Financial Aid Introduction
This isn't Kansas
Often families look to the government for financial aid much like Dorothy sought the mighty Wizard of Oz for answers. Here's some terminology to help you navigate your way through this new Land of Oz:
- Check out my
since all federal student aid programs use that methodology. EFC, Expected Family Contribution, is the key result to remember because it is referenced frequently in virtually all forms of free college money.
- An increasing number of more selective colleges use an additional form called a
This a a very detailed and often intrusive look at a family's finances. This is a private service run by the College Board and is not run by the government.
- It is very important to recognize that the term "financial aid" as used by the colleges includes loans (more on that below!) These loan programs include interest accruing either at the point of the loan is taken out (unsubsidized) or after graduation or no longer a full-time student (subsidized).
- Federal student aid also includes federal work study programs. These are cash payments for work for on campus jobs.
- Lastly, grants and scholarships are gifts to the students and do not need to be repaid. These can be from government (federal or state) sources, college's own funds they control, or private organizations.
Avoiding the Pitfalls of Financial Aid
Just as Dorothy found out that the great Wizard of Oz wasn't all that great, many parents naively follow the yellow brick road to financial aid awards. Here are the biggest pitfalls to avoid in your journey:
- Loans are thinly disguised as financial aid. Working adults in the real world know the difference between financial aid (free money) for college and loans that you have to pay back. College staff who live in this Land of Oz equate loans with financial aid - and mislead many families as a result.
Parents and students who don't separate firmly in their minds the free money from the money they have to pay back often make financially perilous decisions as the college decision time line accelerates.
- The federal government is really in the loan business. Because of the drastic cutbacks in direct free money for college over the last 20 years the government has stepped in to shift most of the financial aid pie from direct aid to loans. For families whose EFC qualifies subsidized interest programs are available. However, since this is often not enough it backs additional forms of student loan programs. Under the guise of cost savings, recent legislation even removed banks from their intermediate lending role giving the government another important industry they now control.
- Federal student aid is NOT the biggest source of free money for college. School based grants are very often much bigger but parents don't know how to tap into them.
- All colleges are NOT a good investment. With the continual rapid rising costs of colleges, this is a frequent marketing line colleges use to justify their high costs.
Even if a depressed new college hire job market would rebound taking on HUGE levels of college loans is NEVER a sound investment decision for your student or family. The heavy repayment burden and total cost of college including the interest makes it nearly an impossible math problem to solve in today's economy.
- There is no "Truth in Lending Act" for colleges to follow. After having just refinanced my house, it's unreal the number of consumer disclosures. Similar disclosures exist for buying a car.
However for one of the largest consumer purchases a family will ever make, uncollateralized college debt has very little similar consumer protections. From teaser admissions offers to the seminars provided by colleges it is a buyers beware market.
As one example I believe at the very least a personal financial education program for students on truly understanding the major impact these large loan decisions will have on their future should be offered. I have yet to find a single college that cares enough for their students financial health to offer one beyond a short video. Please contact me with the name of the school if you find a high quality program for students.
Key Planning Factors
Through trials and hardships, Dorothy and her friends found out that they possessed within themselves the most important qualities required to reach their goals. Families seeking to lower their out of pocket costs for college can save themselves enormous time and frustration by doing the same.
Here are the key factors in developing a solid college payment plan and how you market your student to colleges of their choice:
- Parent and student income
- Parent and student assets
- Family size
- Student grades
- Student SAT and/or ACT scores
- Student special talents and abilities
To find out more about how these factors influence your ability to minimize college loans be sure to view my
free webinar on the sources of free financial aid.
Free Governement Money
Go To Home Page
What Clients Are Saying
| “…without your involvement, we never would have thought to approach the college directly…. We got the documentation together to obtain residency, created letters to send and were granted residency which translated to $20,000 in savings. |
THEN we went back and said, 'don’t take away her out-of-state scholarship just because she is now a resident' and got OSU to maintain the $7,000 scholarship".
| "We would like to express our appreciation for the service that our daughter received.|
She is our first child to go through the college application process, and it was very intimidating for our whole family. You were able to create a clear, understandable path for our daughter.
As a result of all of this hard work, our daughter was offered three presidential scholarships at various colleges, including a full tuition scholarship to a private college.
Thanks again, and we look forward to working with you on our son's upcoming college search."
|"HWS presented an above average financial aid award, however, it included some work study. With your guidance, I went back and asked that the work study be converted to either grant or scholarship to relieve the financial burden while allowing my daughter to focus on academics. |
They came back with the conversion AND continued to keep her eligible for an equal amount of money through work study."