|“The 8 Biggest Mistakes Parents Make
About Getting Financial Aid”
|by Dr. Barbara Austin, PhD|
What’s the problem?
• College tuition, room & board are going up by 15% each year (USA Today Report, 6/20/12) at a time when it is already unbelievably expensive (Ivy Leagues $230,000 for four years; public universities like UCs $120,000 for four years; 4 year colleges $180,000 for four years).
• The average middle class family has saved about $1,600 for college and at the same time feels it makes too much income to get financial aid.
How I can help you solve it :
• You can get positioned to receive as much financial aid and scholarships as possible with little or no debt.
• It is not about stuffing more information into so you are overwhelmed, stressed and afraid…
• Rather it about getting enough knowledge and understanding so you can use a clear, step by step process to secure as much college education money as possible.
Why College Financial Aid Officers Don’t Want You to Know These Secrets:
• College and universities are big business and they want to decide how they spend their money and to whom they ration out federal and state funds to.
• Financial aid officers do not like these secrets because they believe these legal loopholes tell rich people how to look poor.
• I believe the financial need formulas (both the FAFSA and CSS Profile) are little more than money rationing system and do not reflect a family’s ability to pay, especially in California.
For instance, if you have a lot of consumer debt that comes out of your check each month, it works against you on the FAFSA because the formula does not count any credit card, car or mortgage debt against your Adjusted Gross Income.
Say you make $140,000 a year but 30% of it goes to your car, your credit card debt and your monthly mortgage. After taxes (at 20%), you really making $112,000 but since 30% goes toward debt (which FAFSA does not count), you are actually living on $78,400. But the financial aid formula will only look at your AGI as $112,000 not $78,400?
This makes a huge difference whether or not you qualify for financial aid or not.
The point here is that you can solve this problem by learning to tell your story in such a way that you receive as much financial aid and scholarships as possible.
But first of all, you need to know:
The 8 Biggest Mistakes Parents Make About Financial Aid:
1. Parents believe that they make too much money to get financial aid at all.
2. Parents think that if all else fails, they can declare their kid independent and he or she can apply for financial aid. This went out in the seventies; today it is very difficult to do. Your child must be married and/or have a child or be in the military full time.
3. Parents save in their kid’s name instead of their own. The formula for getting financial taxes your child more (20%) than you (5.6%) for any assets. There is one happy exception to this which we explain in our workshops.
4. Parents believe the filing dates on the FAFSA form (open ended), instead of filing it as soon as possible after January 1 of the year your child is going to attend college. This is because the financial aid formula (which the FAFSA is one example) is a system for rationing out funds and it is first come first serve.
5. Parents don’t understand a key concept like ‘base year’. Base year is the year before your child graduates from high school and is the standard by which your financial aid money is based. Not understanding this concept and that you want to make as little money as possible and not have any capital gain profits during that year is crucial.
6. Parents hold off on going back to college themselves or stagger their kids going to college, not realizing that the more family members you have in college the better it is for you to get very substantial financial aid.
7. Parents beat themselves up because they have lost their jobs or are having a hard time finding them and think their child can’t attend college when this is actually a good thing because it helps you get more financial aid with grants and not loans.
8. Parents don’t understand the power they hold if they run a small family owned business (under 100 full time equivalent employees). If positioned the right way, you can use it to shelter your assets, including real estate and be eligible to receive substantial financial aid.
All of these mistakes and many more, such as not believing there is a way of sheltering your assets so you can still qualify for financial aid, can be avoided by reading my blog consistently and checking out my website at www.college-quest.com.