15 Things You Need to Know About Financial Aid
Published on - September 20th, 2012 (by Ellen Cannon) Timothy M. Hayes, MBA, CFP®, is the founder and President of Landmark Financial Advisory Services, a member of the Garrett Planning Network of fee-only advisors, and an expert in navigating the financial-aid application process.
Every January, students and their parents face the daunting prospect of preparing the various financial-aid applications that are required to be submitted in order to determine their eligibility for federal and/or institutional financial aid. Most families find the process, at best, mystifying and at worst, overwhelming. Worse yet, many rely on inaccurate information from well-meaning friends or the college’s own financial-aid office when completing the applications, leading to a potential loss of aid.
To better assist students and their parents in the preparation and submission of the various financial-aid applications – including the Free Application for Federal Student Aid (FAFSA) – we offer the following caveats, tips, and recommendations:
- Always remember that higher education is a BIG business and the college’s financial-aid officer (FAO) is not necessarily your friend. They represent the interests of their employer — not you. While they won’t intentionally give you erroneous information, they may overlook or misunderstand your particular situation and give you generalized, rather than specific, input or answers to your questions or concerns. Double-check the accuracy of any information you receive from the FAO with the FAFSA answer key available on the Department of Education’s website. And always be careful not to disclose any specific information about your finances to the FAO until you’re certain that it’s accurate.
- Apply for aid even if you don’t think you’ll be eligible. Given the costs today, most families qualify for some form of assistance. Even if that assistance is nothing more than an unsubsidized Stafford loan, the interest rate on the loan may be less than what you’d pay on a private loan.
- There are two kinds of financial aid: gift aid (i.e., “free” money) and self-help aid (i.e., loans). Most aid today is self-help aid. Your family’s financial need is the dominant factor in determining your eligibility.
- The income and assets of the student are weighed more heavily than the parents’ are in the assessment of your eligibility. Consequently, strictly from a financial-aid eligibility perspective, it’s often better to minimize (where practical and possible) the student’s income and assets when applying for aid.
- The parents’ home equity is not assessed in the federal needs-based (FAFSA) calculation. Don’t allow unscrupulous lenders or promoters persuade you to draw equity out of your home (usually to purchase expensive investments or insurance) in order to “qualify” for more aid.
- If the parents’ earned income and adjusted gross income (AGI) are both less than $50,000, the student will qualify for the Simplified Needs Test, which ignores the assets of the parents and the student in the computation of the Expected Family Contribution (EFC). For those families with an AGI of less than $31,000, there will be a “Zero EFC.” In both cases, the student will receive more aid.
- Harvesting tax losses on investments before the year you apply for aid (i.e., the “base” year) will reduce your AGI and increase your aid eligibility. For those families who will be completing the FAFSA in January of 2013, the base year is 2012 – which means that any losses must be taken before Dec. 31, 2012.
- If your parents are divorced, report only the income and assets of the parent with whom you lived during the past 12 months. This may not be the same parent who “claims” you as a dependent for income tax purposes. Strictly from an aid-eligibility standpoint, the best strategy is for the student to live with the lower-earning spouse.
- Be sure to compare all of whatever aid awards you might receive from various schools before accepting any awards. You generally have until May 1 to respond, but may request an extension if you have not received information from all of the schools by then.
- If you or your family have experienced any kind of extenuating circumstances in the time since you applied for aid – like a death in the family, extraordinary medical expenses, or the loss of a job – be sure to contact the FAO to explain your special circumstances and to ask them to use their “professional judgment” to reconsider your package in light of the new information.
- Withdrawals from a 529 plan in one year (i.e., the base year) do not count as income to the student in the next year, unless the 529 is owned by someone other than the student or the parent (for example, a grandparent).
- Income information in the FAFSA will always be from the base year, but asset information is as of the date the FAFSA is signed by the parents.
- Some assets are not included in the financial-aid calculation, such as personal property, annuities, the cash value of life insurance, retirement accounts, and 529 accounts owned by people other than the student or parents. Thus, before signing the FAFSA, reduce assets by buying a car, computer, or other personal property that you would be buying soon anyhow, or by purchasing life insurance if you need it.
- Loans are not treated as income, whereas gifts of cash are. Consequently, a grandparent wanting to help with tuition could loan the money to the student rather than gifting it. It does have to be a bona fide loan — they can’t just call it a loan — and the grandparent has to charge a market rate of interest on the loan. Also, the student would have to spend the money before signing the application; otherwise, the loan will be assessed as an asset of the student (equal to the amount of the loan still remaining in the student’s bank account). The grandparent might then later forgive the loan in blocks of $13,000 (the current annual gift exclusion), after all aid applications have been filed.
- Some financial aid – like Work-Study, Federal Perkins loans and/or college grants or “tuition discounts” – is awarded at the school’s discretion. If you don’t receive any of these awards, don’t be afraid to contact the FAO and ask why you didn’t receive them.
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Thanks for clarifying in bullet point 3 that most FAFSA money comes in the form of student loans. Many people seem to conflate FAFSA with free rides for college, when most grant money is at the state or institution level
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Re: point 7… You can use this to offset gains (if you have any) but beyond that you are limited to using $3k/year in losses to offset regular income, so in that case this will have a minimal effect — right?
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Michael,
Yes, you are correct. What I was referring to more specifically was the notion of minimizing investment gains (and, so, reducing/minimizing the contribution to AGI of investment income) – but your point is valid, and noted. Thank you.
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Re: Bullet point 14 – Isn’t there an annual exclusion to the gift tax? I thought you could gift someone up to $13000 without the recipient incurring taxes. And if the grandparents were married, can’t they each gift the grandchild $13000, for a total of $26000 without the recipient incurring taxes?
I’m no CPA, so I could be completely misreading the rule. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes
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You are correct – that is exactly the point that I was trying to make about forgiving the loan in blocks of $13,000 – and, yes, a married couple could double those gifts to $26,000 annually.
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But what I don’t get is why a grandparent can’t just give the 13k without the recipient incurring taxes? The bullet point says “Loans are not treated as income, whereas gifts of cash are. ” Do you mean all gifts of cash or only those over $13k?
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Grandparents can also pay directly for someone’s education, with no limits. They would simply pay the tuition bill directly to the universary, rather than using the kid as a conduit.
Not enough people take advantage of this provision.
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Thanks for this article. I lived on-campus most of the last year, and with my mom for the other portions of the year. My dad has a much higher income than my mom. Can I legally list my mom as my parent on the FAFSA, even if my dad is covering most of my college expenses?
Thanks.
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Addie,
I’m assuming from your post that your parents are divorced. If you spent more of your time (off-campus) with your mom than you did with your dad, then it is your mom’s income and assets that should be reported on the FAFSA when you next apply for aid. You should know, however, that if your parents’ divorce decree stipulates that your father is obligated to provide financial support for your college expenses, that the support MAY be construed as a “resource” in the application and/or by the college. Resources (typically) reduce financial aid on a dollar-for-dollar basis.
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Thanks for the response, Timothy. I should definitely receive more aid next year because of this advice!
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Although, many private universities will require the non-custodial parent to provide tax returns and complete certain requirements. We have to use my income, my new husband’s income and my ex-husband’s income for financial aide purposes. Each university may see this differently.
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This is actually incorrect. In the case of divorce the FAFSA outlines which parent should be on the form. Since this is taxpayer money the Dept. of Education will not allow students to choose who goes on the form. Rather it is decided by a “flow chart” of sorts.
1) In the last 12 months (as of the day the student is filling out the application) who did the student live with the most?
If Mother or Father then this is the person on app, if neither move on to question 2.
2) In the last 12 months who supported the student the most financially Mother or Father?
The answer to this question is the person on the application, if neither go to question 3.
3) The last time the student was supported by a parent who was it, mother or father?
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This seems like great advice. I’m very surprised by #5 (parents’ home equity is not assessed in the FAFSA calculation) because I recently learned that my parents “had to” take a ton of equity out of their home to pay for my and my brothers’ college tuitions. Five to twelve years later now, with both of them being laid off from work, and real estate prices way down from the time they took the equity out, they had to sell the house this summer and barely covered the mortgages with the sale. My dad is defintely under the impression that taking equity out was required.
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Well, ‘had to’ could mean a lot of things. Maybe their AGI was high enough that you weren’t going to get aid – and the easiest way to raise funds was to take out a equity line on the house – compared to many loans – it’s a good deal.
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Thanks, Bella, I guess that makes sense. He was saying that having gone through the process for three kids over five different schools he has learned so much about how better to allocate and use his assets. He says he wishes he knew that it’s better not to pay down the mortgages and instead use savings to invest in other accounts or buy things. I don’t know if that makes any sense, but for what it’s worth…
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Totally agree that you learn so much going through it – that you shoulda coulda woulda done differently. The biggest thing my parents foudn out was that there are ‘loopholes’ that depending on your moral standing you can make yourself quality for (like making your child an independant etc..). But you need to be making those decisions and setting things up for it – LONG in advance. for instance – someone who is independantly wealthy – but only generates a minimal income on paper – Mr. MM comes to mind – would be able to have the parents income disqualified. Which is basically the key to getting grants versus loans
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What do you mean by “make your child independant”?
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It’s not easy to make your child indendent for financial aid purposes (if the child is truly independent, then the parents’ income and assets will not be assessed in the aid formula). People often think that they can simply make the child independent (or that the child is independent for aid because they are independent for tax purposes), but independence is determined by the questions on the FAFSA (age, whether the child is married or has dependents him- or herself, etc.). If answering the questions pertaining to independence (honestly) does not result in the child being considered independent, then you can’t simply call the child independent.
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Great post. I completely agree on point #1. Higher education really has become a big business and I think many times it can be lost in the shuffle that it should be to benefit the student and not all for the school. One other thing to look out for for aid is that there are many businesses/organizations that will give scholarships out as well. I am not certain how that would look like from a taxation perspective, but would generally be much better than a loan.
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2 other points to remind borrowers of:
1) Loans are often awarded for a substantial amount ABOVE the true tuition cost to cover “living expenses.” These awards will be paid out by the school if you do not decline some portion of the award, possibly DOUBLING your debt obligation after graduation. They make taking their money far too easy.
2) Annual loan amounts are limited, and the total will be split between the two main semesters unless you take action. Decline some loan amount if you plan on attending summer sessions and cannot afford to pay cash for them.
And a correction to #14: According to the IRS, there is a Tuition exemption to the gift tax if that amount is paid directly to the institution on behalf of the recipient. This eliminates the loan amount on hand being counted as an asset of the student (they never possess it), and the obligation to pay taxes on interest income associated with a legitimate loan arrangement.
(Disclaimer: I am not a certified financial professional, so please research your individual situation prior to making a decision. If you make financial decisions based solely on a blog comments section you probably deserve whatever happens.)
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Ben,
Just to clarify – for your edification as well as for whomever else may read this post – payments for tuition and related expenses made DIRECTLY to the school WILL avoid the limitations on annual (tax-free) gifts, but any direct payments will be treated as a “resource” of the student and reduce financial aid eligibility (or awards) on a dollar-for dollar basis. So they are generally not a wise idea for those who may be eligible for financial aid, but could be used by those who are ineligible or who aren’t applying or don’t care about aid.
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Mr. Hayes,
I think we both stand corrected. Payment directly to the school could affect the FOLLOWING year’s FAFSA. Further, not all schools will adjust FinAid after the fact in reaction to a direct payment.
An alternative would be for gifts to be made at the $13,000 tax-free cutoff following graduation to assist the student in paying off their loans. This avoid tax and FinAid obligations.
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The income calculation for my husband (a full time student) changed a lot after we got married because suddenly he went from being eligible for Pell Grants and a very low income to an average income (cause it now includes my salary) and now he doesn’t get any grants at all. One thing that I have noticed is that it’s hard to find guidance on financial aid and paying for college for adults who aren’t getting any assistance from their parents. Most info is for parents to find out about getting loans for their kids or having kids get their parents to co-sign. But for adults trying to get loans as full time students its hard to get approved (at least that was our experience) and grants are now non-existent.
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This is so true! My husband and I both went back to college after our kids were born. The financial aid office basically had no idea what to do with us. I had tuition reimbursement, but needed to take out a loan to pay for child care and transportation costs in order to go. My husband amazingly got a scholarship, but the aid office kept telling him he needed his parents to sign things and generally not getting it.
Probably your best bet would be the aid office at a community college where adults are a core part of the student population.
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Your husband should fill out a FAFSA and see if he will qualify for Stafford Loans. I’m in my 30′s, and have a relatively healthy household income, but still qualified for a substantial amount of aid as a graduate student.
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This is good information.
Note: if your graduating child wants to go to college and you’re not planning contribute toward it, they’ll need to go through certain processes to establish themselves as not a dependent in order to not have your income included in the determination. This includes NOT being a dependent on your tax return for a certain amount of time before applying for financial aid.
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You also have to cut off your child’s medical insurance if you want them to be independent so you need to take that into consideration.
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For clarity, here are the standards you need to meet to be declared independent:
– Be 24 years of age or older by December 31 of the award year;
– Be an orphan (both parents deceased), ward of the court, or was a ward of the court until the age of 18;
– Be a veteran of the Armed Forces of the United States;
– Be a graduate or professional student;
– Be a married individual;
– Have legal dependents other than a spouse;
– Be a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances.
Directly from Fastweb. Link: http://www.fastweb.com/financial-aid/articles/699-fafsa-and-the-independent-student
They are pretty similar to the questions on the Fafsa.ed.gov site, only the ones on the government site are phrased in the opposite manner. Basically, it’s pretty hard to be declared an independent student if you are under 24.
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Unless you marry the love of your life at 20 (like I did…;))
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What’s the effect on the Expected Family Contribution of having more than one child in college? We haven’t needed financial aid yet for our older son, who has a generous scholarship that covers most of his tuition. We’ve been able to handle the remaining costs out of regular income, but that will change when our younger son goes to college next year. Even if he gets a scholarship like his brother’s, we’ll still need more money to cover all the costs.
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As I recall the total amount you are expected to pay goes up, but it typically is less per child. That said, all it honestly did for us is that our children’s federal loans went from being all being unsubsidized to half of the new loans being subsidized. They’ll save some on interest, which is okay, but it didn’t make a huge difference overall.
Frankly, I’ve lost all faith in college financial aid offices. When I was in school the first thing the FA people did was look if I qualified for grants and scholarships and worked with me on that. When my child asked the FA officer about grants and scholarships they brushed them off with a five second line about looking those “things” up on the internet and then turned to me and spent five minutes talking up Parent PLUS loans, how I can take equity from my house for my child, etc.. Didn’t once ask about our income, expected family contribution, or child’s major. Nope, just straight to “make Mommy and Daddy pay for it so the college doesn’t have to”.
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I’d like to point out something that you missed. Federal student loans at this point likely carry higher interest rates than some private loans. But this doesn’t necessarily mean students would do better to borrow a private loan. Federal student loans offer forgiveness provisions and flexible repayment options that usually do not come with private loans. The reality in life is that sometimes you have to pay more to get a better product this is the case with federal student loans.
I’m a little concerned, however, that you’re giving advice on how to best work around the federal financial aid regulations. Perhaps this is best for the student. But not necessarily fair to the taxpayers.
Perhaps I take offense because you seem to think that all financial aid professionals are bad guys. I assure you….most of us really do have the best interest of the student in mind.
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You are worried about people working around the financial aid system yet the system actually penalizes you for doing the “right” thing. If your child works during high school and saves thousands of dollars to use for thier college education it is counted against them…even work study opportunities. If your child works during high school and spends every penny they get, it benfits them when it comes to aid.
The system also doesn’t take into consideration your extenuating circumstances unless they are recent. For the first 14 years of my daughters life we spent approx $120,000 out of pocket for medical expenses that kept her alive. Because of this we are unable to help her with tuition or room and board. No one was interested though because the last four years were uneventful. Yet the government seems to think we can.
It is really hard not to look for the loop holes with this type of system.
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“If your child works during high school and saves thousands of dollars to use for thier college education it is counted against them…even work study opportunities.”
I think the best way to answer this is to have the child go ahead and pay their money to the university (say they have almost one year paid for) and THEN apply for aid, after they have $0 in savings. If they have too much in savings due to hard work, they will get nothing. The school will try to get you to apply at the beginning of the school year, but I think it will work better after the child has spent it all on tuition. He/she then has a better chance at a grant.
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that doesn’t work though. grant money is first come-first served. it is often gone by march or april the year before.
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I can see that it won’t really let me reply to Kitty, so just let me say that my kids have all applied for and received the full Pell Grant…they applied the summer before or finished up the application the school year that they were in. For example, for this school year, we were actually earlier than we’ve ever been, and my daughter got the Pell Grant in July for 2012-13. In previous years we’ve not been as quick, and got it applied to the kids’ accounts by Dec. of the school year they were in. Each time they’ve gotten the full amount for the school year they were actually in.
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I disagree that it isn’t ‘fair’ to ‘the taxpayers’. The goal (ideally, though not always, of course) is that educated members of society benefit ALL of that society. Additionally, a degree generally helps the graduate earn more, hence eventually pay more taxes.
Unfortunately, many of the ‘systems’(financial aid, health care, legal, etc) in our society are set up to punish those who follow the rules. Depressing but true. However, this blog is not about breaking the rules or exploiting taxpayers, it is about understanding those rules in order to make the wisest choices for each person’s situation.
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Great article. It would useful to see something similar for independent students/adults going back to school and facing the prospects of loans. I know some of this info still applies- but there are some differences as well. I am trying to figure out how to save up enough money to pay for school outright and avoid loans- but I also want to be eligible for scholarships which are often need based not merit based.
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Another point I’d make is that you might be able to negotiate with the financial aid office once they determine your financial aid package, especially if you can tell them about other competing offers from various colleges.
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In addition to the advise in this blog, I would like to add a few other points.
1) Find the numbers for entering freshman class, and then check to see the size of the sophomore class. Why? Financial aid packages at some schools change after you are no longer a ‘fresh’ recruit. I know a few people who were given very generous packages their first year, to have them cut back in the second because their ‘financial situation’ changed. Not really. The parents were still making the same amount of money. This actually goes back to a point in this blog and the comments about knowing what your EFC and your expected contribution is as a student. If they are you giving you more aid than you need in your first year to get you to choose their brand, you and your parents could be in a bit of a surprise and adjustment period in the second year. Regardless, if there is a huge decline in numbers from freshman to sophomore years at your college of choice, you’d best find out why to make sure you won’t become one of the dropouts (it could be financial, it could not be). Financial aid is yearly and their isn’t necessarily a guarantee for the next year, at least in several of my friends’ experiences at other colleges.
2) If things change, and you are in a pickle, do go to the financial aid officer. But first, if you are at a small college, and you are doing very well, go to your dean’s office or academic advisor’s office first and then get referred to the financial aid officer. It is hard to know and do, but if you have an administrator’s ear, it can be helpful when dealing with other administration.
The second point I made above is from experience. Midway through my freshman year, my parents began a divorce. It was ugly and nasty, and both were playing games with their finances and could/would not pay my expected family contribution, nor would they disclose the finances to me or the university. I needed additional loans or an adjustment or I would have to drop out. Adding salt to wounds, they also both tried to claim me as a dependent on their tax returns that next year. Though I was at a very small college that prides itself on retaining students and social advancement, when I stopped in to the financial aid office well before my bill was due, the person I had an appointment with said there was nothing they could do, as I came in as a dependent and would be considered that for the entirety of my college career. They were very sorry, but could do nothing.
Well, it just happened that at my college, the dean’s met near the end of the term with their new students before the actual end of term, before grades were officially out to talk to their students about their progress and expected grades and to see how things were going. I was doing great academically, but I told my dean I was going have to drop out due to family issues. When I explained, just as I had to the financial aid officer, a new world with an entirely different power structure opened to me. The next day I had a meeting with the head of the financial aid department, they then supplied me with a lawyer to emancipate me from my parents and get my expected family contribution to zero, and I stayed in college. The spring semester required more loans for me, but in the end my college costs became what I could manage to do on my own. I took out a total of 30,000 in loans altogether while in college. I now have a Ph.D., no debt, and a great appreciation for people who helped me and the phrase, “Don’t take no for an answer.” And a lot of pride of course.
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#3 – sorry to be nitpicky about this but it says:
“Most aid today is self-help aid.”
Loans are 46% of all student aid nationally as of most current data for 2010-2011.
ref:
http://trends.collegeboard.org/student_aid/report_findings/indicator/Total_Student_Aid_by_Source
And for undergrads loans are ~40%.
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Jim, thanks for sharing that resource. However, you mis-read it: it says that FEDERAL loans contintute 46% of all post-secondary financial aid. That does NOT mean that loans in general are only 46% of financial aid.
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Private loans are a small fraction of the total student loan market.
Nonfederal loans were 7.9 billion out of 111.9 total or about 7%. If you add in nonfederal then loans are up to 48% for the whole.
Still undergrads take far lower loan amounts with nonfedeeral loans added they’d go up to around 41%.
All the data is on the college board site.
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What a great list of things to know. Thanks for sharing!
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As someone who has been through the financial aid process for the last two years with my daughter, with at least two more coming up, I’d like to share a little bit of what I’ve learned.
First, retirement money that it already in your accounts is not counted against you, BUT money that you’ve put in for the year you are completing the FAFSA for is. In other words, the money I put into my Roth last year was added right back into my income. I guess it’s considered optional to save for retirement during your children’s college years.
Secondly, work-study is really not all that it’s cracked up to be. Since it’s earned during the year by the student, the family still has to come up with the amount of work-study at the beginning of the year to pay their tuition bill(or at least half of it, for the fall semester). In reality,most students use their work-study for spending money. The other issue with work-study is finding a job. There are not separate jobs just for work-study students, and the student has to hustle to find his or her own job. My daughter was lucky—she was awarded work-study at first, but it was eventually removed from her pkg. due to scholarships–more on that in a bit. She found a job anyhow, but some of her friends who were awarded work-study did not find jobs.
Outside scholarships—if you think your student will qualify for a lot of outside scholarships upon h.s. graduation, remember that most of them are one-time only, and find out how your college will treat them. My daughter was lucky in that her school used them to replace some of her loans and work-study, but some schools use them to offset grant money, which really stinks.
Also, remember that just because your FAFSA form gives you a number for your EFC, that does not mean that is all you’ll be expected to pay. Oh, no—not by a long shot.You can research ahead of time which schools are generally good at meeting need. I wish we had paid more attention to those numbers. Most schools leave a “gap” beyond all the self-help aid and such. One of the schools my daughter was accepted at left a $20,000 gap that I would have been expected to fund. Nope, she didn’t go there. I would advise researching and then casting a wide net, because schools are so different when it comes to aid. One of the schools where my daughter was a top applicant did not give her their highest merit award, which had us scratching our heads. OTOH, we weren’t sure what if anything she would be awarded at her top pick, and she ended up getting their highest merit award.
And, for divorced parents, be sure to be aware of which schools require the CSS Profile form in addition to the FAFSA. There aren’t many of them compared to FAFSA only schools, but many of the top schools in the country require both, and expect both parents to contribute. My daughter was unable to apply to some of her top choices because her dad was not willing to fill out the forms or contribute to her college education beyond what he was court ordered to.
Lastly, I’ve often heard it said that sometimes,with aid, private colleges can be as cheap as public ones. I don’t think it’s really as true as it once was (if it ever was), but I know from first-hand experience it is possible. My daughter had a full tuition (not room and board, though) scholarship to our state university. Her dream school awarded her enough grant and scholarship money so that it was just slightly more expensive than our state school. Like I said, pay attention to those financial aid ratings in the guide books and cast a wide net.
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“There are not separate jobs just for work-study students”
I had a work study job in college. It was treated differently and only open to students with work study. The official work study program should have jobs may have jobs set aside only for work study. Thats how it worked at my school. The federal/state government pays most of the wages. Maybe the university in question just didn’t have open work study jobs or maybe they just didn’t treat work study different than other jobs. But with the government paying a large % of the wages, you’d expect the school or at least the department to only want the subsidized work study students.
But having said that, I do agree that work study jobs aren’t necessarily anything special. Its still just a job, wages aren’t necessarily any better than any other job and you do need to go find the job yourself. They don’t just hand you a job.
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jim,
I think the work-study regulations have changed in the last couple of years. From what my daughter’s school told us, there are relatively new federal regulations that no longer permit them to have a saved pool of work-study jobs. I personally think that’s a little nuts, but that’s what we were told. You are right that the school does get a subsidy for the wages. Maybe the financial aid person who commented earlier can clarify if schools are able to reserve jobs for work-study students, or if all jobs must be open to all students, as we were told.
Oh, I also forgot to mention one clear advantage that work-study DOES have. Those wages are not counted as income on the FAFSA, but other wages earned by the student are, and regular income earned by the student is assessed at a much higher rate than even their parents’ income for financial aid purposes.
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I has been a long time since I went to college and I only vaguely remember how it worked. going to my university’s website they have a listing of work study jobs. I guess they might be required to allow other non work study students to apply to the jobs, but I can’t see how that would work really as they wouldn’t qualify for the subsidy. But I really don’t know how it works.
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“I’ve often heard it said that sometimes,with aid, private colleges can be as cheap as public ones.”
This is true in my son’s case. He’s going to an expensive private college just a few miles from our home. Because of the generous merit scholarship that the college is giving him and the fact that he can live at home, it’s cheaper than the nearest 4-year public university because he’d have to pay for housing if he went there. If a college really wants a particular student, they will find a way to make sure that he or she can afford to come.
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Our son just graduated from undergrad, moved home, is now delivering pizzas while he studies for his lsat. His plan is to live at home for a year and save all his wages for school. Spouse and I are trying to pay off our mortgage and fully fund our retirement. Paying for law school really isn’t feasible. Any suggestions for how he can be treated as an “independent” ’cause he really will be when he goes to law school (probrably out of state since I can’t seem to talk him into living at home and going to our in-state law school). Thanks much.
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I believe grad students are automatically considered independent. And, if he’s in law school, they will usually give him a living stipend (they don’t want future lawyers delivering pizza instead of studying case law).
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All grad students are not considered independents and grad students are treated entirely differently than law school students. I am not aware of any stipends being given out to any law students. If you know where this has actually happened, please do let me know. It appears each law school is different and some will treat students as independent at the age of 24 or 26 while others simply won’t.
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I’m in law school at the moment. I don’t have to put my parents’ information on my FAFSA anymore, although I am still dependent on them and a dependent on their taxes.
I’ve never heard of a law school “living stipend” (that would be pretty great if it existed though!), but you can always take out unsubsidized federal loans that include living expenses. Also, he likely won’t be able to work his first year. They told us that our financial aid and our enrollment would be in jeopardy if they found out we were employed in first year. Would they actually ever know? Probably not. Would anything probably actually happen if they found out? Probably not. So it might be worth the risk.
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Samantha,
Thanks for the information. Do you mind telling me how you are “independent”? Did you qualify by age, marital status or veteran status? Our son will only be 23 years old, single and not a vet. He isn’t planning on working his first year in law school so he’ll have to finance all his living expenses and tuition, etc. I really want to see him keep his loans as low as possible. Law school tuition these days is insane. Thanks.
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Sure – I was only 21 when I entered law school (turned 22 during that year), single, and not a veteran. You’re automatically independent for law school: http://www.lsac.org/jd/finance/financial-aid-applying-for-aid.asp (“All graduate/professional students are considered independent of their parents for the federal loan programs.”) I just checked last year’s FAFSA, and it’s only got my information. There’s an optional parent’s info section – I don’t know who would ever take that option!
Federal loans go up to $20,500 but they’re all unsubsidized now. (http://www.lsac.org/jd/finance/financial-aid-options.asp)
And just my personal view, when he starts applying, if he has to pay 100%, it’s not the school for him.
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Samantha,
Thanks again for the info. I agree that if he has to pay for everything that may not be the law school for him. We’re still new to this. He hasn’t even taken the lsat so we don’t know what kind of scholarships he may qualify for. I’m just trying to learn the system in advance so I can help him get prepared since we are not in a position to help him financially. If you wouldn’t mind, and only if/when you have the time, would you email me at jtarkm@aol.com and tell me what I should expect with all this? It’s totally over my head. Thanks much.
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We are a blended family. Would filing my taxes as “married filing separatly” increase my childs chances of receiving more aid? Or would we still need to include my husbands earnings? My child has not been adopted by my husband.
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I haven’t gotten to read this article til now, and wanted to respond – as you’ve already probably figured out, all schools are different, but no matter how you file you have to report your husband’s income on the FAFSA. Also filing as married filing separately or head of household sometimes triggers the financial aid verification process, in which you’ll have to bring the school your 2011 tax return transcripts from the IRS (schools aren’t supposed to take the plain old tax return forms anymore, like the 1040, 1040A, etc).
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#16 – You do not have to “accept” the full amount that you are awarded in federal loans. Figure up the cost of base tuition, estimated books, room, board (dorm) and tech fees, and politely REJECT any loan award amount that exceeds this figure. This is what I did for my MBA, and now, when I graduate, I’ll only have roughly $21,000 to worry about repaying instead of $40,000 (which is what I was originally awarded).
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The system completely screws students whose parents make a good income and don’t contribute to their child’s education/living expenses. I’m not saying that it’s a requirement but keep in mind how much more the student will be charged in interest over the course of going to school. The unsubsidized loan at a higher rate was my only option because my step-father made decent money (wish they had held off on marrying as I was a Sr in high school when they did). If you can’t pay for tuition, consider making payments towards the interest of those loans while your student is in school. Also consider factors that negatively affect your child, like getting married. Not only did my mother not help but she significantly harmed me financially.
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Meghan,
That stinks. Thanks for the tip re: at least paying off the accruing interest.
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Something else to note about the paying-for-college process: in my experience, freshman coming into a 4-year school right out of high school have a much better shot at scholarships than transfer students.
I took the two years of community college route in order to save money and acclimate myself to college, since I had done a somewhat non-traditional high school program. Having had a 3.9 in high school and a 4.0 getting my associate’s degree, I figured I would be golden for getting a good chunk of my next few years of school paid for by the university.
Not so much. I did get a scholarship that seemed to be a default award for transfer students with high GPAs–somewhere around $3,000 a year, I think. I eventually received another scholarship, but I had to fight for it–and apparently it only went to me by special exception after several other people had declined it. Meanwhile, the local newspaper was publishing lists of scholarships that years’ class of high school seniors had received–$20k and $30k per year packages to my school!
Every year applying for financial aid seemed to be the same–no more departmental scholarships left for the incumbent students, despite straight As.
Ultimately, there were a few things that helped. Number one was unquestionably the generosity of my parents, who shelled out several thousand per year to the school in addition to helping me somewhat with living expenses. The second was actually going to the financial aid office and asking for more scholarships–they eventually found that second scholarship they were able to give me. I also secured a couple small scholarships from extracurricular activities I participated in. While not a huge amount, getting $500/year from a choir scholarship was better than nothing. (Something else I owe to the generosity of my choir professor, who found room in her budget to help me out because she had witnessed my reliability and dedication to the program.) Once I hit the year I would turn 24, I was eligible for a Pell Grant which ended up being an almost-free ride that year–and I got an additional surprise with a $6000 addition to the Pell Grant for students excelling in science/technology/engineering/math fields. (Sadly, that grant has since been discontinued.) Spending money and living expenses were filled in with an on-campus job tutoring. Once again, I found out that it pays to be good at what you do and make your case for needing more money–I was able to talk my supervisor into giving me an extra $1/hour since I had already capped out our certification based raises and graduated, and since I was taking on a significant extra workload because they needed someone else to take a class at the last minute.
Ultimately, I made it out of school with only about $4000 in student loan debt, that being from after I received my bachelor’s and then took another year taking a couple graduate courses on the side. I appreciate my parents so much for helping me out with college–I know I wouldn’t have been able to do as well if I’d had to, say, work full time to support myself while going to school. And it’s definitely a relief not to be burdened with $30k of debt now that I’m working and making it fully on my own.
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