1. “You waited until April? Sorry, we gave your money away.”
At first glance, the amount of financial aid available to students seems like a gold mine. According to education testing and information organization The College Board, students received over $135 billion in aid during the 2005-2006 school year for undergraduate and graduate study; more than $94 billion came from the federal government alone. Problem is, you’ll need a treasure map to find your share.
The bewildering aid-application process stumps thousands of families each year, leaving many to pay more tuition than they have to. Lots of students miss out on aid because of the confusing deadlines for the Free Application for Federal Student Aid (Fafsa), which everybody must complete to be considered for government grants and subsidized loans.
2. “Your error, your problem.”
If you fail to fill in some key parts of your Fafsa, the central processor will reject your form, sending it back to you and not to the prospective schools, resulting in a potentially costly delay. One error that parents make: putting their income and tax information in the student section or vice versa, which can’t be fixed by the machine scanning the form.
3. “Our low tuition rate means less financial aid.”
Many parents who haven’t saved enough for college tell their gifted high school seniors not to consider pricey private schools. Ironically, those colleges may actually be the more affordable alternative. “The more expensive and prestigious the school,” says Bedford, Mass., financial planner Tom Brooks, “the more likely it is well endowed and can meet 100% of need,” thanks to alumni donation campaigns. “You might be sending your kid to a state school that [for you] costs more than a Harvard or an MIT or a Stanford.”
4. “You’ll pay dearly for early decision.”
Early decision is a big temptation at elite colleges: Students can apply months before other applicants, as long as they promise to attend if admitted. In most cases, the college offers these applicants a better chance of acceptance. But when it comes to getting aid, early decision can backfire. Why? Your commitment to attend if accepted means you have less leverage to negotiate a good financial aid package.
5. “We don’t buy your pauper act.”
Every year parents are tempted to cheat the aid system by trying to look poorer on paper — by going on a spending spree, perhaps. There are, however, some perfectly acceptable ways to adjust your assets to maximize your aid potential, and remember, colleges won’t expect you to tap retirement savings to pay your share of tuition.
6. “We’ll judge you by your house . . . and your car.”
Fortunately for homeowners, the value of your house doesn’t get considered in most aid formulas. On the flip side, if you’re paying a fat mortgage or sky-high property taxes to live in an elite suburb, colleges likely won’t be too sympathetic.
Here’s why: To determine aid, colleges calculate your expected family contribution from your adjusted gross income and assets. They usually don’t consider what your real disposable income is or how cash-strapped you might be after paying your stack of bills.
7. “We’ll let you borrow more than you can afford.”
Unfortunately, college financial aid offices rarely discourage these decisions. While there are statutory limits on certain government loans — based on lifetime borrowing caps — there are fewer limits on loans from private lenders such as Sallie Mae, KeyBank or Citibank, three of the biggest players.
If your student must borrow, exhaust federal programs first. Perkins loans or subsidized Stafford loans — both of which you may be offered after filing a Fafsa — are best and interest doesn’t accrue until the borrower leaves school. The Perkins, which you pay back directly to your school, is the slightly more flexible of the two, offering longer grace periods.
8. “Outside scholarships help us, not you.”
Sure, you’re proud of the five scholarships your high school senior won from community groups such as the Lions Club and a local church, but don’t be relieved. Unless you weren’t counting on any financial aid at all, those scholarships won’t make a dent in how much you have to pay. Many parents mistakenly think their cost will be diminished and then are disappointed to learn that it will actually be the grant [from the school] that is diminished, thus saving the college money and not the family. Federal guidelines mandate that outside scholarship money be considered a resource in meeting financial need. This means you can’t use the scholarship dollars toward your expected family contribution, and the college gets to reduce the amount of aid coming your way.
9. “We won’t ‘negotiate,’ but we will ‘review.’
Once you’ve established a rapport with the officer, try casually mentioning that you have a competing offer and where else your student has been admitted. At the very least, aid officers may refer you to outside borrowing opportunities or payment plans. Whatever the response, don’t push it. Remember, you’ll be relying on this person’s award decisions for the next three years.
10. “Thought freshman year was expensive? Wait till senior year.”
Nationwide, the average private school price tag jumped 6% from last year, with the average cost for resident students now just over $30,360. Assuming a steady 6% annual price increase and a constant $25,000 in aid each year, the $5,300 contribution you made toward your student’s freshman year could grow to $11,088 by senior year.
If your child receives merit-based aid, ask whether the college can adjust it for tuition inflation. Regardless, make sure your scholar keeps hitting the books. A mediocre GPA can end a merit scholarship faster than roommates can devour a midnight pizza.
For more information on how to avoid these pitfalls go to: www.mypcfs.com
