Parents

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CFG in the Times-Dispatch

The Richmond Times-Dispatch ran a good story about paying for college – another excellent article by reporter Karin Kapsidelis! Here are a few excerpts with a link to the full article:

A primer on student debt — Know your options

High school seniors weighing financial aid packages may be excused if they feel they already need a college degree to understand what they’re getting themselves into.

Financial aid, a mix of loans that must be repaid and grants that do not, is designed to lower the sticker price if not the eventual shock.

Here’s advice from a higher-education administrator, a financial adviser and a student on how to avoid pitfalls that pile on the debt:

Also contributing to the debt problem is the way in which students receive what’s left of the loan to cover their expenses after colleges deduct tuition and fees, said Jonathan West, director of College Funding Group in Richmond.

This money is part of a student’s loan, but it is oddly called “a refund.”

“It’s misnomer,” West said. “You always know around campus when the refunds are in because it’s like payday for 18-year-olds.”

The refund is meant to last a semester, but at some schools it goes on a debit card and even the student ID, “and all they need to do is swipe it,” he said.

“It’s convenient, but it’s really too convenient,” West said, especially with no one looking over a freshman’s shoulder to see whether it’s spent on pizza or a textbook.

“There’s nobody intervening,” he said, to tell the student “you’re going to be paying this back for 10 years. That Domino’s pizza is really expensive.”

Graduate in 4 years or less

It’s the ultimate strategy to lower the cost of attendance. For a 120-credit bachelor’s degree, that means taking 15 credit hours per semester, but they have to be the right courses.

So be deliberate about your course selection: Don’t sign up for classes just because they sound fun, [Luke] Schultheis said.

Apply for scholarships

Students too often think a scholarship for a few hundred dollars isn’t worth their effort, but win a few here and there and they add up.

That’s been the strategy of [Lorraine] SantaLucia, who said all her awards will allow her to graduate without debt.

SantaLucia, whose scholarships have ranged from $250 to $5,000, founded the group Scholarship Sharing to spread her philosophy. She hopes to turn the idea into a nonprofit when she graduates.

Her advice: Shop local for scholarship opportunities. The offering from a local organization may be smaller, but you’re not competing against thousands of other students to win it.

Students who do that often earn more credits than they need but not necessarily the ones required to graduate on time.

Some schools, including VCU, have software programs to help students stay on track with the courses necessary to complete their degree program.

Fill out the FAFSA

FAFSA — the Free Application for Federal Student Aid — is the starting point for receiving all types of aid, including need-based grants, federal student loans and the Plus loans for parents.

Some colleges also require the PROFILE, administered by the College Scholarship Service, to determine how they will award institutional financial aid.

PROFILE takes a deeper look at a family’s finances. While FAFSA doesn’t include a family’s retirement accounts or home value, PROFILE does.

West recommends listing a realistic value for your home — what you would expect to get in a quick 30-day sale.

And because a student’s assets will factor into aid awards, it makes sense to use those funds to buy a computer and other college necessities before filing either the FAFSA or

PROFILE forms, he said.

Start planning early

Part of the problem is that “colleges let you in and then tell you how much it’s going to cost,” West said.

The worst time to decide how much to borrow is after the acceptance letter is received, but that’s what many families do, he said.

“They don’t figure out how much they can afford to borrow. They just borrow what they need to borrow,” he said, with long-term repercussions for the family’s finances.

“Money shouldn’t be the sole determinant, but the truth is, for many families it is a very important factor,” he said.

West recommends beginning to narrow the “college universe” based on affordability in the 10th or 11th grade with the help of the U.S. Department of Education’s FAFSA4caster, which gives an early estimate of eligibility for aid, and with the net-price calculators that schools must post on their websites.

The best of these calculators incorporate the college’s resources, philosophy about aid, government grants, and possible merit scholarships all into one summary, West said.

But be aware: The calculators are also marketing tools, because higher education is a business, too, he said. “It’s not all warm fuzzies and ivy-covered walls.”

Parents often think their bright teen will coast through with merit aid, but that’s unlikely. West describes merit aid as a pot of money that colleges use as an inducement to enroll the most desirable students.

“They want to give you just what it takes to get you to attend, but not more than that,” he said.

 

Full article:  Primer on Student Debt

 

FAQ – Frequently Asked Questions

What is a college funding plan?

A college funding plan is your road map to paying for college.  It answers the two big questions:  “How much does college cost?” and “How do we pay for it?”

Why do we need a plan?

You only need a plan if it is important to you to keep a lid on college costs so they don’t spill over and hurt your other financial goals and objectives.  If that’s not a big deal to you, you can wing it.

Doesn’t our financial plan cover paying for college?

If you mean a comprehensive financial plan (only about 1/3rd of people even have one, and fewer than that actually follow them), then it probably does have a section on education.  However, a good college funding plan covers far more than just saving for education.  When your plan was put together, did you know exactly where your teenager would be going to college and what that college would cost?

Don’t we just have to pay what the college says we owe?

Yes, when you get the invoice you have to pay it. However, “what the college says we owe” is a moving target.  Your invoice will be different than that of other students, in the same way your airfare is different than other passengers. 

A good college funding plan addresses ways to reduce what the college will say you owe, well before the invoice arrives.

What goes into our plan?

The first part of your plan will focus on what college will cost your family – that’s different than what college costs.  In-state schools, out-of-state schools, selective private schools, community colleges all have different prices and different financial aid resources.  What you pay may be significantly different than another family of a student in the same class.  Your plan addresses ways to both figure out and reduce what college will cost.

The second part of your plan is to identify all available sources of money.  It is perfectly possible to borrow 100% of the cost of college (including spending money) from the federal government through student loans and parent loans, but is that wise for your financial situation?

Our checklist starts with your family’s cash flow and savings to see what can be reallocated to college costs.  What education tax credits will you qualify for? Do you have the generosity of a grandparent or other relative to count on? Do you have a 529 plan or prepaid plan? Can you count on income from a part-time job for your teenager? Can a tuition payment plan help?

These are just some of the items we examine. The important thing is that your plan includes all the items that are relevant to your family.

Loans can be part of a college funding plan, they just should not be the first thing you turn to.  Loans have to be repaid at some point, so you are going to need to come up with the money eventually.  If a careful analysis shows you have confidence in your ability to do that, loans are an option.

What about all the “other” costs of college, like books and spending money?

The extra costs are significant and can add up to thousands of dollars per year.  40% of families report having some major expense they did not expect.  Your plan should identify these costs and address ways to proactively lower them. 

Here’s a huge cost that is often a surprise:  the fifth year.  It is increasingly common, especially at state schools, for students to need an extra semester or two to graduate.  Nothing will blow your budget like an extra year.  Your plan should help keep you on track to a four year graduation.

Why don’t colleges tell us about all this?

Colleges can be wonderful institutions, but it’s not their job to tell you how to pay them less money.  That’s your job.  Fortunately, your college funding plan will do just that.

When should we get started with our plan?

Today!  What you can do will vary depending on the age of your child, but it’s never too early for information and it’s never too late to make changes.  Ideally, parents of sophomores and juniors have more flexibility than parents of seniors or current undergrads.

Our son or daughter has graduated with student loans.  Can you help?

Yes.  Student loan repayment is incredibly complicated and college graduates are not prepared to make the important choices that are required of them.  We go over the different repayment programs, cover the immediate and long-term implications, and help your son or daughter create a loan repayment plan.  As situations change, the repayment plan will also change.

Can’t I make a plan myself?

Yes, absolutely. A college funding plan is not incredibly complicated.  If you’ve been through the college process lately, understand how financial aid works and how to lower your net price, can tell when a financial aid award should be appealed, can compare the various and misleading aid award letters, are able to get a grasp on the 15+ education tax provisions and 10 loan options, know how to complete the FAFSA properly, and can manage your costs while in school, you do not need help.

Or, if you’d like help, or are just too busy for all that, we can get your plan started in about an hour.

 

 

 

Scholarship newsletter launches

We’ve just launched a new email newsletter focused on finding, winning, and using local private scholarships! If you’d like to subscribe so you don’t miss an issue, please click here.  You’ll get in-depth tips and advice as well as important input from area counselors.  Scholarship season is heating up, you won’t want to miss an issue!

Local scholarships are just part of the tremendous generosity in Richmond – thank you scholarship sponsors.

 

Priority financial aid deadlines for Virginia colleges

Make sure to check with your own school’s financial aid office to verify deadlines. The following dates are reported by college websites as of January 2014:

College Deadline
Christopher Newport March 1
George Mason March 1
James Madison March 1
Longwood March 1
Mary Washington March 1
Norfolk State March 15
Old Dominion February 15
Radford February 15
UVA March 1
VCU March 1
Virginia State March 31
Virginia Tech March 1
VMI March 1
William & Mary March 1
   
Emory & Henry March 1
Hampden-Sydney March 1
Hampton February 15
Hollins February 1
Lynchburg March 1
Mary Baldwin March 1
Randolph April 1
Randolph-Macon March 1
Richmond February 15
Roanoke March 1
Shenandoah March 15
Sweet Briar February 15
Washington & Lee February 15
 

How your FAFSA can be used against you

From our October newsletter

It’s understandable if parents are a bit jaded these days about college.  It seems like the schools hold all the cards – they don’t even tell you what it will cost you until after you are in, and then you only have a few weeks to accept. 

Talk about no transparency!  Admissions are a black box – incredibly qualified students are passed over in favor of others.  Why?  We figure there are reasons but it’s all so secretive.

Now there’s a shocking revelation about the FAFSAAccording to a story in Inside Higher Ed, colleges are using the FAFSA in a way it was never intended both for admissions and awarding aid.

Remember, the goal of a college in awarding financial aid is to give you enough money to say yes, but not one dollar more.  They have consultants, they have enrollment management programs, it’s all quite sophisticated.  They know you better than you know yourself it seems.

So back to the FAFSA.  When you submit the FAFSA, you need to list the schools you will send the information to.  You can list up to 10.  But how do you list them, in what order, and could that possibly be important?

We’ve been telling parents for some time that the order might matter, and we offer suggestions and strategies on how you might consider listing your schools, just in case.  Here’s why it matters.

To read the entire article, click here to subscribe – it’s free!

 

UVA – differential tuition by any other name

UVA has coined one of the best euphemisms of all time.  But what else would expect from our leading state university?  Instead of calling a planned tuition increase a tuition increase, UVA is calling it an “academic excellence fee.”  This makes you wonder if you can just choose the “average” education and avoid the fee.

The plan is not yet set in stone and has only been reported in the newspapers.  The fee for this academic excellence for juniors and seniors would start at $500 this fall and increase to $2,000 by 2016.  The business  program already has a differential tuition plan in place which we wrote about here.  Engineering students will be asked to pay $2,000 extra as well as a $750 lab fee that exists now.

This fee is in addition to a discussed tuition increase of 2.9%.  This has not yet been approved.

UVAs chief operating officer noted that the planned fees were less than what the market would bear.  That statements holds the answer to the question, “why does college cost so much?” Because they can get away with charging it.

An academic excellence fee.  Really?

 

Free review of award letters

April is the month for acceptance and award letters. It can be incredibly frustrating to try to decipher the language and format of different award letters from different colleges.  Our April newsletter gives you some tips on how to do that, and we have a special offer for new subscribers too. 

If you sign up for our newsletter during April, and would like help understanding and comparing financial aid award letters, we will do a side by side comparison of up to 5 letters for free. 

To take advantage of this offer and sign up for our newsletter, please click here.

 

 

Free review of merit aid awards

Many students are getting fantastic letters from colleges detailing awards, scholarships, and grants that come with the offer of admission.  Great job!  These awards are NOT need-based, they are merit aid.  The colleges want you to attend, and this is one of the tools they use to get you to say yes. 

But is your award amount fair based on what the college has done in the past?

We’d be glad to help you determine that.  If you sign up for our newsletter in March, we will send you a list of average merit aid awards for Virginia colleges.  In addition, we will do the research for other colleges on your list, just drop us a note.

Merit aid is the best aid there is, but college remains a huge financial transaction. Be thrilled you received some, but be sure the amount is fair.

To take advantage of this offer and sign up for our newsletter, please click here.

 

What does college cost?

Excerpted from our February newsletter – if you would like to sign up for free, please do so here

 

You might think a word as simple as “cost” would have a simple definition. It doesn’t when it comes to college.

 What does college cost?

 There are two ways to answer this question. The first is to look at the annual, published sticker price. The second is to examine Net Price, the amount that a college will cost your family after deducting any grants and scholarships.

 The current cost of the freshman year at UVA for an in-state student is $25,354. That number is the 2012-13 Cost of Attendance (COA) for UVA. It is the sticker price and it includes the following components:

Tuition and Fees

$12,224

Room and Board

9,440

Books and Supplies

1,220

Travel

360

Personal

2,110

Total COA

$25,354

You’ll never see an invoice for $25,354 and in fact you might pay more or less for your first year of college. Let’s consider the items one at a time.

Tuition and Fees: This is paid directly to the college. You do get an invoice for this, on a semester basis (actually, your teenager will get the invoice – watch their face when you ask them how they are planning to pay for it!). We’ve written before about tuition payment plans and what a help they can be in making the payment of Tuition and Fees more manageable.

Some schools charge extra fees or tuition for special programs. Known as differential tuition, these programs are becoming more common, especially with engineering and business majors. Some science programs have extra lab fees as well. Your actual invoice might vary from the amount included in the COA, but for most students it will be similar.

Room and Board: Now things start to get tricky. Many larger schools have a number of housing options. Single rooms vs. doubles vs. suites and some dorms cost more than others. What that means is that there is no single cost for housing. Colleges handle this by using an average or typical amount in the COA.

If you are living off-campus, your costs can be significantly different than the amount in the COA. You could be paying rent to a landlord, a student’s parents, or a management company. Tip: for upperclassmen, learning to pay monthly rent can be a great financial literacy step in a relatively safe environment.

Meal plans vary widely too. Off-campus students might decide to not participate in a meal plan at all and cook their own food (read: eat at Moe’s). How much that costs is anyone’s guess, and you’ll be wise to establish a food budget in advance. Most schools require freshmen to select a meal plan.

Finally, Room and Board costs can be exorbitant at some schools, over $14,000 per year. Some accommodations are nothing short of luxurious. Know what you will be paying and what you will be paying for.

Books and Supplies: With all the different courses and options for books, there is no way the school knows what your student’s cost will be, so they throw a number out there and move on. Our tips on saving money on book purchases are a great place to start. The biggest mistake you can make is to wait until you get to school in the fall to buy your books at the college bookstore. Ouch!

Transportation: Gas money or air fare? Where are you going to? How many trips per year? This number is another wild guess and you’ll see lots of variation from school to school. UVA’s number is low and reflects the idea that most students come from in-state. (But the same is true for James Madison students, and JMU uses $2,112 for travel.)

Personal: Who knows what this includes. UVA adds a footnote that it does include loan fees for student loans, if you get any. The rest of the category is for college student spending money: entertainment, pizza, Target, this list goes on and on. Again, you’ll see variety across schools. UVA uses $2,000 but Virginia Tech uses $1,200. College students don’t spend 45% more at UVA than Tech. The numbers are little more than a guess.

Add each of these numbers up and you get the Cost of Attendance, but as you can see by now, the number is largely random and very subjective. Understanding the numbers is the first step in figuring out what college will cost.

For families with juniors who are putting together college lists, our free Student Research Sheet can be a great help in organizing the information. We include a section on Cost, where you itemize the components of the COA for each school. If you would like a copy, please drop us a note.

As you can see, your actual out-of-pocket costs will vary based on a number of factors. Many families benefit from putting together a personal cash flow plan for college that takes into account realistic spending and funding amounts. Let us know if we can help you with your plan.

 

FAFSA Tips

January 2013 is here– it’s time for the FAFSA!  We have a few tips to help you through this challenging time.  If you get stuck, please drop us a note.

FAFSA Tips

 
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