Colleges: The Facts About College Financial Aid

The cost of a 4-year college education is soaring! Every year tuition, room & board and other related expenses increase 9% to as much as 15% at some schools, and have already climbed to $160,000 and more! Despite this, American families are sending their children to college in record numbers. So how are they paying for it?

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A College Loan Will Finance Your Education

A college loan has given people all over the United States a chance to further their education, even if they are not making a lot of money. Education loans can be a big help in paying for college. You'll find these loans offer a low interest rate and a generous repayment period. Of course, student loans must be repaid, usually with interest, although some education loans have provisions for cancellation if the borrower performs a program-related service. If you are looking for a loan, be aware that there are many different types of loans. Try to find the student loan that fits you the best. For example, there is a loan called the Federal Stafford Loan. The Federal Stafford Loan is the most widely used loan in the student education loan program. Federal guidelines limit the maximum interest rate to no more than 8.25% and outline repayment terms of up to 10 years. Remember that if you ever need help or are falling behind on payments, consider a consolidate student loan.

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Most American families are offsetting the high cost of college by applying for some degree of financial aid by submitting their FAFSA (Free Application For Federal Student Aid) on or after January 2nd. Unfortunately, this is not a simple solution as the college funding process is not user-friendly. There are an endless number of pitfalls in the application process, and it is far too easy for families to lose some or all of the aid they are eligible for.
Many families fail to even attempt application because they don't know how to, or they incorrectly assume they are not qualified, or simply because they are intimidated by the complicated and confusing process and all of its paperwork. With far more qualified applicants than desks in all of America's colleges and universities, it is reasonable to expect a system intentionally designed to eliminate all but the most knowledgeable and persistent applicants.
According to a disturbing statistic from the US Dept. of Education, over 90% of all financial aid applications are rejected for errors and inconsistencies! As financial aid is awarded on a first-come, first-served basis, the loss of time in the resubmission process results in thousands of dollars of lost financial aid to eligible families who braved the college funding process blindly and alone.
This being the case, what's a family to do with one or more college-bound students facing as much as $160 to $300 thousand dollars to send each of their kids to a 4-year college? Many make the mistake of relying solely on the advice of guidance counselors, college financial aid officers (FAO's), and even their accountants. Sadly, these families are not getting all of the financial information they need and are in for a rude awakening!
Nationally, guidance departments are facing their worst crunch ever, and are overloaded with as many as 800 students or more for each counselor! Budget cuts have added to the problem, causing schools to increase responsibilities of guidance counselors in areas other than guidance, leaving them with even less time for their students - and there is no relief in sight!
Despite these obstacles and to their credit, guidance counselors still manage to effectively advise students in career planning and college selection. However, when it comes to college funding they come up short in providing the necessary financial information that could save families thousands of dollars!
Counselors do not have the time or the financial expertise to show parents how to reduce their Expected Family Contribution (EFC), the minimum the federal government determines that each family will pay for any college. Additionally, knowledge of specific financial aid strategies and their legal application would help families avoid an array of assessments that could cost them thousands of dollars for each year each of their students are in college!
For example, parents, and most guidance counselors, are unaware that students have no asset protection allowance. Consequently, students with assets in their own name are assessed by the federal government at 35% for each year they are in college! Thus, a student with $1,000 will be assessed $350 for each year the $1,000 remains in their name. After 4 years, the student will have lost $1,400 in financial aid for only $1,000 worth of assets! This is tragic as it can be legally avoided - if you know how.
Periodically, guidance departments present "in-house" Financial Aid Nights which focus on filling out financial aid forms and understanding the basics of the application process. Nevertheless, year after year, 9 out of every 10 families applying for financial aid continue to be rejected for filling out their forms incorrectly. Clearly, parents are not getting enough guidance on the college funding process.
Well-meaning guidance counselors invite FAO's to speak at their high schools trusting them to put the best interests of the students above the financial interests of their college. By evening's end, parents are often left with a false sense of security that the college of their choice will award their student its best possible financial aid package. This is rarely the case.
Much like frugal employers whose goal is to hire the most talented applicants for the least amount of pay, FAO's seek the most promising students for the least amount of financial aid. Relying on an FAO to help reduce college costs is like expecting an IRS Agent to help reduce income taxes! FAO's can be helpful, but their loyalties are with their schools - not their applicants!
Accountants may offer some assistance, but far too few have experience with college funding. Although they are experts with income tax forms and tax strategies, college financial aid forms and college funding strategies are a horse of a different color. The application of accounting principles to college funding can actually hinder a family's chances of getting all the financial aid they are entitled to!
There is an endless amount of misinformation on the subject of college funding, and a good deal of it is from so-called reliable sources. In fact, one instruction on the current FAFSA, if followed, will cost families thousands of the financial aid dollars they are qualified for! (See our website's FAFSA ALERT for details.) So, "who you gonna call?"
One of America's best kept college secrets is the existence of the college funding professional. This small group of financial aid experts assist parents through the college funding process and help families provide their students with the best possible college education for the least possible cost. One would naturally assume they are in great demand and are often invited to lecture at America's high schools. Sadly, this is not the case!
It would likely surprise and enrage parents to learn that, on a national scale, most guidance departments refuse the services offered by college funding professionals often stating that bringing in "outsiders" is against school policy - even though such services are offered absolutely free! The distressing result is, every year parents enter the college funding arena without the necessary ammunition to do battle with the system - and severely overpay for college!
To insure your family does not fall victim to the college funding process, please contact Reecy Aresty at [email protected], or visit: www.thecollegebook.com for further information.