My son turns 18 this month and will graduate from high school in June. Like his older sister, he applied to a range of schools – public and private, near and far. This means our family is once again “baring all” as we apply for financial aid.
If your family has never been through the process, it can be daunting. It would be terrific if every school required the exact same information at exactly the same time. But there is no single road map to follow – each school sets its own deadlines, requests different information and may ask for that information in a range of formats. There is nothing like firsthand experience to fully appreciate my clients’ angst as they navigate this process each year. This is our family’s third year applying for aid and I still find it challenging.
Much is asked of the students and parents – and it can feel very invasive. But if you need the aid – and given the current cost of college as high as $65,000 annually for a 4-year private college – you need to play by the rules. Questions about parent & student income as well as parent & student assets require full disclosure with accurate answers that can be verified by the IRS and/or the college. There are unfamiliar terms to learn (e.g., FAFSA, CSS Profile, EFC, FM, IM, IDOC and more). Most of the data entry requires online access. It is important to understand what is required, when it is required and why it is required.
What if you think your family will not qualify for aid? Clients who have saved significantly for college educations - or who have significant income - are often surprised when I suggest they apply for aid. Not all aid is need-based. Most merit aid requires that students and their parents complete the FAFSA to even be considered for merit aid. I know many students who received a generous grant/scholarship even when their family could easily afford to pay the full cost of 4 years of college.
All students (and parents, if the student is a dependent) seeking financial aid must complete the FAFSA (Free Application for Federal Student Aid). The FAFSA is the official form used to request federal, state and school assistance to pay for college (www.fafsa.ed.gov). Most students submit the FAFSA online although it is possible to submit it via mail. FAFSA becomes available every January 1st; students are encouraged to submit it early (January or February). This requires having a good estimate of your prior year taxes.
FAFSA asks questions to determine a student’s level of financial need. It takes into account the family size, number of family members in college, and taxable and nontaxable income. Based on the information submitted, a Student Aid Report (SAR) is produced, an estimate of what the student and parents are expected to pay out of pocket for the student’s college expenses. This is known as the Expected Family Contribution (EFC) using the Federal Methodology (FM). The federal government, each college the student is applies to, and the state where the colleges is located all use the FAFSA to determine how much financial aid to grant to each student applying for aid.
In addition, some private colleges also require completion of the CSS/Financial Aid Profile (or a school-specific questionnaire). This is far more comprehensive and includes a wide range of family assets including family farms and home equity. It also assumes the student will work part time to pay for college expenses. The formula used is known as Institutional Methodology (IM). The CSS Profile is administered by the College Board (https://student.collegeboard.org/css-financial-aid-profile). It is rare that the EFC using the Federal Methodology will be the same as the EFC using IM.
Schools that currently require the CSS Profile: https://profileonline.collegeboard.org/prf/PXRemotePartInstitutionServlet/PXRemotePartInstitutionServlet.srv
Each year more information is requested, and questions are added or changed. Some colleges ask how many cars you own, including make, model and year. Some ask about trusts, something that was not required to be disclosed until recently. The rules have recently changed regarding divorced parents; most colleges now require disclosure by both parents, custodial and non-custodial.
If your child applies Early Decision or Early Action (deadlines = November 1 or November 15), preliminary financial aid applications are due at the same time. Many parents overlook these early deadlines. Regular decision applications (January 1, January 15 or February 1) usually require filing for financial aid by February 1, February 15 or even March 1 - well before you may complete your taxes for the previous tax year. So it is important to gather your tax documents and develop a reliable estimate well before April 15th. You will need to update your tax information before any aid package is final.
I think one of the biggest challenges is keeping track of each and every deadline. This must be a mutual process with your child. Colleges communicate with student applicants directly - yet it is usually the parents who navigate the financial aid maze. It is far too common that critical emails - with reminders about deadlines and information not yet received – are never passed along to parents. The students either don’t notice the emails (since many rarely use email much anymore) or fail to recognize their importance.
More information will be forthcoming, so stay tuned. If you have a child in high school, NOW is the time to begin researching college costs and funding options – and to set realistic expectations for your child.
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