Six Common Myths & Misconceptions That Could Cost You A Bundle When Its Time To Pay For College!

We hope that you are enjoying a remarkable and rejuvenating summer! As you well know, we always recommend that parents and their college-bound high school students use a bit of their summer to plan ahead for college admission and funding. This is the perfect time to look forward to the next academic year (or years), simply because we are away from the thick of things and have a chance to consider them with a more relaxed brain! It is also vital to take the opportunity to see how things are shaping up on the financial aid front when it comes to college and university attendance, even if this is a few years in the future. As we always say, it is never too early to plan for your child’s college attendance and the financial aspect is extremely important… in fact, it is an ever-present issue that simply will not go away.

 

There are many myths, however, that seem to swirl around about who can and who cannot qualify for financial aid. This can be remarkably frustrating, not only for parents and their children, but also for us as college funding professionals. We regularly see people who have attempted to prepare for college, but in doing so with false information they end up in a very bad situation financially. This is preventable, assuming you have the correct information to begin with, and we consider our duty to battle against the misinformation that exists out there and provide some facts and clarity through the din.

 

Of course, the best way for us to manage this task is to put the facts out there for our clients and potential clients, to clarify areas of confusion, and make the process a bit easier to understand. While there are certainly details that are best managed with the assistance of a professional, we also want to help all parents with proper and factual information about the college planning process and especially the financial aid aspect. The more parents and students know, the more comfortable they will feel about getting things prepared for the jump from high school to college or university.

 

There are some myths and misconceptions that we tend to hear over and over again, so we have decided to devote this month’s newsletter to shedding some light on some of the most common misinformation out there. These could be things that you have heard yourselves… in fact, we will be surprised (and you can account yourself lucky!) if you have never heard any of them before. So, without further ado, here are some common myths about financial aid that we would like to dispel immediately, with an eye toward helping you and your family plan for the future in the most appropriate manner possible.

 

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Myth #1: “My child did fine in high school, but wasn’t an academic all-star… so there won’t be any aid available for us.”

First off, it is important to remember that federal financial aid is not based on excellent grades or extracurricular activities… it is based on a strictly-defined definition of need. As long as your child performed well enough to be accepted to college or university, that is the main thing when it comes to governmental financial aid. (Of course, there are plenty of academic and leadership scholarships, as well, and these are absolutely based on grades and test scores… so it is in your child’s best interest to do his or her best in high school!)

 

The amount of federal aid available for college students increases every year. Over $125.5 billion was budgeted in 2010 for more than 19 million students. This does not include billions in state and private scholarships and grants that colleges administer or award themselves.

 

Myth #2: “We already saved a lot of money for our child for college, so we probably won’t qualify for aid.”

 

This is not necessarily the case. The formula that is used does allow for savings and assets, but your college funding professional can assist you in finding the most advantageous ways for families to save for college. Remember that colleges and the federal government do not expect you to sacrifice the equity in your home or your life savings in order to send your child to college. In fact, only a specific portion of the assets owned by parents are anticipated for use as contribution for your child’s education.

 

Your best bet, especially if your child has been working hard to save for college, is to speak with a college funding specialist to determine the best ways to allocate those funds to allow him or her to maximize eligibility for financial aid.

 

Myth #3: “Our oldest daughter wasn’t eligible for financial aid last year, so this year our graduating son won’t be, either.”

 

Many families with multiple children approaching college age seem to have heard this bit of nonsense, but it is absolutely untrue. In fact, the reverse is more likely to be the case, because the federal government takes into consideration the total number of family members who are currently attending college. This bit of information has an enormous impact on the financial aid eligibility of each student.

 

Even if you applied previously and were denied aid with one child in higher education, do NOT hesitate to apply again with a second (or even third) student in the works. We think this makes perfect sense, actually, but apparently some parents start to develop a “one-bitten, twice-shy” mindset when it comes to financial aid application. Then again, if they planned ahead and used a good college funding professional the first time around, they probably would have had better results to begin with!

 

Myth #4: “My family makes far too much money to allow my child to qualify for financial aid.”

 

This myth really drives us up the wall, because it is so commonly heard (and believed). Truly, the only way to discover whether or not your family’s income is too high to qualify for financial aid is to actually fill out the FAFSA (Free Application for Federal Student Aid) and then receive the SAR (Student Aid Report). However, we hasten to assure you that even families with a substantial income can still legally position themselves to be in an excellent position to receive financial aid, if they plan ahead and work with a knowledgeable college funding professional.

 

You see, the federal government has a particular formula that they use and it takes into consideration several different factors. These factors, among others, include the number children that are college-age, assets, income, and other considerations that will help to figure out how much the family is expected to provide to the college-bound student. The costs that are above and beyond this parental contribution is usually what is given to the student by way of government loans or private student loans.

 

If you plan ahead for the college years, you will have every incentive to fill out the FAFSA because you will be well-prepared for whatever amount you qualify for… and in fact, your advisor will likely be able to project it with fair accuracy in advance! Your college planning experts will help you through the process to make sure you are providing all the information that is necessary and to help you to qualify for the most financial aid that you possibly can.

 

Myth #5: “Private schools are horribly expensive, and therefore out of reach for all but the extremely wealthy.”

 

Ok, this one is actually a half-truth. In general, the tuition at private schools DOES tend to be significantly more expensive than public institutions, because the public schools receive substantial financial support from the state. This means that overall tuition is usually significantly cheaper at a state school – at least for a state resident, that is the case! Note carefully that a student who is a resident of another state may actually pay more in tuition at a public university than they would at a private school, in some cases… so your state of residence definitely makes a difference.

 

However, the idea that private schools are only for the financially privileged is simply inaccurate. In fact, many of the best private colleges and universities in the country (including the Ivy League institutions) have adopted a policy that guarantees accepted students the necessary funding to attend. Additionally, private schools often have impressive amounts of funding from influential alumni, offering private scholarships and grants that can actually make them cheaper overall than your state school! The most important thing is to find the right fit for your student… your college funding advisor will help you make sure that the financial elements fall into place.

 

Myth #6: “Only apply to schools where you KNOW you will be admitted… and don’t consider a first-choice school if it costs too much.”

 

Generally, we recommend that students apply to a mix of schools. These include a few “reach” schools, where they would love to attend but may be on the lower edge of the usual admitting standard… followed by “competitive” schools at which the student stands an even chance of admission, and would still be happy attending… and finally a few “safety” schools, where the chances of admission are almost certain. As mentioned above, the total school costs will likely be different after the final offer from each school’s financial aid offer, so do not rule out a school just because of price tag concerns. The better job you and your student do in applying to a healthy mix of schools, the easier it will be to end up at the right school with the right offer for financial aid. Again, your college funding advisor can assist you with this vital process in advance, making sure that the colleges and universities you select are all appropriate for your student’s high school performance, interests, and future academic and professional plans.

 

While you are putting some of these myths to rest in your mind, please let us also take this opportunity to remind you about the excellent (and completely ACCURATE) additional information available to parents who order a copy of our free college funding report “9 New Ways To Beat The High Cost of College”. This report provides a basic overview of the process, and it can be extremely useful in clarifying many of the most frequent questions we hear year after year from parents and students alike. Our staff will be happy to send you your own free copy if you give us a ring at (818) 333-5099.

 

For more personalized information and details, above and beyond our free report, please consider attending one of our College Financial Planning Workshops. These reserved-seating workshops provide more focused and detailed information on higher education funding, and they are free as well. However, all locations and dates for the workshops do require a reservation, so please feel free to call for additional details, or to reserve your own seat call our 24 hour reservation line at 1-888-311-0049. Feel free to call our office at 818-333-5099 and we will be very pleased to assist you further with any questions or comments you may have!

 

Until next month…

 

Michael Budnick

 

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