October 2017 Newsletter

“How many colleges should my student apply to?”

Dear Parents,

One question that parents ask every year is: “How many colleges should my student apply to?” If you need financial aid, the more colleges the better.

The Magic Number

You won’t know in advance how much aid your student will be offered, and you need the ability to compare several awards from similar schools. Some aid packages will be more lucrative than others, and some will contain more loans than free money. Once you have all their award offers, you can begin the difficult task of evaluating each one.
It’s not only a matter of the bottom line. Parents need to know– even if one college costs more than another– if the award was fair. Some colleges have more inherent value than others.
It often happens that a private college with higher graduation rates and other benefits– like lower student-to-faculty ratios– can cost close to, if not the same, as a state school sporting a lower sticker price.

Where Do You Want Your Money To Go

Colleges are competitive businesses, not charities. They enjoy a not-for-profit status that allows them to avoid paying federal, state, and property taxes and some of them make an awful lot of money. How else could they afford to pay their presidents and coaches millions of dollars? How else could they build dormitories that are the envy of the world?
The University of Arizona in Tucson not only features spectacular rooms, with private beds and baths, fully equipped kitchens (even a Keurig!), walk-in closets, and personal washers and dryers. The building amenities are comparable to a stay in a tropical oasis. They have gaming, fitness, executive meeting rooms, and a spa which includes a sauna, steam room, and tanning beds! Outside, the rooftop infinity pool is the main attraction. But when students feel waterlogged, there’s always a 22-foot LED TV, a grilling gazebo, hammocks, and a sand volleyball court– with stadium seating!

Wouldn’t it make sense for your student to go to a college that spends more on teaching, and gives a break on tuition, rather than on obscenely opulent amenities?

Financial Aid Deadlines

Thousands of times I’ve heard that unless parents file their financial aid forms on October 1st, they’ll lose aid eligibility or consideration. I’ve all but given up trying to convince parents that 99% of the time that this is not the case. Reasons why include that not every family is the same and not every student is going to qualify for each type of aid that exists.
Each college has their own financial aid deadlines and timetable. Some begin in November and December, and others are as late as June 1st. Most college also have specific deadlines for Early or Regular First-Year Admission, returning, transfer students, and even international students.

For parents of students who may qualify for a state grant, one concern is that not every state has a published deadline for applying for their grant program. The Department of Education has published a list of state aid deadlines for the 2018-19 academic year, and instructions if there aren’t any. In those states without a published deadline, it’s entirely possible the money will run out, so it’s important to file before they do so! You generally have to make less than $80,000 per year to qualify for state aid, and your assets have to be less than $60,000.

If your student does qualify for in-state aid, but are applying to a college that is out of state, they may only get a fraction of what they would have received at home, or nothing at all. Some states, like New York, New Jersey, and Pennsylvania, don’t allow grant aid to cross state lines. Know what you qualify for before you apply!

Offer support and encouragement. Educate yourself about colleges. Assist with logistics and organization. Students want their parents’ support– but from the sidelines. Parents need their students to take ownership of the college search and application process. But this is a much bigger undertaking than in years past, and some students will be overwhelmed. Be there for your student, but refrain from doing the actual work of writing essays and completing applications for them. Be a sounding board, and you will help your student be satisfied with their effort.

Other than taking out loans, students are not going to be paying for their college costs. It’s going to fall on you to be aware of the types of financial aid available at the colleges that your student is interested in applying to. In this, you can take a more active role without intruding on your student’s progress.

Stick with the roles of coach and administrative assistant. Again, being active in the things that students don’t pay much attention to will yield a much happier experience for the both of you.

Readying For the Financial Aid Forms

No matter your financial circumstances, you must always apply for aid. With some colleges costing more than $70,000 per year, you just may qualify for financial aid– even if you earn more than $200,000!

Students applying to the more competitive colleges and universities may have to complete the College Board’s CSS/Profile financial aid form. This form asks many questions that most parents have no idea how to answer, for fear that if they put down the wrong one they will lose financial aid. The fear is justified. The CSS/Profile is a form designed to DISQUALIFY you from getting aid. If ever there was a field peppered with landmines, this form is it’s equivalent. This is a “field” you do not want to cross alone. You really should have professional advice to help you avoid expensive mistakes.

If a student’s grandparents want to help with college expenses and they are not gifting large sums to reduce their taxable estate, the money should be given to the parents and they should use it to pay the bills. Otherwise, the college will count this money as a “resource”. Unlike income (assessed at 50%) and assets (assessed at 20-25%), resources reduce the student’s aid package on a dollar for dollar basis.

If the grandparents can benefit from gifting money to reduce their taxable estate, it is better for grandma and grandpa to wait until after their grandchild graduates to help them pay off student loans, since money paid directly to the college will reduce a student’s need-based aid eligibility.

That’s it ’till next month!

John Tillman

P.S. If you find this newsletter helpful to you please share it with other parents like yourself!