Financial Literacy

Understand The True Cost of College Attendance by Decoding Award Letters

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They’ve waited. They’ve watched the mail for weeks. Finally, the letter arrived: Students are getting notice that they’ve been accepted to the school of their dreams! But after the moment of excitement and congratulations wears off , the realization sets in: it’s going to cost money to go to school.

Even if a family has prepared for years, saving money, investing in 529 plans and being on top of completing their student’s FAFSA, now is a crucial time to pay attention to information from schools and have a clear understanding of the financial aid award letter.

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Financial aid award letters are sent to students in the weeks after receiving their acceptance letter to a school and reflects the cost of attendance as well as the financial options available to families to help pay for their student’s education. As the letters state, a student’s place in the schools incoming class cannot be reserved until a deposit is received based on the financial award letter. But families should take the time to understand their award letter before submitting any form of deposit, as these deposits are not refundable if a student decides not to attend a particular school.

Currently, there is no standard format for schools to report the financial aid being offered to a student. So families should use these tips to better understand what is being offered and make a smart comparison between what different schools will cost. The school with the lowest tuition fees might not always be the best financial choice thanks to financial aid awards. Knowing how to read the financial aid award letter can make all the difference.

  1. Find “free money”
    Many schools offer students institutional scholarships or grants. These types of funding can be seen as “free money” because students and families don’t have to repay this money after graduation. Make sure to look for words such as “scholarship” or “grant” in the name of the financial award. These awards are often given to students based on the information in the Student Aid Report created when completing the FAFSA, based on income or family responsibility. Families may miss these awards because they do not technically apply for them separately.
  1. Consider loans and work study options separately
    To help show families how they can meet the cost of attendance at their school, award letters will also include options that require repayable loans or other options that require further action by the student, such as work study programs. Since there is no standard format for separating these options from other “free money,” families need to recognize that any loans taken out, be they private or federal Stafford loans, will require repayment by either the student or parent (depending on the loan) after graduation. This is not funds being offered by the school, but money that will require repayment.
  1. Know the difference between “direct” and “indirect” costs.
    Attending college features a variety of costs, but not all of them will necessarily be covered the financial aid offered in the award letter. The “cost of attendance” on a financial aid award letter applies to direct school costs, such as tuition, room and board. Indirect costs, such as books for classes or travel to and from school are not considered in an award letter. These costs are those that the student and family will have to bear personally.
  1. Determine if awards are for one year or more.
    Many families fall into the trap of thinking that the financial award letter reflects the costs and awards for all four years of school when, in reality, the letter reflects the cost for one year of school. While many of the loans listed on an award letter will be available to students each year, many of the grants or scholarships listed may require a new application each year or, in some cases, are only available for one year. Determining which of these awards are renewable, or the length of the award, can help families avoid an unpleasant surprise.
  1. Make sure the award letter is final.
    In some cases, an award letter might not reflect the final amount of aid being offered to a student. If any section of the letter uses words such as “estimated,” “tentative” or “pending,” the school may not have all the information from a student’s FAFSA or other document needed to make a final determination of aid. Once this information is provided, it may have an impact on the amount of aid that the student is finally offered.

Understanding the financial award letter that students receive can lead to some difficult decisions about where a student should go to school. By making the best effort to compare award letters from all schools that have accepted a student, families can make an informed choice of which school fits best with a student’s goals while creating a financial plan that will avoid any bad surprises or unexpected debt down the road.

Debunking Two Common Financial Aid Myths

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Financial Aid Awareness Month is dedicated to helping families and students of all ages better understand the options available to them as they look to fund their educational goals and dreams. Iowa College Aid has dedicated a page to discussing some of the common issues facing those looking for financial aid.

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Our staff of financial aid experts have also helped out this month, with advice on how to overcome financial aid issues (see last week’s post). This week they address two of the common myths that students have about applying for grants and scholarships and how to debunk them.

Myth #1: We make too much/my parents make too much – I won’t get anything

Family income is definitely a factor when it comes to handing out financial aid.  The best kind of financial aid is always the “free” kind – the scholarships and grants that are given freely with no expectation of being paid back later.  And often it’s this “free” money that has a “financial need” component to it.  Many scholarship and grant providers want to give their awards to students who show some kind of financial need, and when a student’s/family’s income is high, usually the financial need is low.

Not all scholarships and grants are need-based, however.  If your student is motivated, they can seek out scholarship and grant opportunities that are based on skills, abilities and interests, grades, musical, athletic or dramatic talent, essay-writing, or a number of other merit-based achievements.   The key is looking for them.  You know the saying, “you can’t win if you don’t play”?  That same philosophy applies to scholarship competitions.   Investing some time online searching for “scholarships for high school juniors” or “scholarships for journalism majors” or, if writing essays isn’t a strength for your student, “no essay scholarships” might provide some avenues of funding.

Myth #2: My parents aren’t helping me pay for college so I can’t get financial aid.

Students who are financially independent from their parents can often access additional student loan funds, but a parent’s unwillingness to pay for college doesn’t make you financially independent from them. 

The primary circumstances that cause a student to be financially independent are:

  • Age
  • Orphan/ward of court/foster care/emancipated minor/legal guardianship/homeless status
  • Veteran of the Armed Forces of the United States
  • Graduate or professional student
  • Student’s marriage
  • Student provides support to dependents

Detailed information about these circumstances can be found on the federal Department of Education website https://studentaid.ed.gov/sa/fafsa/filling-out/dependency

 If a student has no contact with their parents, or if the student doesn’t reside with their parents because of an abusive or neglectful situation, the student can approach the financial aid office at their college for special instructions on how to complete the parent section of the FAFSA or to determine if there’s a need for a dependency override.

Filling the Gap Between Award Money and Tuition Costs

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Financial Aid Awareness month encourages students who are getting ready to attend (or are currently attending) college to put together a game plan that helps them achieve their college dreams in the most cost effective way possible. Completing the Free Application for Federal Student Aid (FAFSA) is the first step and a vital one. But once that’s done, where do students go to figure out how to get the money they need for college.

Iowa College Aid not only awards and administers state grants and scholarships for Iowa students, but helps students stay on top of all the resources available to help them graduate college with as little debt as possible.

The financial expert team from Iowa College Aid ranked the ways for students to fill that gap between the money awarded to students in a school’s financial aid award package and the cost of attending the school of their dreams. Here are their top picks:

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You filed your FAFSA, you submitted the State’s Financial Aid Application, you met the deadlines and you’ve done the math – your financial aid is just short of covering your tuition bill.  You still need a few more dollars to pay for the semester and buy books, what else can you tap into?

Savings and 529 Plans: The first resource to explore is your own savings account or 529 account.  If you (or your parents) have been saving money for college, now is the time to use it!  Not only has the money been set aside for this purpose, but using savings or college investment accounts could reduce or eliminate the need to borrow additional loans.

Explore private scholarships: There are many scholarship search websites that allow you to create a profile and search for scholarships that fit your skills, abilities and interests and often scholarship essays can be tweaked and customized allowing you to use the same essay multiple times.  Make sure to read directions carefully and pay attention to deadlines.  And don’t rule out “fun” scholarships like those found on unigo.com – who knows, maybe your creative 250 word essay on what flavor of ice cream would you be could score you a $1,500 scholarship?

Payment plans and paychecks: Since colleges bill you for the entire semester at once, it can be overwhelming to get a bill in the mail for the whole semester.  But what if the amount you owe could be divided into 4 or 5 monthly payments?  If you’re working part-time, maybe it becomes more manageable to think about making monthly payments to your college when you know you have a paycheck coming.

Parent PLUS and other student loan options: If borrowing more money becomes an option, talk to your Financial Aid Office about which loans are available to you (and your parents) and which loans have the best repayment terms and interest.  Your student loan options will differ depending on if you have a co-signer, or if you want to start repayment after you graduate (versus starting repayment while you’re still in school), or if you want a fixed or a variable interest rate.  Your Financial Aid Office can help you sort through options and pick the loan that works best for you.

Scholarship Resources:

fastweb.com

collegegreenlight.com

https://iowacollegeaid.gov/content/helpful-websites#scholarship

https://www.unigo.com/scholarships/our-scholarships

The Three Letters That Will Make FAFSA Filing Easier

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For students getting ready to go to college, GPA is an important three-letter abbreviation that can help determine success in finding the right school. But three other letters are about to become equally important in helping students and families find money to pay for that education.

PPY, or “prior-prior year” refers to changes in the  Free Application for Federal Student Aid (FAFSA) that will go into effect starting with the 2017-18 FAFSA application, available this fall, that will make it easier for families to file for financial aid.

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The most important tool for students looking to find money to help fund their education after high school, a completed FAFSA helps schools create financial aid packages, states  determine grant eligibility and  qualify students for federal Pell and other grants.

The FAFSA determines financial need for aid based on looking at the tax return submitted by the family, or student if they are funding their own education. In the past, applicants had to wait until they or their family had completed tax returns for the previous year. If a student was completing the FAFSA for the 2016-17 school year, for example, they would be forced to wait for their 2015 tax return to be completed. Considering that many financial aid deadlines hit around May 1, the window of opportunity for getting in tax returns was very small, especially if a family waited until the April 15 tax filing deadline.

In 2015, however, President Obama signed changes to the FAFSA into law that help families apply in a more timely manner starting with the 2017-18 school year. The new FAFSA guidelines not only extend the application filing dates (starting October 1 as of this year), but allows families to use an older tax return, their prior-prior year return.

So in the case of the 2017-18 FAFSA, families can use their PPY return from 2015, as opposed to waiting to complete their 2016 tax return. By allowing this flexibility in which tax returns are needed for the FAFSA, families and students will no longer need to wait to complete the FAFSA as early as possible. And by filing the FAFSA early, students will get information about their financial aid opportunities earlier in the college application process, as well as make themselves eligible for state grants and scholarships well before deadline dates.

As with any changes, PPY might seem intimidating until families better understand the convenience it brings to the FAFSA completion process. Many organizations have created FAFSA toolkits to help navigate the changes in this year’s FAFSA. Both NACAC (National Association for College Admission Counseling) and NASFAA (National Association of Student Financial Aid Administrators) have created FAFSA toolkits aimed specifically at understanding the impact of PPY on this year’s application.

For students that will be looking for financial aid in 2017-18, these sites offer vital tips to navigating the changes in the FAFSA. But all families can benefit from learning how three simple letters will make obtaining college financial aid easier for their students when the time comes.

Get Ahead of The College Prep Game With These Sophomore Year Tips

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For many students, college preparation kicks into gear starting during their junior year of high school. But as yesterday’s post showed, students who know that college is in their future can work toward their goals as early as freshman year. But what happens during sophomore year? Besides maintaining the good habits established during freshman year, there are a number of options available to sophomores looking to keep their momentum going toward college.

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Putting in the effort now with some of these tips will take the pressure off come junior and senior year:

  • Keep those grades up. It’s important to stay focused on your schoolwork. After all, colleges will look at more than your grades during your junior and senior years.
  • If you plan to take the SAT, take the PSAT in October. It’s good practice for taking the PSAT in your junior year when the scores will count towards National Merit Scholar consideration.
  • Investigate concurrent enrollment options for your junior and senior years. Concurrent enrollment, sometimes called dual enrollment, enables students to take college-credit courses in their high
    school setting.
  • Research financial aid options and begin searching for scholarships. Make a list of those that you think you would be eligible for, including deadlines.

For more tips on preparing for college, check out Iowa College Aid’s “Your Course to College.” This guide helps students and families not only prepare for education after high school, but offers step-by-step advice for financial aid, finding the right college and profiles of every postsecondary school in Iowa.

Another Iowa College Aid publication, “Planning for Our Futures” offers families further information on financial aid and options on how to prepare for your student’s education.

Families, Educators Will Get Smart About Money at July Jump$tart Conference

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With the increase in financial literacy education’s presence in classrooms around Iowa, it’s more important than ever the educators find ways to work with students on a wide variety of financial literacy topics. Over the last 16 years, Iowa Jump$tart has helped teach and support Iowans, helping them embrace financial literacy.Ben-Easter-9302-2

The group’s annual conference, taking place July 22 in Ankeny, IA, targets educators looking for the latest information and materials available to help them teach financial literacy, while providing a forum for teacher collaboration and discussion. Speakers at this year’s conference will highlight and motivate audiences on such subjects as financial education, personal finance and financial planning all with an eye toward making Iowa students more fluent in the financial literacy.

Keynote speaker Mitch Matthews will help audience members deal with the worry and stress that blocks creativity and focus, while breakout sessions will delve into a variety of financial literacy subjects including responsible educational borrowing, tips for first-generation families paying for college and ways to make kids more money savvy at an early age. For the first time, the Jump$tart conference will also offer attendees a chance to meet with a financial planner in a one-on-one session to talk about how to put plans into personal action.

As a further benefit to teachers, those who attended the Iowa Financial Literacy Summit in Des Moines this past May can receive teacher credit by registering and attending the Iowa Jump$tart Conference. Teachers can also enter to win a sponsorship to the national Jump$tart conference in November while at the Iowa conference.

A variety of exhibitors will also be on-hand during the conference, including the Iowa Attorney General’s Office, Iowa State Extension and Outreach, TS Institute, Next Gen Personal Finance, Wells Fargo and many more.

Find out more and register for the 2016 Iowa Jump$tart Conference by visiting IowaJump$tart.org.

Supercharge College Plans With These Summer Tips

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The books have just closed and the vacations are finally under way. But summer also offers the chance for students to get a jump on building a game plan for choosing and applying for a college. For incoming high school seniors, things are about to get real busy where college readiness is concerned. Beat the rush and get ahead of the game by following this summer college planning preparation checklist :

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Finalize a list of target schools.
Summer is a great time to whittle down the list of schools that a student might attend. Still not sure which schools make the cut? Take advantage of vacations to tour schools.

Discuss finances in depth as a family.
Completing the Free Application for Federal Student Aid (FAFSA) can seem daunting. Taking the time to prepare now will make the process less time-consuming. Also consider the costs of target schools now to properly prepare for what students and families will need to succeed at that dream school.

Plan campus visits.
While summer might offer more free time, visiting target schools in the fall gives a chance to see what student life is like during classes. Don’t miss out on these opportunities by scheduling campus tours in advance, as reservations can fill up once the school year starts.

Take advantage of volunteering opportunities.
Volunteering is valuable and important not just for seniors looking to find work experience in interesting fields, but for students of all ages looking to establish a resume that will reflect well on their community involvement when applying to colleges down the road.

Stay on top of testing.
Choose the ACT or SAT based on spring scores, register for the fall test, and consider test prep. Knowing the test and score requirements of target schools will also help families develop a strategy for test-taking.

Line up your targets.
Develop a spreadsheet of target schools with deadlines for Early Decision, Early Action and Regular Decision. Applying early to a school shows an admissions office that a student is dedicated to the idea of being a student at that school. Make sure that students don’t overextend their early decision applications by applying to too many schools.

Don’t put off thinking about the Common Application.
Review application requirements and essay questions for each college on your list; open an account with the Common Application and get a head start filling out the easy parts. While it may be too soon to write that killer essay (there’s still a lot of living to do), filling out many of the parts of the Common Application will help students who otherwise might try to shove college applications in between busy homework and schools schedules.

Review scholarship application requirements and essay questions.
Many scholarships post requirements well ahead of time so that students have the opportunity to find the information and apply. Millions of dollars of scholarships go unclaimed annually. Hunting out and applying for scholarships can make the difference between attending that dream school or having to pass.

Think about recommendations.
Consider which teachers, counselors or coaches might write a letter of recommendation on your behalf, and reach out to them with a request. Just like students, teachers are far less busy in the summer than in the fall. Reaching out to those teachers that might right the best recommendation now not only reflects a student’s interest, but also respect for the teacher’s time. That alone might result in a higher quality recommendation.

Prepare to work hard.
Do your summer reading for the fall semester, and mentally prepare to continue working hard senior year. College is the goal. But there’s still that senior year to get through. Don’t overlook it.