Parents

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:

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 FAFSA.  According 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:

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

Average student debt for 2011 is…

$26,600.  The Project on Student Debt is back with the annual update and estimates that 66% of college seniors who graduated in 2011 has student loan debt, and the average is $26,600.  But wait, there’s more.

37% of working young graduates had jobs that did not require a college degree.

19% were either working part-time or had given up looking for work entirely.  Given up at age 24?

The unemployment rate for the young grads was 8.8%.

High debt and depressed income is not a recipe for success.   The twenties are the time for you to get ahead financially and get out of debt, not to struggle and get further behind.  Your daily decisions about spending will make a difference for years.  Financial education tools are widely available for free, so there is no excuse to be uninformed.  If you are the kind of person who does better with guided help, our financial coaching program might be the ticket for you.

Parents, if you see your kids struggling with financial matters or student loans, please urge them to get some advice.  They might not want to hear the advice from you, but that doesn’t mean they won’t listen to anyone.

Grandparents helping with college costs

It’s incredibly nice when grandparents want to, and are able to, make a financial contribution for college costs.  Parents want to honor that, but there are good ways and not-so-good ways for those contributions to be made.  Here are some guidelines.

Sometimes grandparents have some strong feelings on how they want to make their contribution.  They might not know the intricacies of the financial aid system and what the ramifications can be of doing it wrong.  For example, when made incorrectly, a $13,000 contribution can reduce financial aid by $9,100.  No grandparent would want that to happen!  Still, you want to honor the grandparents wishes, so it can be a delicate situation.

 The main thing to keep in mind is, “Will this help affect our eligibility for financial aid?”  To answer that, you need to know where you are likely to fall on the financial aid spectrum.  If your family is likely to get need-based aid, you want to be very careful with grandparent contributions.  If your family is clearly unlikely to get need-based aid, you can pretty much handle the grandparent help in any way they prefer.

If you are “maybe yes, maybe no” when it comes to need-based aid, you’ll want to lean to the side of being careful.  The best place to start is the EFC Calculator at null.  This will give you an estimate of your Expected Family Contribution, the minimum amount that the federal government (and colleges) expect you to be able to pay.  If that number is close to or less than the cost of the colleges on your list, you might be in the running for need-based aid, so be careful.

The timing and the amount of the gift are important.  It can be awkward to ask about these details when your parents are being so generous.  But the details matter.  Why?  The gift will count as “income” when it comes time to fill out financial aid forms.  If the grandparents give the money directly to the student, it will be “income” to the student.  That’s bad.  However, students can have income of roughly $6,000 and it will not impact the EFC, so if the gift is less than that amount, and the student does not have any other earnings, the grandparents can give the money directly to their grandchild.  But what if the gift is larger or the student has income from a job?

The better alternative would be to give the money to the parents.  Parent assets are counted at a relatively low rate in the EFC formula.  But you cannot stop there because now the timing of the gift becomes important.  In the best case scenario, the grandparents would make the gift before December 31 of the student’s junior year in high school.  That’s far in advance of college application season, but due to the way the EFC is calculated, it is the best way to avoid extra “penalties”.

Another approach is to open a grandparent-owned 529 account for the student.  This approach has some benefits in terms of financial aid but it also has one serious drawback.  When the money is withdrawn from the grandparent 529, presumably during the college years, it will count as income to the student in that year.  This could reduce aid by up to 50% of the amount of the distribution.

To avoid this and still use a 529, the parents could open the 529 as a parent-owned 529 and then the grandparents could make a deposit to the account.

When grandparents are making a very large contribution, they often wonder about using a trust.  Trusts are fine legal entities, but they will pretty much end any need-based aid hopes.  Run the null BEFORE that is set up so you know where you stand.

Grandparents are sometimes motivated by estate tax considerations.  2012 might be the end of a fantastic opportunity for moving money out of an estate, and setting aside a chunk for the college costs of grandchildren is one strategy to reduce the size of their estate.  Also, one option is direct payment of tuition to the college (not room and board, just tuition.)  Again, this will significantly hurt need-based aid, but if you won’t get it anyway it doesn’t matter.  Some grandparents like this option because it is a good estate planning tool and because there is no question how the money is being spent.

One other option that many grandparents choose is to set some money aside, keep it, but earmark it to help pay off student loans after graduation.  This approach does not impact financial aid at all.  However, it does open up the potentially uncomfortable question of what happens if the grandparent is not alive to give the money to the grandchild after graduation.  If something happens, you want to be sure those original wishes are honored.

As you can see, grandparent help quickly becomes a complicated situation.  We’ve only touched on some situations here and this is not a complete guide to all the possibilities.  We can help sort out the details of your family’s circumstances as part of your overall college funding plan.

Financial Wakeup Call

Fidelity Investments recently came out with their College Savings Indicator study and check out these findings:

• 31% of parents of college-bound students have adequately considered how much college will cost
• Parents plan on paying for 57% of their kids’ college costs, but if you look at their savings, they are on track to cover only 30% of costs.
• Parents expect their children’s first job out of college will pay over $70,000 per year.  The average salary of 2012 grads (those with jobs) is $44,000, according to this study, and other studies show the number to be much lower, more like $27,000.

These numbers show a shocking disconnect with reality.  Parents, don’t fall into these traps.  Learn the ropes and how the system works before you get locked-in to your college plans.  If you need help figuring out what college will cost your family, drop us a note.

Insurance and College Students

Many parents associate their kids going to college with things like buying sheets and finding boxes and whether or not they need a small refrigerator.  Those are important for sure, but there is something else to put on your checklist, and that is insurance.  How will your teenager going to college affect your different insurance coverages?

First, let’s look at possessions or personal property.  Will your homeowners policy cover your student’s possessions at school if there is a loss, like a theft or a fire?  Does it matter if they live in on-campus housing or not?  Is there a limit on the amount of coverage for your son or daughter?  Most policies do cover a college student’s possessions but the only sure way is to check with your insurer.  If you are not covered, you want to find out about a renters insurance policy which will then provide coverage.

Next, car insurance.  If your son or daughter is on your automobile insurance now, moving to college can save you money.  Many insurers will reduce premiums if your previously driving teen does not have access to one of your vehicles because they are so far from home.  The details on these situations vary widely-some companies have certain distance limits for example, so you’ll want to find out what the specifics are in your case.  Also, if your student is taking a car with them, you’ll want to let the insurance company know that too.  The coverage may need to be adjusted for the new state’s requirements.

One study showed that half of all parents failed to make adjustments to their auto policies when their kids went to college.  The lost savings can add up to $3,000 over four years.

Finally, let’s look at health insurance.  You do want your son or daughter to be covered with health insurance while at school.  Start with the existing policy and be sure that it will “go with” your teenager to their new home.  Check specifically for in-network vs. out-of-network care.   If you need to find new coverage, many colleges offer student health plans that are seemingly affordable, but you want to look at the coverage details closely.  Are there low caps on claims? What items are excluded?  It might help to have a conversation with the staff at the college’s medical facility to find out what other students do and what works well in that geographic area.  One choice where there is no other coverage is to buy a high-deductible policy for your teenager.  You’ll end up paying for most care that is needed since the deductible is high, but the policy will provide coverage for very expensive care, should that be necessary.

The common theme with insurance matters is to get on the phone to your agent or insurance company and talk over your situation with them.  Know what coverage you have and what changes you might need to make, and in the event of a claim, you’ll be glad you did.

New Whitepaper on Tuition Payment Plans

With high school barely in the rear view mirror, it is time for parents to start thinking about the upcoming college bills.  We have just released a new study on tuition payment plans at Virginia’s public colleges, available here.  The payment plans should be part of every family’s college funding strategy.  However, there are a number of twists and turns that you’ll want to know about, so we urge you to read the whitepaper before you enroll.  If your son or daughter will be going to a private school or out-of-state school, the tips will still apply–tuition payment plans do not differ that much by college.

Please let us know if you have any questions about payment plans.

The $3,600 solution for student loans

The hot topic of the current season is whether or not Congress should extend the subsidized (lower) interest rate on need-based Stafford loans to college students beyond the July 1 expiration date.  The subsidized rate is currently 3.4%.  After July 1, all loans will be at 6.8%, which is what the unsubsidized loan rate is at present.

But this argument totally  misses the point about student financial aid.  First, loans are not financial aid in the sense that a grant or scholarship is.  Do you call your mortgage or car loan aid? Of course not, they are just a payment plan.  That’s all a student loan is.

Second, student loan terms don’t call for payments to begin until months after the student has graduated.  The rate could be 0% or 20%, and the cash help to the student today is exactly the same.  What the student receives today is the assistance in the form of the principal amount of the loan being paid to the college he or she is attending.  The interest rate on that loan is irrelevant today.

Finally, is this good public policy?  Move ahead four years, two graduates earn their diplomas.  One has parents who qualified for need-based aid, one does not.  Why does the first student deserve a lower interest rate on his loan going forward?  They each are competing for jobs in the marketplace, using their education and experiences and talents to make a living.  Does it make sense to handicap their financial futures in such a way?

Here’s a better solution.  What is the lower interest rate on a ten year loan that starts repayment after graduation worth to a student today? Answer: $3,600.  So let’s give students that qualify for need based student loans $3,600 in aid today, and let everyone pay the same rate after graduation.

UVA Differential Tuition

The McIntire School of Commerce at UVA will cost $4,000 more per year than other undergraduate programs in 2012-13.  This extra charge is known as “differential tuition” and will apply to in-state and out of state students alike.  This extra charge will increase the cost of attendance by a like amount, bringing the COA for McIntire students to close to $30,000 per year.

For families with Virginia Prepaid 529 plans (VPEP) who thought they had tuition and fees covered, think again.  This differential is not covered by VPEP, according to UVA.  You will want to budget accordingly.  This is not an isolated occurrence either; the concept of different tuition rates for different course work is growing among community colleges and public institutions.  Parents, if your son or daughter is interested in a specialized area of study (like business, engineering, or nursing), be sure what the college charges for all four years so you can plan ahead.

Student loans at 50?

According to a piece in the Washington Post by Ylan Q. Mui, student loans are not just for students.  The Federal Reserve Bank of New York released data that show that roughly 20% of student loans that are in default are owed by borrowers over the age of 50.  Ms. Mui attributes this to co-signing, to adults returning to college, and to the inability of borrowers to discharge student loans through bankruptcy.  Who knows.  Borrowers over 50 would have gone to college in the 1970s and 1980s and college was not so expensive then, nor were loans so easily available, so these debts are most likely not lingering from their undergraduate years.  And, note that the 20% figure is for loans in default, so it’s not just that they have the loans, it’s that they aren’t paying.

What does that mean for the hordes of new borrowers who are leaving college with average loans of $25,000 and facing a grim job market?  Student loans might affect life decisions like getting married and buying a home.  (Theories have been postulated that the decline in marriage rates is due in part to debt problems.) The loans certainly delay retirement savings since money is being diverted to repayment of debt.  Now, with data showing the impact on seniors, the real effects might be worse than we knew, at least for some families.

The clear takeaway:  avoid debt if you can.  If you have to include loans in your financial aid package, treat them with respect.  Make a financial plan for your future that shows what you expect to earn after college, what you will need to live on, what you can donate, and what you need for debt.  Parents:  no one will make your teenagers do this if you don’t.

Shocking report about Virginia colleges

Most parents don’t really know what is going on during four years of college.  We know what it costs, certainly, but beyond that, we only hear what is reported through the filter of our young adults.  We don’t see the opportunities not taken, the courses not offered, the ability of the teachers to connect.  Not that we necessarily should; our kids are on the road to adulthood and are those things really our job?

So when you read the report issued by the American Council of Trustees and Alumni, you will be shocked.

• Over 33% of Virginia schools do not require math.
• No Virginia schools require a course in economics.
• Only two schools require a basic course (one) in American history or government.
• The notion of a core curriculum as fundamental is only lip service.
• At 22 of the 39 colleges, less than 50% of students graduate in 4 years.
• At 17 of 39 schools, tuition and fess (notice this excludes room and board and living costs) now represent more than 40% of the median household income.
• Facilities are significantly underutilized in terms of hours of average weekly use.
• Most colleges require all sorts of testing of students before they are admitted.  Only a small handful of Virginia schools participate in any sort of academic accountability program once the students are enrolled.

Parents and students, are you getting what you are paying for? 

FAFSA Tips

Here are a few things to keep in mind while you are working on the FAFSA.

If this is your first time dealing with the FAFSA, it can be intimidating.  We suggest you run the FAFSA Estimator first.  It takes less time to fill out and it will give you a chance to get comfortable with the questions before the “test”.  It can be found at null

Decide who is in charge, parents or student?  The FAFSA will be in the student’s name, using his or her social security number, birth date, driver’s license and financial information.  But the real focus of the FAFSA is parental income and assets, and most parents prefer to handle that information themselves.

If your tax return for 2011 is not yet filed, don’t wait.  Go ahead and file the FAFSA now using good estimates and make corrections later.  Be conservative in your estimates; otherwise, the changes you make might yield some unwelcome surprises. 

Most of all, if you think you don’t need to file because there is no reason to, you might be mistaken.  Drop us a note and we’ll help you determine if filing is worth your time.

FAFSA for North Carolina Residents

The North Carolina General Assembly made significant changes in how the state of North Carolina awards state financial aid.  A single, new need-based scholarship will replace a number of old scholarship and grant programs.  Eligibility for this new scholarship will be based on the results of the FAFSA.  But here is the biggest takeaway: 

The new scholarship will be awarded first-come, first-served. That means you want to get your FAFSA in immediately if you expect to qualify for aid from the new program.  Students who are legal residents of North Carolina with EFCs of $15,000 or less and who meet the eligibility of the Pell Grant Program will be eligible.  Check with your school’s financial aid office for more details.  If you are unsure, call their office, this news is so new that many websites are not yet updated with current information.

This is only true for North Carolina residents.  Virginia residents can continue to observe priority deadlines of specific colleges and scholarship programs.  Always check the deadlines, and file sooner rather than later.  You can file the FAFSA without waiting for your 2011 tax return to be completed.  You do this by using estimated information and making corrections when the return is done.

Newspaper Readers – Calculator Report Here

NPC HANDOUT

Please follow the above link for our detailed report on Virginia schools’ net price calculators.  If you have any questions, simply drop us a note.  You can also subscribe to our free monthly newsletter using the button at the top of our home page.  Thank you to the Times-Dispatch and the Daily Progress.

Finding net price calculators

Colleges are required to have net price calculators on their websites, but they are not required to make them easy to find.  The best idea is to look under the Financial Aid section.  We put together the following table of clickable links to 27 Virginia colleges’ calculators. (Note: Links updated October, 2019 – please report a broken link here.)

Deadlines Move Up

Most parents and teenagers know that deadlines are important when it comes to applying for college.  The “system” is built around a certain timing – start getting serious in the spring of junior year in high school, take tests, apply in the fall and winter of senior year, hear back in the spring, make a decision, and graduate.  It’s been that way for years.

But it is changing, subtly.  Students are applying earlier and earlier, and now, colleges are moving up application deadlines.  No longer is January 1 or February 1 the only important date.  Some schools are encouraging applications beginning as early as September!  The new popularity of Early Action programs (as opposed to Early Decision) means that most students will have at least one admissions decision by Christmas.

What does all this mean?  First, you have to know each of the deadlines for every school on your list.  You cannot assume it will be the same as last year, this is a rapidly changing area.  Second, merit aid may have its own deadlines, especially for early applicants.  Third, for families with juniors in high school, you need to be focused on college now.  Do not wait until the spring to get started. 

The entire calendar has shifted forward.  Get started sooner so the shift does not catch you off-guard.  For seniors, be meticulous about your deadlines.

Henrico College and Career Night

Thank you to everyone who stopped by our table at the Henrico College and Career Night.  Here are some websites that we talked about:

EFC Calculator:

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No-loan pledge schools:

http://projectonstudentdebt.org/pc_institution.php

Information on how generous colleges are with financial aid:

http://nces.ed.gov/collegenavigator/

If you run into any questions as you do your research on colleges and aid, please let us know.

Helpful Advice

The Wall Street Journal Sunday edition had a nice article on saving for college.  The idea was to give parents advice on what to do using a three-year countdown until college starts.  The advice was fine, but what happens so often with articles like this is that the advice has to be apply to so many readers that it is very generic.  It is certainly well-intentioned but even trying to follow some of it is daunting.  Here’s a sampling:

About 529 plans:  if your 529 plan is “underperforming” or is high-cost, you can roll it over to another plan but beware of the fees.

On financial aid:  start juggling money three years out so it won’t weigh as heavily in the financial aid calculations.  One year about, the article suggests that you “submit all necessary paperwork.”

On loans:  two years out, start looking at loan options – federal loans for students and parents and private bank loans which have variable or fixed rates.

The idea here isn’t to bash the article, it is fine for generic advice.  It is to ask is that advice helpful to you as a parent?  What specifically do you do with that, and is that a good use of your valuable time?

We believe that good guidance for college is targeted to your family’s situation, so that you know what to do when, and you can make informed decisions.  Contact us to find out what that means for you.

It’s Tuition Bill Time

Tuition bills for the upcoming fall semester are coming in now. If you haven’t seen one in the mail, check online through your student’s online ID, since larger schools often send bills electronically. Many schools offer different payment options, including electronic funds transfer from a checking account, credit card payment, and good old fashioned checks. Credit cards are not always the best option however, since there are often large service fees charged by the college’s credit card processor.

Writing a check is often the best option. It makes sense to limit giving out your bank account information, and a written check will provide easy documentation for tax considerations.

Many colleges offer payment plans. Payments can be spread out over a number of months and any charges to set up such a plan are relatively small. You may have to agree to electronic payment to use such a plan, but that might be worth the risk.

If you plan on using money in a 529 plan, you usually have three options. The withdrawal can be paid to the college, to the beneficiary, or to the account owner. You will want to choose the option that is easiest for you and best fits your needs. Generally speaking, payments directly to the college are least advisable since you lose control over the entire process. Remember to allow sufficient time for the withdrawal to be processed by the 529 plan.

If you have specific questions about your situation, please drop us a note and we’ll be glad to help.

Counting Down

The last summer home can be especially trying for parents with rising freshmen. Ideas of some special bonding time, family vacations, and special dinners are wonderful but often not shared by the kids. They are more interested in being with their friends, the friends they will be leaving in a few weeks. Mom and Dad aren’t going anywhere after all!

These differing perspectives are fine unless Mom and Dad fail to see where their teen is coming from and push too hard to do the things they want to do. Talk to your son or daughter now and get them to commit to one or two family activities that you feel are important. Then let them have the rest of their time. Maybe they’ll spend some of it with you if they don’t feel like they have to. Also, there will be time hanging out when they are just around home or running errands with you that can count as quality time too. Value it.

The best part is that a couple of summers from now they likely will be more interested in spending time with you than they are this summer!

And for those of you who just can’t wait, parents or teens, you might want to Google “countdown timer”.

Saving for College with Young Children

Parents of young children often ask what the best way is to save for college.  With so many choices out there, it can be confusing to consider 529s, IRAs, Savings Bonds, Coverdells, UGMAs,  Zero Coupon Bonds, Insurance policies and a number of others.  But you don’t need to make it complicated, you need to start setting some money aside.  The specific instrument you invest in is not the important point, it is that you are saving at all.  We suggest opening an account (in your name, not your kid’s) with a good mutual fund and making regular deposits.

The reason is simple:  you can always change the fund or tweak the amount, but you cannot get the time back, and time is your biggest ally when you have a financial goal to save for.

Once you’ve started your college fund, you can take some time to investigate the particulars of college savings:  what the options are, how they affect taxes and financial aid, what the dollar goal should be, and make appropriate adjustments.  Those are complex questions and we are happy to help you figure them out, but please don’t delay getting started.

Sewanee and Randolph-Macon Make News

It’s rare that we hear some good news on tuition, but the last couple of weeks have had two noteworthy items.  First, The University of the South announced a decrease in tuition for next year by 10%, or about $4,600.  It will be interesting to watch what the peer institutions do.  Second, Randolph-Macon announced a four year degree guarantee.  If you follow the (relatively basic) requirements but don’t get a degree in four years, the school will waive tuition until you are finished.

These schools are directly addressing financial concerns that families have.  Let’s hope that this is just the beginning of a new type of competition to reduce college costs.

Free Online FAFSA Tutorial Video

We are happy to announce that Fox College Funding has posted a series of video tutorials called My FAFSA Assistant – and it is available to you absolutely free.  The videos walk you through the entire FAFSA filing process, and include answers to common questions as well as lesser known tips.  You’ll be learning from Deborah Fox, one of the nation’s leading experts in college planning.  We are proud to be an affiliate of Fox College Funding.

Every family should file a FAFSA.  There is no reason to be put off by the form – the answers are here!  Unless you earn more than $350,000 per year and are not interested in 6.8% education loans, and will have only one child in college, you may qualify for need-based aid.  The only way to know for sure is to complete the FAFSA.  Visit www.MyFAFSAAssistant.org to register for the tutorial.

Whose FAFSA Is It Anyway?

One of the first things you have to consider before starting the FAFSA financial aid form is “who is going to be in charge?” Here’s what you need to keep in mind.

The FAFSA is for the student, and is under the student’s name and social security number. However, much of the information–in fact, most of the important financial information–pertains to the parents (questions about income and assets.) This type of information is generally not something the kids have ready access to, so parents will need to supply it. Finally, parents have more familiarity with financial forms, and the FAFSA is an important form with a high follow-up verification rate. You don’t want to make a mistake.

One of the most important aspects of the college process is how you can involve you teenagers in the jobs that need to be done. But the FAFSA might not be one that falls into that category for your family. So give that question some thought before you get started and the FAFSA will go more smoothly.

If you decide that you want to retain control, here are some tips.

a. Apply for PINs for you and for your teenager. You each will need a PIN as your official signature on the FAFSA.

b. Use your email address anytime an email address is asked for. This is how communication is handled and you want to be sure you see what is being communicated.

c. You (Mom or Dad) sit down and start the FAFSA, getting through the initial screens of Student’s name, SSN and birthday, and you use your email address and you select the password.

d. Print out a blank copy of either the FAFSA On the Web Worksheet or the Printable FAFSA (both on the FAFSA website) and show your teenager what it looks like. If you want him or her to supply information about his or her own income and assets, that can be a good way to get them involved (but be sure to double check.) If you want to share your own financial information, that’s fine too, that’s your call as Mom or Dad. But you don’t have to if you don’t want to.

e. The EFC will come in the form of a Student Aid Report (SAR) in a week or two, by email. The SAR lists all of the financial information used to calculate the EFC so if you didn’t want to share your financial information, you probably won’t want to share the copy of the SAR. However, you can share what the EFC is so your teenager knows where they stand in the financial aid game.

The FAFSA can be confusing to complete, but you want to get the basics right before you start. There is no right or wrong answer here, but how you handle it will reflect your values, so give it some thought up front.

Divorced Parents and College Costs

A new study by researchers from the University of Wisconsin and Rice University looks at the relative contributions of divorced and married parents to their children’s college costs and comes up with some surprising findings.   One of the more interesting ones:

• Middle income divorced parents contribute significantly more than married parents.

Yes, you read that correctly.  The authors find that in lower incomes, the situation is reversed, with lower income married parents contributing more than those divorced.  But once you move above an  income of  $40,000, it flip-flops.  (The income figures come from 1995.)

Two possible theories are put forward (and other common ideas dismissed.)  First is that non-custodial parents often have something of a “financial role” in their child’s life, and that role continues into the college years.  The custodial parent, on the other hand, may feel the need to “keep up with the ex” once college starts, and they do this by writing a check for college costs.  The students benefit from this parental “competition.”

The second theory, though, is more relevant to college funding planning.  Settlement and support agreements often require ex-spouses to confront future college costs in some fashion.  Because of that, children of divorce may get something that children of married parents do not–a specific plan that addresses paying for college.  The children benefit from their parents’ planning.

Divorce is stressful enough.  A college funding plan that is customized for your family’s needs can reduce that stress and save you money for all the other important things in life.