Parents are “freaking out,” and well they should be about the costs of sending a child to college. College costs are rising much faster than inflation in general, and the projected costs for four or five years are staggering — more than $120,000 for public schools and more than $250,000 for private schools.
Well, you’ll be glad to know there is help, and even people with relatively high incomes may still qualify for some financial aid. There are two free, informational workshops next week — from 7 to 8 p.m. Tuesday at Bishop Diego High School and from 7 to 8 p.m. Thursday at Santa Barbara High School — where interested parents and students can learn how to navigate through the confusing maze of college funding.
Most college needs-based financial aid comes from government, which last year made available more than $110 billion, and added to that was more than $80 billion of institutional money. In addition, there are many millions of dollars of aid for students with academic, artistic and athletic talent.
To get any needs-based aid, the family must complete the Free Application for Financial Student Aid (FAFSA) form, which calculates a family’s need based on factors such as a family’s income, assets and number of children in college. Each family is assigned an Expected Family Contribution (EFC), which is the portion of the total cost of attendance that the family is expected to pay. Money held in retirement accounts, 401(k) plans, annuities and permanent life insurance are not counted as available assets, nor is home equity. There are strategies for repositioning assets, thus reducing the EFC so that a student could be more eligible for financial aid.
Often families will accumulate money for college in the child’s name, in UGMA accounts, and children take summer jobs and put money aside for college. It is a surprise to many when they find that those assets in the student’s name count over three times as much as assets in the parent’s names and can result in markedly smaller awards of financial aid. Again, there are smart strategies that can be utilized to maximize the financial aid package.
The FAFSA form can be submitted to those colleges where your student has applied right after Jan. 1 and the final deadline is June 30. However, timely filing is important as many schools require the form earlier in the year and awards are given on a first come, first served basis. The FAFSA form was “created in 1992 to simplify applying for financial aid and it has become so intimidating — with more than 100 questions — that critics say it scares off the very families most in need, preventing some teenagers from going to college,” according to The New York Times.
We are senior advisers for 123 College, an organization that, since 1994, has been helping parents and students plot a course through the complex maze of obtaining student financial aid. We have the largest database of college financial aid data and in addition to helping parents with the timely and correct filing of the FAFSA forms we have extensive knowledge of schools with the most money to give. Oftentimes parents are surprised to find their child can attend a private college for less money than a public school because the private schools have access to institutional money from endowments that public schools do not.
We also help analyze award packages from competing schools. It is important to evaluate what portion of the financial aid package is in the form of grants, which never need to be repaid, as opposed to certain types of loans. Some government subsidized loans defer interest until graduation, whereas others start accruing interest right away even if repayment is delayed until after graduation. Most student loans are given to the students, but parents may also borrow to help with the costs of college.
Our last two workshops of this financial aid season are coming up next week. Students and parents from any school may attend. At each event you’ll learn:
» How to navigate through the confusing maze of college funding.
» How to lower your out-of-pocket costs and get the maximum amount of money from each school.
» The dos and don’ts of FAFSA preparation.
» How to pick colleges that will give you the best financial aid packages.
To attend either workshop, RSVP by calling 805.569.7666 or email firstname.lastname@example.org.
— Brent Anderson CLU, ChFC, is the CEO of Anderson Financial Solutions & Insurance Services, in Santa Barbara, and is a 40-plus-year veteran of the financial services industry and a frequent speaker at financial forums, seminars and workshops.