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Financial Aid Calculator

Archive for April, 2009

What are the steps to get Financial Aid?

Wednesday, April 29th, 2009


Dear Babs,

My daughter got into her first choice school, Vassar College, but I don’t know how I am going to afford it. I just got laid off, and I don’t have a college savings account set up for her. What do I have to do to get financial aid?

-Financially Insecure

Dear Insecure,

Although paying for college can be stressful, you will find a way to afford it. There are four main steps to getting the money you need to pay for college for your daughter. Follow them, and she’ll be on your way to Vassar in no time.

1)      Apply for Financial Aid-The first step to paying for college is filling out the FAFSA. The FAFSA is the form that determines your eligibility for government subsidized loans, as well as private scholarships and loans. Most schools require you to submit the FAFSA by early spring-about the same time of year that you will be filling out taxes.  The results of your application will determine your “financial need”-how much money you and your mom can realistically contribute towards your college tuition.

2)      Find Scholarships-Scholarships are the best way to finance her education, if you can.

Scholarships, unlike loans, do not have to be paid back. Vassar probably has scholarships that she will be considered for automatically when she applies for financial aid. There are also hundreds of private scholarships that can give her anywhere from 100 dollars to 10,000 dollars a year.  FindTuition.com has a great scholarship search that allows you to search and apply for hundreds of scholarships.  If she applies for as many as she is eligible, the money will soon add up.

3)      Find Student Loans-Across the country, millions of students are taking out loans to pay for their college education. She may be eligible for Federal subsidized loans, or she may have to take out private loans. Subsidized loans, like the Stafford Loan, are low-interest and do not accumulate interest while you’re in school. Private loans have a higher interest rate, but you do not need to qualify for them (no FAFSA required!). You can also apply for a Parental Plus loan-a loan that you can take out to pay for your daughter’s education. Taking out a ton of loans may seem scary, but between her scholarships and loans, you should be able to afford paying for college. Let your daughter know that once you graduates, she will need to pay down her loans. If she focuses on making small monthly instalments-and doesn’t miss a payment-her bundle of debt won’t seem so bad.

4)      Calculate the Difference-Up until this point you’ve let other people tell you how much money you should spend on college. Now, it’s time to figure out how much you can really afford. Add up your loans, your daughter’s loans, her scholarships, and any savings she might have from summer jobs. Subtract this amount from the total cost of education-including room and board, transportation, and pocket money. The Financial Aid Calculator will do all this, taking into account local prices for rent and groceries. If, after loans and scholarships, you can make up the rest with some creative financing, you’ll know that you can afford the school of her dreams.

Good Luck!

-Babs

POSTED BY Dear Babs IN Uncategorized
04.29.09
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Is there a way around the FAFSA?

Thursday, April 23rd, 2009


Dear Babs,

My daughter is going to SUNY Albany (out of state) in the fall, and I am worried about how to pay her tuition. I filled out the FAFSA, and it said our expected family contribution is way over what I think we can afford. Why are they doing this? Is there a chance we can get around this?

-Falling Short of Expectations

—

Dear Falling,

Just so you know, you are definitely not the first to be told that your expected family contribution be more than your personal budget will allow. To make sure you have judged correctly, calculate your financial need to figure out what financial aid you will really need to pay for college. Take into account any scholarships or loans already offered, and estimate what cash you can provide each year up front. Then see how far off your EFC is from your Real FC.

There are a few ways that FAFSA calculates your EFC, and depending on your situation, its formula may work to your detriment.

FAFSA looks at all of your available income and assigns a percentage of this income to your child’s college funds. Available income means any salary, property, savings, or investments that you could divert to your child’s education. Second homes, investment property, and valuable cars all qualify as an asset, but your primary residence does not. Therefore, if you own a vacation home that you clearly do not want to sell, this will count against you. FAFSA does not count money in an IRA, but it does count money in a general savings account, or investment funds (mutual funds, stocks, etc.). So if a large portion of your savings for retirement is in these types of accounts, it will hurt you. FAFSA also does not take into account consumer debt. If you owe a lot of money on your credit cards, FAFSA will not take the money required to pay them off from your total available income. These policies hurt a lot of middle-class families with credit card debt and moderate investments. Although your mutual funds may be non-negotiable to you, to FAFSA, they are fair game.

Unfortunately, there is not a lot you can do about your EFC this year. Unless your financial situation has drastically changed because of a lay-off or losing substantial savings because of the market. If this is the case, contact SUNY Albany’s Financial Aid Department to explain your situation-most schools are setting up procedures to deal with such situations in this economic crisis. For next year, try and pay off your credit cards with cash you have saved in the bank. This will reduce your debt-load, and reduce the income you have available in savings. If you have any savings that you have earmarked for retirement, but that are not in an IRA or other registered retirement account, consider transferring them. Do not hide assets-colleges investigate at least a third of FAFSA claims for fraud, and you can be fined as much as 20,000 dollars.

Good luck!

-Babs

POSTED BY Dear Babs IN Dear Babs, Financial Aid, parents
04.23.09
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Rejected: Should I plan on a college transfer?

Friday, April 17th, 2009


Dear Babs,

I didn’t get into my dream school. I am so in love with the campus at Washington University, and I really hoped I’d get in. The next-best school I got into was Dickinson College, and it’s okay, but I still really want to go to Washington University? What are my chances of getting into WashU as a college transfer?

-Disappointed Dan

—

Dear Disappointed,

I’m sorry you didn’t get into your first-choice college. It sucks to be rejected, especially when you want something so bad. However, all is not lost. You did get into a great school-Dickinson College. I can’t tell you how many students have to go to their 2nd, 3rd, 4th, or 5th choice school and wind up loving it!

If you are hell-bent on transferring, there are some things that you can do to improve your odds. Colleges look for transfer applicants who show significant change since they last applied. If you didn’t get in this time around because of your GPA, or because you didn’t seem like you had enough focus, or because you weren’t well-rounded, than those are the areas you need to improve on. Try and get your school counselor to call the admissions office, and give you a reason for your rejection. It may be hard to hear, but it’s the only way you’ll be able to improve. Also, showing continuing interest in the school (even after they rejected you) will let them know that they are still your No. 1.

Make next year your test-ground to discover what you like, both in a campus and academically. Take different classes, and work really hard to get A’s. Don’t just join clubs to join, but really get into student life on campus. Finally, think about why Washington University is your be-all and end-all of all schools. Did they have one program that you loved? Search for college classes at Dickinson that show your dedication to this area study. Washington University is going to look for similar attributes in a transfer that they did in a regular applicant; they don’t want to see some mope-y freshman who’s still hung up on not getting into their “first choice.” And honestly, if you just like Washington University because it has a prettier campus, than that really isn’t a good reason to transfer.

Once you’ve moved into your dorm at Dickinson College, chances are you’ll start making friends and having a great time! Dickinson is a good school-whether it’s your 1st or 2nd choice. If you can make a good group of friends, get involved, and enjoy your classes, you’ve found the right school for you. It could turn out to be your dream school after all.

Good Luck!

-Babs

POSTED BY Dear Babs IN Admissions, Dear Babs
04.17.09
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Can a 2nd tier college compare?

Monday, April 6th, 2009


Dear Babs,

My son got into two schools, University of Chicago and University of Illinois-Urbana Champaign. University of Chicago is an amazing school, but they did not offer us any financial aid. University of Illinois is less prestigious, but they gave him a 50% scholarship (and it’s instate!). Is going to the “better” school worth the extra money?

Frugal Father

—

Dear Frugal,

That’s a tough decision. Prestige aside, how did he like the environments of University of Illinois and UChicago? Financial fit is important too; even if your son likes UChicago a bit better, he might not want the added responsibility of loans. If he’s leaning either way, than he should follow his gut and go where he feels is his best fit.

Measuring the value of a college education objectively can be pretty tricky. The most selective colleges might have better academics, more active alumni networks, better career counseling, and higher success rates of post-grad job placement.  Then again, they might not.

Looking at average starting salaries for the two schools is one way of comparing value. A college education (as opposed to just a high school diploma) amounts to about one-million dollars of additional salary over the course of one’s lifetime. So it is definitely worth it. But does a private school amount to 2 million more? No, probably not. University of Chicago has an average starting salary of about $47,500 according to payscale.com. University of Illinois-Urbana Champaign is a little over $52,000. By that measure, University of Illinois is a better value than the more elite University of Chicago. When basing your college decision on statistics like these, use a little common sense. Does your son want to be a teacher? His salary will probably be the same no matter where he goes to school. If he wants to do anything in the arts/communications/non-profit sector, I highly recommend minimizing his debt and taking the scholarship. Starting salaries in those fields are often well under $30,000, and paying off loans might be impossible.  A prestigious degree will be the most beneficial for those who want to break in business or politics, where one’s social network has a large bearing one one’s salary.

You need to have a heart-to-heart with your son about what he wants to study, what he wants out of his degree and, ultimately, where he sees himself being most happy. You also need to be honest about how much money you can contribute to pay for college. Try to accurately assess what the total college cost for each school will be. If the economic crisis has you strapped for cash, let your son know that he will need to be able to pay for most of his education himself. You both need to weigh the pros and cons of his favorite college, and try and make the most informed decision you can. Bottom line, your son needs to choose the school that’s right for him academically and financially.

Good Luck!

POSTED BY Dear Babs IN Admissions, Dear Babs, Financial Aid, parents
04.06.09
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