Ep. 21 Financial Aid Myths & Tips
Today’s episode is with a retired Rutgers financial aid administrator who helps to debunk
college financial aid myths and gives valuable tips toward paying for college. Mr. Thomas Holmes retired from Rutgers University in 2010 and has started his own educational consulting business, Powerful Visions, LLC. This is somewhat longer than our usual episodes but well worth listening to from beginning to end.
Myth #1 Parents have to wait to file their taxes in order to complete the FAFSA.
WRONG. The FAFSA will be available beginning January 1, 2016 (and thereafter available as early as October) and you can use the previous years tax info to “estimate” what your tax liability will be.
Myth #2 You HAVE to take out a student loan to pay for college.
WRONG. An offer of a student loan can be part of the “financial aid award package” from the colleges that you apply for, especially if your need exceeds the cost of college admission (tuition + room/board/fees). You can actually turn down a student loan if you have secured enough money to meet your financial need from outside sources such as scholarships.
$30,000 is the cost of college
$5,000 is your EFC (expected family contribution) subject from above =
$25,000 is your financial need
$20,000 is the max you may be offered from federal and institutional aid=
$5,000 is the amount you are short to meet the cost of college.
It is at this point you may be offered a subsidized loan (interest free until graduation)
Myth #3 I can’t or shouldn’t apply for financial aid because my grades are not that good. Grades are not a prerequisite for getting financial aid. They are important when maintaining credit and satisfactory progress while in college.
Myth #4 I can’t change how much financial aid that I am awarded.
WRONG (Sometimes). You have the ability to file an appeal with the school and have them reconsider the amount of aid that is awarded. They may not have any control over the “state aid” but given certain circumstances, may award you more federal or institutional aid.
Myth #5 We make too much money to get financial aid, plus it is too much of a hassle.
WRONG (Almost). Everyone is “probably” eligible for something even at higher incomes such as over $200k, depends on what kind of school you are applying to. The FAFSA is easier and simpler than ever to complete online.
Mr. Holmes’ tips for students/parents:
1. States may audit you and require additional info related to your assets before they award you financial aid.
2. Be smart about your assets, “[spp-tweet tweet=”if they can see, they will count it”.”]
3. Be aware of outside sources (scholarships) and how it will affect your award.
4. Start being intentional with your child’s academics and extra activities while they are in middle school to build up your “profile”.
5. Take your children on college tours while they are a freshman to get used to the concept.[spp-player]