Posted by Adam R. Goldberg, M.Ed. on Thu, Apr 30, 2009
Today is the day... May 1 marks the beginning of a new chapter for
those accepted to college. They've researched, visited, applied, received notifications, and finally made a decision.
But, reality sets in. Now they actually have to come up with the money!? Or do they?
The bottom line is that the vast majority of those 'consumers' don't know how to buy. They are so swept up by the dream that the financial aid award letter catches them off-guard. They are disappointed, perhaps devastated to learn that there will be a sizable gap between what they hoped to pay and what they will have to pay.
So what do most do? They make rash decisions and either jump into inappropriate, incompatible financial products or they actually consider changing the college plan itself. Others just accept the fate bestowed upon them and end up struggling more than they need to... for many years out. Ouch!!
Now what should you do? Our self-declared "financial aid geek," and Goldberg Center Education Financing Director, Nina Flood, described a myriad of strategies in a corporate presentation just the other day. College aid for students comes in many forms and she urges clients to carefully and objectively examine and evaluate loan programs. The problem is that colleges themselves are highly discouraged from steering families to particular lenders due to the student loan scandal and then there are the sharks out there who claim to advise objectively, yet hawk their own wares to make commissions.
If you want completely unbiased, unattached advice, hop on over to our May Day! Paying for College Promotion and sign up to chat with Nina. She's seen it all and will be virtually giving away her life lessons from over 25 years as a financial aid officer (Brandeis & BU) and education lending expert. And tell a friend or two if you think they could benefit as well.
Posted by Nina Flood, M.B.A. on Sun, Mar 29, 2009
It is almost April and you are likely feeling this mixture of intense emotions. Your child has earned admission to college but wait, it costs WHAT? After the initial celebratory dance, you are confronted with the grim reality of the net cost of this achievement. Despite your responsible actions, (you saved, you applied for financial aid), this year is not going to be easy for any college payer. Before full panic sets in and you do anything, take a deep breath. There are things you
can do, even at this stage, to enable the realization of academic dreams without losing your integrity, your temper, or your even your mind.
Don't lose your integrity! Are you wondering what I meant by not losing your integrity? Well this one reality really sticks in my craw, (and that is not my first choice of a euphemism). While there are financial aid planners out there that operate by the highest code of ethics, (like me), there are far more that make the whole lot of us seem suspect. This contrasting group of financial advisory professionals recommend things like hiding income and shifting assets to non interest bearing accounts, (which by no coincidence, pay a nice commission). These energy and time-consuming paper acrobatics rarely result in increased grant eligibility and by the way, lying on the FAFSA is a federal offense.
Don't lose your temper! If you did apply for financial aid, don't pick up the phone to rant about how impossible this situation is for your family and how the school will be the loser if your child can't afford to attend, (which of course is true). Financial aid offices are working under the deposit deadline with federal rules about money. The financial aid office cannot consider anything other than financial drivers like changes in asset values, losses of assets, loss of job, increases in non discretionary expenses like dependent or elder care, or dramatic changes in family status, (divorce or death). Consumer debt resulting from poor budgeting is not a basis for professional judgment to increase eligibility.
Don't lose your mind! Speaking of that word, budgeting, this is the time to do it, regardless of whether or not you applied for financial aid. How much of your monthly income are you utilizing for living expenses? The remainder, and there needs to be a remainder!, is what can be utilized for current college costs or repayment on supplemental loans for education. Keep in mind that any loan debt service is going to be increasing each year of college, for each of your children, and that interest only payments are not a long term strategy. If that made you feel like you might lose your mind, email nina@edconsult.org!
Posted by Adam R. Goldberg, M.Ed. on Fri, Mar 20, 2009
Nina Flood is a self-proclaimed "financial aid geek." I guess you'd assume that would hold true for someone who has lived a life dedicated to championing education financing for over 25 years.
I can honestly report that I've caught the bug myself. It's tough not to when you spend enough time with Nina. We often kick back and find ourselves marveling over financial aid follies... the fact that seven of ten people still refer to the FAFSA as FASFA... the idea that so many families who would qualify for aid never apply... and especially the notion that financial aid administrators are restricted as to how they can productively direct families.
"Wait a second," we recently thought... "Why not make it easier for these financial aid administrators?! Let's create a new community where these professionals can gather to share frustrations, keep up with education tax benefit changes, get the latest skinny on who's doing what, and FINALLY, direct families to the most current education loan rates and fees when they can't advise them directly?!"
This thought ultimately led to our creation and now launch of the FAAS Buzz, an informative and, in some ways, cathartic web community comprised only of financial aid administrators (FAAS)... a refreshing extension of their more formal associations within the NASFAA fold.
If you are a financial aid professional and are interested in connecting to the FAAS Buzz, please email nina@edconsult.org.
Posted by Nina Flood, M.B.A. on Tue, Feb 24, 2009
This week's Boston Globe Sunday Edition featured an article "Daunting Federal college-aid form flunks with most families", by New York Times reporter, Tamar Lewin. The now 6 page federal student aid application is intended to provide a full financial snapshot by which financial aid professionals allocate (by a regulated formula) limited federal, state and institutional resources. However, the Free Application for Federal Student Aid or FAFSA, (sometimes erroneously called the FASFA) and the numerous other forms and information often required, are commonly, mistakenly thought as assessing a family's need.
No one is looking at the process or the resulting award letter and saying, "That was easy and now I can continue my life without any further financial sacrifices." Instead they are thinking "Why didn't I get a Pell Grant?", "Loans for college are considered financial aid?", "Where are all those scholarships for college everyone says are available?", and /or "There must be a mistake."
The process of asking for money is intimidating for everyone and more complicated by the misinformation in circulation. I thought back to my experiences and consulted my financial aid community to provide you a list of what they wish you knew. Save yourself and the office, with which you will be working, time and angst by recognizing the following realities.
1. Comparisons between your family and another don't make sense when it comes to eligibility. No one knows exactly what someone else makes or how they live.
2. Each institution has its unique endowments and enrollment goals, so institutional aid can and will vary widely. (Institutional aid is the college's money, so they determine how to best spend it.)
3. Despite any rhetoric, there really is no negotiating. While certain circumstances can be taken into consideration through a process called professional judgment, this is nothing like buying a car or even a house.
4. Calls are made from coaches and alumni to the financial aid offices, (FAO), but the FAO cannot bend the rules. Just as Admissions would not consider finances in its decision, financial aid is required by federal regulations, to not be swayed by non financial data.
5. You must have your student read and understand ALL correspondence from the financial aid office in mail and email. The FAO is working to help your student get through their education and welcomes his/her questions and yours.
6. Most financial aid administrators have caseloads in the hundreds, so to get an answer to a question, call, email or make an appointment.
7. The director of Financial Aid is not going to approve or deny all requests; your case is best known and worked by the individual assigned as your counselor. Make sure your student knows this person is his/her and your first resource for all questions and requests.
8. The student owns this process in the eyes of the FAO. Encourage him/her to ask the office and you questions, and do not advise them to "just sign and don't worry." Most institutions have wonderful financial literacy resources and your student will miss a valuable life learning opportunity if you try and do everything for them.
9. Accuracy and documentation are the cornerstones of all appeals. Financial Aid professionals will be requesting lots of documentation and if you are looking to forecast a lost income, be cognizant that your severance and unemployment are resources that go into the calculation.
10. Apply early and honestly. Hidden assets are usually found and while the IRS offers income offsets like retirement contributions or asset depreciation, financial aid professionals add these back
However disheartened you might feel by the above realities, the process strives to be fair and the financial aid office wants to give you all the money they can. By working with these offices, you can save thousands of dollars. Another huge benefit is teaching your child about investing in her/himself and managing money responsibly.