An Unconventional Guide to Paying for College

The Insider’s Guide to Dominating Your Financial Aid

 

As you are all well aware, a college education is expensive and the costs continue to increase. According to the U.S. News and World Report, the average cost of a 4-year public college is just shy of $20,000 per year. If you go to a private school, that number almost doubles. Even if you have enough money for college to pay those fees for four years, or five, or six…it is not, shall we say, a pleasant experience.

The debate has occurred here at MfCP and other personal finance blogs, about whether a college education is a smart financial choice. I am strongly in the camp of going to college because I believe it creates opportunities that simply do not exist without a college degree.

Many people argue against going to college, because you could theoretically earn a lot more money by investing the cost of a college degree in a security of some type. I would like to disprove that theory by showing you how to lower the cost of college to a fraction of the original amount, thereby rendering the alternate investing option null and void.

My job as a financial services counselor at a large public college affords me the opportunity to learn how the financial aid process works from a very different perspective than most parents and students will ever see. I want to give you tips and advice on how to maximize your financial aid, and how to bring down the cost of your college tuition to a manageable amount. Feel free to consider this legal insider trading….

The Insider’s Guide to Submitting the FAFSA

 

It is very easy for me, as well as all of my colleagues around the country, to slip into a world of financial aid slang that most of you would never understand, or want to.

That is why when you call the financial aid office at your college, you will likely hear words like Sub, Unsub, FSEOG, ACG, FISAP, FERPA (what is a FERPA anyway?), and you will hang up the phone even more confused than before you called. It honestly is a full time job keeping track of all of the programs that are administered through a financial aid office. However, as a parent or student, it is critical for you to have a basic knowledge of how the system works and what programs are available, so you know the right questions to ask when you call.

In order to qualify for any type of federally funded financial aid program a student MUST submit a Free Application for Federal Student Aid (FAFSA). The FAFSA is the catch all application that is used by every college in the country to determine a student’s eligibility for all federal programs; including student loans. You are able to submit your FAFSA as of January 1, for the upcoming Fall semester (roughly 8 months ahead of time).

As a student, the FAFSA application is done in your name and it is your responsibility to complete it. However the majority of college students are considered dependents, which means that you will need to include your parent’s tax information on the FAFSA, and they will need to electronically sign the FAFSA. Even though the burden of paying for college education often falls to the parents, it is still the student’s responsibility to complete the FAFSA.

FERPA: Protecting Your Privacy One Unhappy Parent at a Time

 

That brings us to another point that will save you some heartache down the road. The Family Education Rights and Privacy Act (FERPA) is the educational version of the HIPPA law. FERPA protects the privacy and identity of the student and parent.

As a parent, what this means for you is that even though the burden of paying for your child’s education might fall squarely on your shoulders, a college cannot give out personal information about your student’s account without their express written permission. I get phone calls every day from a parent wanting to know what is wrong with their student’s bill or why their FAFSA has not been processed. If your student has not signed an information release form, we cannot give out any information.

FERPA also protects a college from giving out income and tax information to one parent versus another parent in the case of separation or divorce. The moral of the story is, if you want access you must ask your student to sign an information release form that will give you access to the financial side of their student account. No release form, no information. This form can typically be found in the Registrar or Student Records office at your college.

Reviewing Your Award Letter

 

Once you submit your admissions application and your FAFSA, you will receive a financial aid award letter back in the mail (or online for many colleges). On this award letter you will see all of the awards that you have, and you can compare that to your estimated fees for a close picture of what your net cost will be (By October 31, 2011, all colleges are required to have a net price calculator on their website that will allow every student to estimate their “net price of attendance”, or how much money for college they will actually need,  based on personal identifiers.).

On this award summary you will likely see any federal or state grants that you qualify for, scholarships that you were awarded through your school, state, or local and national organizations, a Federal College Work-Study if you requested one, and any student loans that you have requested.

It is very important to maximize your free grant and scholarship funds first, before taking out student loans. Just like with a mortgage broker who will get you to buy more house than you can afford, often times you are offered more student loans than you absolutely need.

It is your responsibility to limit these loans to the absolute necessities. Once you have reviewed your award letter, you should submit it back to your financial aid office by their deadline, and wait for those funds to be credited to your student bill at the beginning of the semester.

Once this has been submitted, you can focus on actually taking classes and graduating as soon as possible!

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