| If you make any one of these mistakes, it could end up | | | | Here's the important idea to take away - It can actually |
| costing you thousands, or even tens of thousands of | | | | cost you LESS to send your child to a 'more |
| dollars by way of lost funding that you might have | | | | expensive" school! Don't rule out the big ticket private |
| been eligible for. | | | | schools! |
| I don't want you to make these "unforced" errors. So | | | | Mistake #6: Not understanding the difference between |
| that's why I've devoted this chapter to teaching you | | | | "included assets" and "un-included assets" for purposes |
| how to avoid these common mistakes, so you can | | | | of filling out financial aid forms. |
| obtain the maximum amount of money from each | | | | The Reality: Certain assets are counted much more |
| school your child applies to. | | | | heavily in the financial aid formulas than others. For |
| Mistake #1: Most middle and upper-middle class | | | | example, savings accounts, CD's, stocks and bonds |
| parents assume they won't be eligible for financial aid | | | | are all included and asked about on the Federal |
| because they own a home and make too much | | | | Financial Aid form. However, it does not ask about the |
| money. | | | | value of annuities or cash-value life insurance |
| The Reality: Most families with incomes ranging from | | | | anywhere on that same form. |
| $40,000 - $120,000 per year who own homes are | | | | Mistake #7: It doesn't matter where you keep your |
| eligible for some form of financial aid. There is billions | | | | money; it's all counted in the same way. |
| (with a "b") of dollars available each year from the | | | | The Reality: Nothing could be further from the truth. |
| Federal Government, the states, colleges and | | | | Where you keep your money could mean the |
| universities, and private foundations and organizations. | | | | difference between you getting $10,000 in financial aid |
| You have to know how to get your "share". | | | | or getting nothing! For example, money in the child's |
| Unfortunately, most parents give up before they even | | | | name is weighted much more heavily than money in |
| start and assume they won't be eligible. This is exactly | | | | the parent's name. If you don't know how to legally and |
| what the government and colleges hope you will do so | | | | ethically position your money properly for purposes of |
| they can keep more of these funds. | | | | financial aid, you could end up losing thousands in |
| Don't make the mistake of not applying for aid! If you | | | | financial aid that you otherwise deserve! |
| fall into a "high earner" category, make sure you apply; | | | | Mistake #8: "My CPA or tax preparer is qualified to fill |
| you'll probably be eligible for SOME money. | | | | out my financial aid forms - I'll have him/her do it." |
| Even high-earning families (those making six figures | | | | The Reality: Unfortunately, CPA's and tax preparers |
| and more) can get a ton of money for college. Many | | | | are experts at tax planning and preparation – not |
| make the mistake of not applying! | | | | financial aid planning. For example, a CPA or tax |
| Mistake #2: Focusing your time and energy on a | | | | preparer might suggest that you put some or all of |
| private scholarship search instead of spending your | | | | your assets in your child's name to save money on |
| time trying to qualify for "need-based" financial aid. | | | | taxes. While this advice is well meaning, it will usually kill |
| The Reality: Private scholarships make up only a | | | | most or all of your chances of getting financial aid. |
| percentage of the money available to you to help pay | | | | Also, CPA's and tax preparers are not trained in filling |
| for your child's college education. Funding also comes | | | | out financial aid forms. In many cases, they will |
| from the Federal Government, the state you live in, | | | | unknowingly fill out these forms improperly (i.e., using |
| and the colleges and universities your child is applying | | | | pen instead of pencil, omitting social security numbers, |
| to. | | | | etc.). These "minor" mistakes will bump your financial |
| Mistake #3: Assuming only minority students, athletes, | | | | aid forms back to the "bottom of the pile." If this |
| and academically gifted students get financial aid. | | | | happens, you will have to re-submit these forms all |
| The Reality: Nothing could be further from the truth! | | | | over again, and you will likely lose thousands in financial |
| "Need-based" financial aid is solely awarded based on | | | | aid since it is awarded on a first come, first served |
| "financial need" which is calculated by taking the cost | | | | basis. The students with properly filled out, "top of the |
| of attendance at a school and subtracting the family | | | | pile" forms will be considered for aid first! |
| contribution (which is the minimum amount the | | | | Mistake #9: Waiting until January or even worse after |
| government determines you can afford to pay based | | | | January of your child's senior year of high school to |
| on your income and assets and your child's income | | | | start working on your college financial aid planning. |
| and assets). Whatever is left over after you subtract | | | | The Reality: Since financial aid is based on your |
| these two numbers is your "financial need" or eligibility | | | | previous year's income and assets, it is imperative to |
| for financial aid at a particular school. If you haven't | | | | start your planning as soon as possible before January |
| noticed, this has nothing to do with a student's ethnic | | | | of your child's senior year. If you want to legally set up |
| background, athletic ability, or grades. It's based on this | | | | your income and assets so you can maximize your |
| simple formula: | | | | eligibility for financial aid, you must start working on this, |
| COA (Cost Of Attendance) - EFC (Expected Family | | | | at least, one year in advance - preferably in the |
| Contribution) = FN (Financial Need) | | | | beginning of your child's JUNIOR year of high school. |
| Mistake #4: Picking colleges and universities without | | | | The longer you wait and the closer it gets to your |
| paying attention to where your student lies in relation to | | | | child's senior year, the tougher it gets to set up your |
| the rest of the student body. | | | | financial picture without creating a "red flag" for the |
| The Reality: To increase your chances of getting the | | | | colleges and universities. It is also important for you to |
| best possible financial aid packages, it is imperative that | | | | know what your "Expected Family Contribution" is so |
| you pick schools where your child lies in the top 10% of | | | | you can start saving for it. And, you should also know |
| the incoming freshman class with respect to their GPA | | | | which schools can give you the best packages before |
| and SAT/ACT scores. Although schools give financial | | | | you start visiting and applying to them. If you haven't |
| aid based on your calculation of "need" at their school, | | | | started planning, DO IT NOW! |
| they will definitely give preferential packaging (i.e., more | | | | Mistake #10: Going Through The Financial Aid Process |
| FREE money, less loans) to students who lie in the top | | | | By Yourself Because It's "Cheaper". |
| 10% of the incoming class. | | | | The Reality: If this describes you, the colleges and |
| The reason they do this is to attract the better | | | | Federal Government are going to have a field day |
| students to their school. Use this to your advantage | | | | with you - they'll love you! Here's why. This attitude |
| and apply only to those schools where your child | | | | allows them to keep control over the process instead |
| would fit into the top 10% category. | | | | of you, the parent, understanding how the game really |
| Mistake #5: Assuming all schools are created equal | | | | works and taking back control from them. It always |
| and will be able to give you the same amounts of | | | | amazes me that people will readily use a doctor when |
| money. | | | | they get sick, a lawyer when they get sued, but |
| The Reality: All schools are not created equal and will | | | | suddenly when they are going to send their child to |
| not be able to give you the same financial aid | | | | college and spend between $10,000 - $45,000 per |
| packages. Some schools are well endowed and get a | | | | year, parents want to save themselves a couple of |
| lot of money from alumni and corporations. These | | | | dollars and do it themselves. |
| schools have more money to give out and are | | | | What do I mean? Well, thanks to the complicated |
| generally able to meet most or all of a student's | | | | system that includes federal and government |
| financial need at their school. Other schools, like state | | | | bureaucracy, mixed in with involvement of private, |
| universities, get no private funds and rely solely on | | | | for-profit and non-profit enterprises, a maze of rules, |
| state and Federal funds to help fill a student's need at | | | | deadlines, regulations and other complications resulted. |
| their school. In many cases, these schools leave | | | | Bottom line: it's not easy to figure this stuff out! |
| students short and give them less money than they | | | | Unless you spent the last 5 - 10 years of your life |
| are eligible to receive. It can actually end up costing | | | | studying and understanding the financial aid process, |
| you more to send your child to a "cheaper" school if | | | | there is no way you are going to know how to get the |
| they don't have the money to meet your need. It is | | | | maximum amount of money from each school. And, if |
| very important that you know each school's history of | | | | you do try it yourself, you'll probably spend countless |
| giving money before you ever apply, so you're not | | | | hours trying to figure it out. It can be done, sure. But |
| blown away when you get a bad financial aid package | | | | you might have to quit your day job! |
| from your child's top school choice. | | | | |