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Common Myths of Financial Aid with Bonnie
Hepburn
Financial Aid can have a paralyzing effect on
parents. Many people wrongly
discount themselves from schools well within their reach because of what they do
not know about financial aid. Demystify financial aid a read the common myths
below.
Myth 1: Middle-class parents can’t get aid.
They can’t if they don’t apply, that’s
for sure. Parents sometimes fail to even consider selective private colleges
because they think they won’t qualify for aid. Families with income between
about $40,000 and $90,000 are considered middle class in the U.S. Even at the
high end, most can qualify for aid the expensive private colleges.
There’s no one right answer. Several
different solutions can work out very well, given the student and the particular
circumstances. That’s the beauty of financial aid. It can create options. If
you are interested in, for example, colleges in Massachusetts offering Criminal
Justice, consider private colleges such as Stonehill College and Northeastern
University as well as Westfield State. Compare the aid awards, and then make the
decision as a family. It’s better to explore all options than to regret what
might have been. Spending an extra $50 on an application will really be worth it
in the spring if that school gives you $2,000 more aid.
Myth 2: Financial aid means loans and a job so
why bother?
It is true that financial aid from the federal
government is largely limited to loans and a job on campus for most middle-class
students who qualify. It’s also true that public universities give primarily
federal aid, unless your student has a 90-mph fast ball, a 125 MPH serve or some
other unique and amazing talent!
At private colleges, though, federal aid is
typically only a small part of total aid available. Private colleges use money
from their endowment to fund grants. Grants are outright gifts of money, based
on your financial need.
Myth 3: Only exceptional students get grants.
Since grants are based on need, many students are
eligible to varying extents. The more a school wants a student, all other things
being equal, the more generous the aid package will be. Target a place where you’ll
be in the top 25 percent of entering freshman academically. Money will likely
follow. Keep in mind that every student can be exceptional at the right school.
The more a school wants your son, the greater the chance that the aid
package will contain grants vs. loans or work-study.
Myth 4: The Best school for your student is the
most selective.
There’s an unwritten assumption, particularly
in the suburban Northeast, that every student in the top two or three places in
the class will be best served by a Harvard education Although you’re the one
responsible for parenting, which includes paying for college, you’ll get
pressure from unexpected sources. People will pressure your student to attend
his reach school, if he’s accepted. Sources of pressure might include the high
school, his friends and their parents, and your parents (the student’s
grandparents).
As the parent, your role is to help with the
selection of an affordable college that will challenge and nurture your student,
helping the student realize his/her potential. Not only do you need to pay for
college, but also for retirement, which is looming. For example, your student
might get a lot more money at Drake University than at Middlebury College. Your
student might also get better grades for graduate school in the bargain. Use
your wisdom to help the decision.
Myth 5: All schools use the same formula and give
about the same aid.
Wrong! Aid packages vary considerably, with the
biggest difference showing up in the distribution of institutional grants in
private colleges.
Federal financial aid is awarded on more or less
the same basis for school to school because the awards result from the Federal
Methodology calculation, which Congress developed. Congress makes substantive
changes to the formula every five years and cost-of-living adjustments annually.
All colleges use the Federal Methodology in calculating a student’s Stafford
Loan eligibility, for example. Federal aid is very similar from school to
school.
Aid packages at private colleges vary because the
Federal Methodology does not restrict how they dispense their own money. Even
though institutional methodologies do vary from college to college, all schools
tract Federal Methodology closely. However, two exceptions apply almost
universally:
#1- in making decisions about disbursing their
own money, most private colleges do count home equity.
#2- In addition, most private colleges expect
students to contribute about $1500 from their summer earnings.
Myth 6: The house doesn’t count.
See Myth 5. I’m mentioning this twice, because
it confuses almost all parents. Most private colleges do count the house before
they’ll give out their own money. (They’re much more generous with federal
money, it’s true, and don’t count the house in that calculation.) Typically,
colleges look at the equity parents have built up, add it to their other assets,
subtract an asset protection allowance of about $40,000 from the total (the
figure is based on the age of the older parent), and multiply the remainder by
5.64 percent. That’s how they count the house.
Myth 7: Financial aid is part of growing up, the
student should do it.
Busy parents sometimes operate as if they believe
their student will learn how the Alice-in-Wonderland work of financial aid
works-perhaps in the high school guidance office-and all will be well. This is
the same student who’s busy getting good grades, enhancing his student ‘resume’
with extra-curricular activities, practicing a sport after school every day,
taking occasional time out for social interactions, keeping his room clean (sort
of), and working and saving money for college. Not to mention studying for SATs,
opening voluminous mail from colleges, and trying to figure out what to do with
his life.
Who’s going to be signing the checks? Enough
said. Even if your student is destined for a doctorate in accountancy, do it
yourself. You know the intricacies of family finances, and you know your hopes
and dreams for retirement. With the annual cost of selective private colleges at
$31,500 this year, preparing pays. The difference between taking action early in
your student’s high school years and waiting till after college acceptances
have been received may be tens of thousands of dollars.
Start by finding out what you need to do to lower
your cost of college. Some of these steps will be financial, others will involve
wise college selection.
Need Financial Aid Help? FASFA got you
worried? Athlete's Advisor has found a very useful and economical online
service that walks your through every step of the process and allows you
to view historical financial aid figures.
MoneyForCollege123.com
- Online program walks you through FASFA!
GO
Ray Lauenstein is the author of
Baseball: Playing Outside the Lines and
The Making of a Student
Athlete. He also holds a Masters Degree in Sport Psychology and gives
seminars on Mental Skills Training and the Recruiting Process. If you
would like him to speak to your team, booster club or other group please
contact him via the online form or call
1-617-835-1836.
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