR FINANCIAL AID EACH YEAR?

ANSWER: Unless you want to pay full retail…Yes, you do. Sure, it’s a pain...but think what a bigger pain it would be to suddenly find yourself without any help for your child’s second year of college! You or your student should receive a friendly reminder in the form of an annual renewal FAFSA (Free Application for Federal Student Aid). When it comes, we’ll get back into action so you can be sure to keep the funds rolling in!

QUESTION #6: WE’RE HOPING OUR CHILD WILL GET A GOOD AMOUNT OF PRIVATE SCHOLARSHIP MONEY…WHERE DO WE START?

ANSWER: Start with the simple fact that private scholarships make up only 2 percent of all the money available for college funding. The other 98% comes from the federal government, the state government and the colleges and universities themselves. Many private scholarships are very small—just a few hundred dollars. So, you should not plan on these scholarships to pay for your child’s education. I recommend that you put most of your effort into getting other forms of aid.

            If you’d still like to get some scholarship money, the Internet can be a good resource. Just keep in mind that it is advertisement driven. The best free website I’ve found is www.fastweb.com. Your student should be registered online early in the year. You want to continually update your information every time something has changed. Changes include: ACT/SAT score updates; class rank changes; anticipated major; and GPA.

Another caveat: If your child gets an outside scholarship (one that is given by an organization other than the college), the college probably will reduce the amount of financial aid it offers you. In other words, outside aid reduces the amount of aid coming from the school. This may be negotiable, however. And don’t think you can “hide” outside scholarship money. You are required to report it, and, in many cases, the check is made out to the school, not to the student. (Of course, the funds are designated for the student.)

QUESTION #7: WHAT DOES THE TERM “BASE FINANCIAL YEAR” MEAN?

ANSWER: Ah, yes… the all-important base financial year.  That is the calendar year your student is a 2^nd semester a high school junior and 1^st semester high school senior. It’s absolutely essential that you understand the importance of this term and its impact on your family’s eligibility for college funding.

Simply put, the base financial year is the year that your income, assets and taxes will determine your child’s eligibility for financial aid and the types of aid that he or she will be able to receive. Your “base financial year” moves with you every year your student is in college until January of their junior year in college (assuming a 4-year undergrad). There are many perfectly legal and ethical actions that you can take in the base financial year to improve your chances of receiving the best financial aid deals next year.

Of course, every family’s situation is different, and many factors are involved— from the value of your home to the amount of money your child has in his or her own name. We can help you sort through the many options and chart a financial course that will put you in a better position for college funding. Together, we’ll look over all the variables that apply to you and your family and come up with sound strategies to help you save as much money as possible on college costs.

In fact, we can help you maximize your financial aid prospects in many different ways, no matter where you are in the planning process—whether your child is in diapers or already packing his or her bags for college. Just give us a call at (602) 889-6500 for more information or an appointment.

Well, that’s a wrap for this month. Best wishes!

Randy Stoltz, President

Tips to Help You Pay for College Next Year

Dear Parent,

             If you’re the parent of a high school senior who’s bound for college—and if you have been following our advice, there’s not much more for you to do except start packing and making plans for converting his or her bedroom into your own space! However, I do have a little advice for graduating high school students who are heading off to college this fall.

Encourage Your Child To Work This Summer: The college has already made its offer of financial aid for the coming academic year. If your child earns $2,900 or less this year, those earnings will not affect the financial aid offer or your Expected Family Contribution for next year’s financial aid. Best of all, that is money your child can certainly use to help with the high costs of college…saving takes discipline, but what better time to start those good savings habits!

Have Your Child Search For An On-Campus (Or Near-Campus) Job: If your child plans to work part-time while attending college, now is the best time for he/she to start looking for that position. Looking now will give your child the advantage over all the other students who will wait until the school year starts to begin looking for a job. This early search is a good idea even if the college is some distance away; it will probably be worth the time and money for your child to make a special trip now and start job hunting. The best planning is still to do “work study” first, and then supplement their income needs with a second job if they can handle the schedule without having their grades slide!

Consider Last-Minute Strategies for Reducing Your EFC: If your Expected Family Contribution (EFC) seems to be a bit of stretch (or bigger than Mount Everest), don’t panic. You may still have some options.  If decisions have not been finalized about your EFC funding options, we’re available by appointment to review your options in person. 

Decide How To Provide Spending Money To Your Child: You should know, by now, how and when you will be paying for tuition, room and board, and other major college costs. But don’t forget that your child will need spending money throughout the school year. Some parents give their child one of their credit cards to use. If you choose this option, please plan carefully and give your child very firm guidelines. Decide how much he/she can charge on the card and under what circumstances. For example, can the card be used for meals, clothing and entertainment, or just for emergencies? Other parameters to consider: How will the child notify you of charges (so you aren’t shocked when you get the monthly bill)?  What dollar limits will you set on the amount your child can charge?

If you don’t want to give your child a credit card but are concerned about financial emergencies that he or she may face while away at school, don’t assume that giving your child a credit card is the only solution for such situations. In my opinion, an ATM Card is a better option. They contact you when they need money, and you determine how much to give them and when. Check with the college and see what bank’s ATM is on campus, and then use that bank for your account.

These are some options for consideration.   Each family should determine, in advance, what will work best for them. 

Until next month…Best Wishes!

Randy Stoltz, President