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Sun Feb 28, 2010
High School Juniors
Here’s What You Should Be Doing This Spring
Take the SAT’s
Don’t take your results test for granted. There are numerous SAT prep opportunities and materials available as well as tutoring resources to help boost your scores and make you shine when it comes to application time.
Explore Colleges
Start visiting colleges of different sizes and locations to get the feel for what is the right fit for you. Develop a list of 15 to 20 colleges you can email your high school resume to. There are a number of search programs that you can use to help construct your college list.
Plan Ahead for the Summer
Plan your college visits for the summer. Review your resume and decide on areas you could enrich through volunteering or an interesting job perhaps.
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Sat Jan 30, 2010
Establishing Need-Based Eligibility
“Need" is established when the total cost of attendance (tuition/fees + room/board) for one year's education at a particular school exceeds the EFC, whether determined by Federal or Institutional Methodology. Let’s look at an example of two students planning on attending the fictional State University. State U. costs $10,000 a year and Jimmy Jones’ EFC is $3,000. The difference ($7,000) is his established need. However, Sara Garcia’s EFC is $11,000. The difference is $-1,000. No need is established, and Sara’s family must turn to non-need based sources of aid for assistance.
So, need is the relationship between the cost of one year's education at a specific school and what the government determines to be the family's fair share of that cost.
“Need” will vary based on the cost of the college or university in question and the Methodology used to determine the EFC. Again, the major difference is that the FAFSA does not ask for home equity information while the CSS Profile and some institutional forms do. In some cases more detailed financial information on business enterprises is required as well. As a result there could be about 12% of the equity value tacked on to the Federal
Remember, the EFC is calculated on the "base year" or tax year prior to the student’s enrollment. The critical issue is that anything the family does financially during the base year can positively or negatively impact their ability to qualify for financial aid. The sophomore year in high school is the latest time to effectively plan for college financing, and the fall of the junior year is the last chance to maneuver financially. However, there may still be positive actions the family can take before submitting the FAFSA or CSS Profile.
In determining the family's EFC, the Department of Education takes into account the parents' and student's (or independent student's and spouse's) financial situation--income as established by the previous year's tax information and current assets value reported as of the day the FAFSA is filed. Reportable assets do not include the value of retirement accounts (any amount added to retirement accounts during the reportable tax year will be assessed), life insurance or annuities, nor equity in the home. Remember, if required, the CSS Profile and some institutional forms will ask for this information. Other variables that are considered in the formula are the age of the older parent, the number of family members, and how many family members are enrolled in college.
It is also important to know that domicile is the key to determining which parent's financial information is required in the case of a divorce. Who claims the student for tax purposes is not the issue for financial aid eligibility. The "custodial parent" is the parent the student lived with the most during the past 12 months. Court orders for child support and college assistance have to be reported. Those schools which use the CSS Profile or their own institutional form may ask for information on the finances of the "other" parent when determining financial aid eligibility.
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Fri Dec 18, 2009
High School Senior Winter Activities
According to the College Board, the following are focus items for high school seniors during the winter months:
Most regular applications are due between January 1 and February 15. Keep copies of everything you send to colleges.
Have your high school send your transcript to colleges.
Contact colleges to make sure they've received all application materials.
You and your family should save this year's pay stubs to estimate income on aid forms that you'll file early next year.
Submit your FAFSA as soon after January 1 as possible. Men 18 or older must register for the selective service to receive federal financial aid.
Many priority financial aid deadlines fall in February. To get the most attractive award package, apply by the priority date. Keep copies of everything you send.
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Thu Oct 22, 2009
What is Student Financial Aid?
Student financial aid is money given by the Federal and State governments and the colleges to help students pay for the cost of a college education.
There are two basic types of financial aid:
1) Self-Help aid which consists of interest subsidized loans and work study; and,
2) Gift Aid, which consists of grants and scholarships.
The amount and type of financial aid is based on two factors:
1) The merit of the student ( scholastic, athletic, musical, etc.); and,
2) The financial need of the student. By far, this is the most important factor in determining financial aid. Most of the financial aid given by the Federal and State governments is based on the financial need of the student. Also, most of the financial aid given by colleges is need-based.
NOTE: The Ivy league colleges and other highly selective private colleges base almost all of their grants and scholarships on the financial need of the student and not the student's merit.
So how is the financial need of a student calculated?
NEEDS ANALYSIS is the process of determining the financial need of the student. It is calculated using the following formula:
COST OF ATTENDANCE (COA)
- EXPECTED FAMILY CONTRIBUTION (EFC)
= FINANCIAL NEED
- RESOURCES OF THE STUDENT
= ADJUSTED FINANCIAL NEED
EXAMPLE: If the 'cost of attendance' at a particular college was $12,000 and the 'expected family contribution' was calculated to be $4, 000, the 'Financial need" of the student would be $8, 000. In this case the student would be eligible to receive $8,000 in financial aid. Whether he receives a financial aid award for the entire $8,000 is up to the discretion of the individual college. Nonetheless the financial aid eligibility of the student is directly related to the financial need. If the student, had other resources to help pay for the college cost, the financial need would be reduced on a dollar-for-dollar basis for these resources. In this example assume the student had received a $1,000 private scholarship from the local Chamber of Commerce. Since private scholarships (scholarships which are not given by the college), are considered a resource, the $1,000 scholarship would reduce the financial need down to'$7,000. This means the student would now be eligible for only $7,000 in financial aid from the college.
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Wed Sep 23, 2009
You're a High School Junior - What Do You Now?
It is important to maintain and improve your grades during your junior year. Grades can make the difference in whether you receive scholarships and grants. Work to improve your vocabulary, reading and math skills-achievement test scores are also very important for both admission and financial aid. Start a personal file to document your achievements, awards, community service, sports, club and school activities.
September:
ƒÝ Register to take your PSAT.
ƒÝ Use the career center to explore educational and career opportunities available to you.
ƒÝ Get more involved in extracurricular activities
October/November:
ƒÝ Take your PSAT in October.
ƒÝ Discuss your family's financial resources. Obtain an estimate of your EXPECTED FAMILY
CONTRIBUTION (EFC) and determine adjustments to increase financial aid eligibility.
ƒÝ Start a list of college characteristics that are important to you.
December:
ƒÝ Register for January SAT.
ƒÝ Attend local meetings about financial aid or college admissions. Take final steps to
increase financial aid eligibility.
January:
ƒÝ BASE YEAR FOR FINANCIAL AID BEGINS.
ƒÝ Determine colleges and universities to explore based on admission requirements,
educational programs and cost vs. your family's financial aid eligibility and ability to pay.
ƒÝ Take your SAT.
February/March:
ƒÝ Register for May achievement tests in February.
ƒÝ Spring break is a good time for college visits.
ƒÝ E-mail colleges for information about admissions and financial aid. Include brief
information about yourself.
April/May:
ƒÝ Attend college fairs.
ƒÝ Check admission requirements against your own course of studies.
ƒÝ Take achievement tests in May.
June/July/August:
ƒÝ Make a list of people who might write a letter of recommendation (teachers, counselors,
employers).
ƒÝ Visit colleges going or coming from vacation spots.
ƒÝ Narrow your college list to 6-8 based on scholastic, financial aid and personal criteria.
ƒÝ Start working on your personal essay and other writing requirements for the colleges you
plan to apply to.
ƒÝ Register with the NCAA if you¡¦re an athlete
ƒÝ It¡¦s not too early to start looking for private scholarships.
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Sun Aug 02, 2009
What To Do This Fall
Junior Year
It is important to maintain and improve your grades during your junior year. Grades can make the difference in whether you receive scholarships and grants. Work to improve your vocabulary, reading and math skills-achievement test scores are also very important for both admission and financial aid. Start a personal file to document your achievements, awards, community service, sports, club and school activities.
September:
ƒÝ Register to take your PSAT.
ƒÝ Use the career center to explore educational and career opportunities available to you.
ƒÝ Get more involved in extracurricular activities
October/November:
ƒÝ Take your PSAT in October.
ƒÝ Discuss your family's financial resources. Obtain an estimate of your EXPECTED FAMILY CONTRIBUTION (EFC) and determine adjustments to increase financial aid eligibility.
ƒÝ Start a list of college characteristics that are important to you.
December:
ƒÝ Register for January SAT.
ƒÝ Attend local meetings about financial aid or college admissions. Take final steps to increase financial aid eligibility.
Senior Year
September:
ƒÝ Register to take your achievement tests (SAT's and/or ACT's).
ƒÝ Work with your guidance counselor on career interests and appropriate scholastic programs.
ƒÝ Obtain on-line, applications for each school (6 to 8) that you're applying to.
ƒÝ Develop a matrix to keep track of forms and deadlines. Will you apply Early Decision or Early Action?
ƒÝ Continue to search and apply for private scholarships as appropriate.
October/November:
ƒÝ Obtain on-line, financial aid information from each school, including forms, procedures and deadlines.
ƒÝ Continue to search for private scholarships.
ƒÝ Request letters of recommendation and transcripts.
ƒÝ Work on completing your applications
December:
ƒÝ Finalize applications prior to Winter Break.
ƒÝ Obtain on-line, a worksheet for the FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA) and CSS PROFILE. Verify the deadlines for each college your applying to.
ƒÝ Begin collecting family tax information.
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Fri Jun 12, 2009
Loan Tips
The fact of the matter is that most students will have to finance some or all of their education. The College Board provides the following tips when considering student loans:
Ten Essential Borrowing Tips
And the Number One Borrowing Tip Is...
Look at your child's award letter and figure out which need-based loans your family has been given and for what amounts.
After you look at your family's full financial picture—education cost, awarded aid, and family share—settle on the amount you or your child actually need to borrow.
Never borrow more than you need. Remember, you are not required to borrow the full amount of loan aid your child has been offered or to borrow the maximum loan amount.
Don't forget about student employment as an alternative for borrowing. Although working at a job can seem like an extra burden for your child, so is struggling with high loan repayments after college.
Apply for your loans right away. You want to make sure that the loan is approved and the money paid to the college before your family has to make your child's first student account payment.
Follow the loan application instructions carefully. Any mistakes you or your child make will delay receipt of the funds.
For a Stafford Loan, be prepared for the amount that is paid to the college to be less than the amount for which your child signed. An origination fee, guaranty fee, or both, may be subtracted from the loan before the check is sent to your child's college.
If you will be taking out parent loans, start to keep track of your "loan tab"—the amount your monthly repayment will be—once you know the amount that you are borrowing.
If you feel your family needs to borrow more than the amount that's been offered in your child's award letter, talk with a financial aid counselor before taking on an additional loan.
If you or your child does take on an additional, unsubsidized loan, consider making interest payments while your child is in school. They won't be much and will save you money—you'll end up having to pay back significantly less than if you delay (and capitalize) the interest payments.
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Tue May 12, 2009
Paying Your Fair Share
Even with financial aid and scholarships, your college bill may seem higher than you think you can afford. So, what can you do? The good news is that your family has more options than ever
before.
Do you and your family have a plan to pay for your "family share of costs," the bottom line on the college bill? Many financing options exist, so you'll want to consider each one carefully:
* Payment plans: Most colleges provide a variety of ways to spread out payments, such as monthly payment plans:
* Loans: Parents can borrow up to the cost of education, minus financial aid, with a federal PLUS Loan. Students also have the option of taking out federal unsubsidized Stafford Loans and private loans.
* Savings withdrawals: Now is the time to withdraw funds from personal savings and college savings plans such as 529 plans.
* Financial aid appeals: If your family has recently been affected economically, consider asking the financial aid office to reevaluate your aid package.
You're not required to borrow the full amount of loan aid shown in your offer letter. If you can reduce your expenses or increase your funds, you may be able to borrow less. Using money from savings, working more hours, or winning scholarships are all ways to keep your student-loan debt to a minimum.
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Fri Feb 13, 2009
Comparing financial aid award letters
It is important to remember that this letter only constitutes an “offering.” The student does not have to accept it. He or she can accept only certain parts of the aid being offered or even request a review and negotiate for a better package (more on that later).
Let’s work with an example. Our EFC is $9,000, for a private college and determined through Institutional Methodology. Assuming that the total cost of attendance at this private college is $25,000 a year, our student has established $16,000 in need. Since most private colleges cover 100% of the established need, the resulting aid package should be $16,000. About 60-70% of this amount should be in grants and scholarships (money the student doesn't have to pay back), 21% will be in the form of a subsidized Stafford Loan (the student doesn't make payments until after graduation), and the remainder will be covered by work/study (the student holds down a part time job and uses the pay to cover books and miscellaneous expense). Be aware that some schools may back off on the amount of grant and scholarship money and pad the award offering with a federal parent loan (PLUS Loan) .
At a public institution, because there is less private endowment and scholarship money to assist the student, less than 100% of the established need is normally met. In our example the Federal Methodology said the student's EFC was $7,500. Let's assume now that the student applies to a less expensive public university, which uses the federally determined EFC. The cost of this university is assumed to be $13,500 a year. The established need is now only $6,000. But the college can only cover 75% of the need, or $4,500. This now creates an out-of-pocket expense for the family of $2,500 ($6,000-$4,500), making the total cost $10,000 ($7,500+$2,500).
There's another difference. For the same reason that less of the established need is covered, the percentage of loans and work/study received in the aid package is noticeably higher than the amount of grants and scholarships. So in our example, the $4,500 would be covered by a loan first ($3,500 is the maximum for a Stafford loan for Freshman). The majority of the remainder would be provided in the form of a work/study program.
In this situation then, the student could go to a more prestigious private college for less than what it would cost the Family at a less expensive public institution. Keep in mind each circumstance is different, and each college and university has different policies on financial aid distribution and eligibility. But it is critical that this type of information is evaluated along with the scholastic benefits of the institutions the student is interested in attending. In that way the family can be assured of the best dollar value.
If the college is making full disclosure of out-of-pocket expenses, their letter will reflect the total cost of attendance. Then they will deduct the student’s EFC from the cost and show the difference as “financial aid eligibility,” or “demonstrated financial need.” A breakdown will then be given of the aid offered—grants, scholarships, loans, and college work/study.
On the other hand, colleges that want to keep financial aid a bit more mysterious will simply send a very upbeat letter with a listing of aid awards. The student has no clue as to the true cost to their family. A call to the college to get a copy of the “on-campus budget for 2007-2008” will provide the missing information with which to determine the real out-of-pocket expense.
A fair comparison of award letters can then be made. Check the EFC used by the school against the EFC reflected on the Student Aid Report. If the school is using Institutional Methodology to determine the EFC, then add about 5.6% of the family’s home equity to the federally calculated EFC. The two figures should be fairly close. Next look at how close the schools come to meeting your established need (the difference between what it costs and the student’s EFC). Also, compare the amount of loans necessary to complete the package. Remember, additional loans such as the PLUS for parents may be necessary to handle all or a portion of the family’s out-of-pocket expense.
Do a thorough analysis of the debt circumstance. How much debt can the family tolerate on the other end of four or five years of college? Is there a second student in the picture in the near future?
Another easy trap to fall into is college work/study. This money is not a gift. The student must earn it. If the student does not work, the family pays that amount as well.
Here is a list of tips to use in comparing packages:
1 Compare the debt first by adding up all the loans being offered.
2 Compare unmet need and the family contribution--the more need met may mean more family debt, the more gift aid may mean a larger family contribution.
3 Make sure books and miscellaneous are expenses are included in the cost the college used to figure the family's need.
4 Consider travel costs if institutions are some distance away.
5 Determine if any outside scholarships are renewable and if the college will allow self-help portions of the package to be reduced by them.
6 Compare the terms of any loans included--what the payments will be and the real cost to the family once they're paid off.
7 Check what aid is provided to upperclassmen—Freshmen award packages are often better.
8 Write it all down and look at the numbers--don't just guess which package will be less expensive.
9 Last, compare the economic benefit of your future career with the need to incur substantial debt. It may well be worth it. After all, that’s what it’s really all about—what are you willing to pay and what level of debt are you willing to endure to achieve a college education?
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Tue Nov 18, 2008
Paying for College in Today's Economy
• OCTOBER 16, 2008
College Savers Stuck in Stocks as Market Falls IRS Rule on 529 Plans Allows Just One Portfolio Shift a Year; Weighing a Cheaper School
By JANE J. KIM
A rule designed to protect investors in 529 college-savings plans is having the unintended side effect of preventing them from shifting to more-conservative investments as the stock market swoons.
When Charles Strawbridge of Ashtabula, Ohio, got nervous about the markets this past spring, he wanted to boost the bond allocations in the 529 plans he had set up for his 16- and 19-year-old sons. But because he and his adviser, Matt Olver of Cleveland, had already changed his investment mix in January, he had to keep his current allocation of 20% and 25% in equities for his older and younger sons, respectively.
Now, after watching the accounts drop in recent weeks, he’s telling his older son — who is in the process of transferring colleges — to consider less-expensive schools. “We do have to keep in mind the downturn that the market has had on his available funds,” says Mr. Strawbridge, a 55-year-old accountant. “It was unfortunate that we couldn’t have made the move. It takes a little bit off the table.”
With 529 plans, investors put after-tax dollars into an account that typically offers a range of mutual funds and other investments. Distributions and earnings are tax-free, as long as they’re used for higher education. The plans have grown in popularity in recent years — they held about $110 billion in assets at the end of the second quarter — although the pace of net new investments into the plans has started to slow, according to Citigroup Inc.’s Financial Research Corp..
Amid the current market turmoil, more investors like Mr. Strawbridge are running into one of the quirkier restrictions of these state-sponsored plans: an Internal Revenue Service rule that limits investors to one investment change per calendar year. The rule is intended to keep people from making knee-jerk reactions to market moves, but some investors and financial advisers say it makes the plans overly restrictive. Indeed, the College Savings Plan Network, a membership organization of state 529 officials, investment firms, program managers and others, is considering asking the Treasury Department to raise that limit to four times a year.
But that’s not the only feature of 529 plans that’s causing investors grief right now. Many investors use age-based portfolios that automatically shift to more conservative investments as the child nears college. Yet some of these conservative portfolios may actually hold a high percentage in stocks. North Carolina’s National College Savings Program has an age-based portfolio that can hold just over 50% in stocks, including real-estate securities, just one year before the child starts college. That portfolio, which is part of the state’s CollegeHorizonFunds managed by J.&W. Seligman & Co., was down 15.7% for the 12 months ended Sept. 30. Given the big market drops this month, the plan has likely posted additional losses.
Seligman’s age-based portfolios were designed to create “the opportunity for capital appreciation” while becoming “extremely conservative” in college, says Charles Kadlec, the firm’s managing director. The CollegeHorizonFunds move to 100% cash in the last two years of college, he says.
Other plans with more-aggressive portfolios include Nebraska’s broker-sold AIM College Savings Plan, which can have as much as 40% in equities when the child is one to three years away from college, and South Carolina’s Future Scholars direct-sold plan, which can have up to 33% in equities with college enrollment one to two years away.
Keeping Pace With Tuition
Such equity exposure may help investors keep pace with tuition increases, some investment managers say. “If you’re a senior in high school, you still have five years before you hit your senior year of college,” says Tom Kazmierczak, senior product manager for T. Rowe Price Group Inc.’s 529 unit, whose portfolios for students starting college in 2009 can hold up to 28% in stocks and up to 20% while the child is in college.
# # # #
Now more than ever, spending the time and effort to plan correctly for college is critical. Analyzing the family financial circumstance as it relates to the calculation of the Expected Family Contribution (EFC), which drives need-based assistance, shopping for the right college in terms of the student’s academic, financial and personal needs, maximizing the student’s achievements, and exploring alternative payment and financing options, are so important to increase the potential to receive a value education.
Choices become more limited and planning becomes paramount.
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