March 2010
Our college & career newsletter, The Compass will be updated monthly with timely tips and links. For the month of March, here are a few highlights students and parents should know. The word “college” throughout this newsletter refers to private or public 4-year universities and colleges.
The focus of this month’s newsletter is financial aid, for senior high school students / families, or those students already in college. If the financial aid topic doesn’t apply to you, please skip ahead using the content links below!
Other
Financial Aid and Award Letters – From March through early April, college-bound seniors will receive financial aid award letters from colleges to which they’ve been accepted. These letters will list any need based and merit based aid which can offset college costs. Below are some typical considerations and questions regarding financial aid awards.
- Award Letters – Parents or students may be surprised if the financial aid award from a particular college is inconsistent with what they expected to pay based on their federal “Student Aid Report” (SAR). In last month’s newsletter, we discussed the SAR, which shows the expected family contribution (EFC) and is determined from the completed FAFSA form (Free Application for Federal Student Aid).
- College Methods for Allocating Aid – The reasons why colleges may or may not meet family financial “need” vary widely. Family financial need is calculated as college costs (tuition + room + board) minus the “expected family contribution” (i.e., how much the family and/or student are expected to pay). Once need is calculated, colleges offer a mix of need based or merit based aid to help offset costs and “meet need”. The amount and mix of aid awarded will probably vary by college. The reasons for variation include how a particular college allocates their total aid dollars relative to all accepted students and the methodologies they use for determining family contribution. Some colleges estimate family contribution based solely on the federal methodology (per the FAFSA form). Other colleges determine family contribution amounts based on a combination of the FAFSA form (for federal and/or state need aid awards) and the “Profile” form (for institution-specific aid awards).
- Family / Student Situational Factors are Considered – Once family contribution amounts are determined, the college’s financial aid office may also apply judgment based on numerous factors such as a) family financial strength; b) the need to balance aid across all accepted students c) situational factors that affect the family’s ability to pay and d) many other variables. Last, colleges have varying policies on whether they will “meet full financial need” for their accepted students.
- Making a Family / Student Decision on a College – Before deciding on a specific college, families and students may want to compare award letters and visit one of several “award” calculators such as the one at http://apps.collegeboard.com/fincalc/compare_aid.jsp. Award compare tools are designed to help evaluate which college has offered the best mix of aid. Of course, financial aid is not the only criteria for accepting a particular college. Families and/or students will need to consider aid and other factors of fit when making an overall decision.
Loans
- Loans are Financial Aid – Loans are considered financial aid and a method to help families “meet need”. There are more types of loans than space in this article! Some are student loans; others are parent loans and most are government backed. Student loans are generally more advantageous in payment terms and interest rates. For subsidized student loans, the government pays interest while the student remains in college. For unsubsidized student loans, interest must be paid while the student attends college or must be capitalized (added) into the loan principal for repayment when the student completes (or leaves) college. Either option means that unsubsidized loans generally increase the total amount of borrowing. For either type of student loan, leaving college for more than six months before graduation could trigger principal repayments to begin.
- Is Debt a Good Idea? While many families and students don’t want to incur debt for college, student loans offer low interest rates and allow students to establish credit, provided that total debt is manageable relative to the student’s chosen profession. The College Board provides overviews of student loans and a loan compare tool http://www.collegeboard.com/student/pay/loan-center/433.html
- Must You Accept Loans? – No. Parents and students do not need to accept loans offered as part of the financial aid “award”. For unsubsidized student loans, or parent loans, the best scenario may be to wait until later in the student’s college career to begin borrowing and to use other funding sources in the short-term. However, the funding approach is very family / student specific and also influenced by prevailing economic conditions. Families and students may consider using a funding-based calculator tool and/or professional consultation. This link from College Board shows a number of different calculator tools to evaluate funding options http://www.collegeboard.com/student/pay/add-it-up/401.html. Also, see the Big Picture section on benefits of a multi-year funding plan.
The “Big Picture” of Costs vs. Aid
- What if the Aid Award isn’t Enough? – With the above variables in mind, families often ask “We didn’t get the amount of aid (merit or need based) that we expected from our first choice school, is there anything we can do?” The answer is a qualified “yes”. The approach and next steps are very student and family specific. Students and families can request an appeal through the college’s financial aid office. Legitimate appeals are usually for hardship or extreme situational factors that pertain to the family and/or student. Examples may be where a family or student a) are unexpectedly providing support to an aging family member; b) have incurred high medical bills that may / may not have been captured on the forms or c) have experienced loss of employment that may or may not be reflected on the aid forms. These represent a few examples.
- Understanding Your Award Letter – At a minimum, it is reasonable for families and students to analyze their awards and compile a list of questions. Next, they should contact the financial aid office with any questions to understand opportunities for adjustment to the “mix” of the award. It is also important to understand that Financial Aid Officers are trying to balance total financial aid available at their college with the needs of all students whom they’ve accepted. Here’s an article that overviews when families should consider an appeal and the appeal process: http://www.collegeboard.com/student/pay/ways-to-pay/485.html.
Costs and Aid May Vary by Year – As part of the decision-making, families and students may also want to consider:
- Total college costs will be likely be greater than the published price and will likely increase each year. College published costs include tuition, room and board but may not factor in full costs. For example, campus organizations, books and even lab fees can add-up. A full cost budget spreadsheet and managing to a budget over time is a good way to introduce students to basic financial planning.
- The student / family award amounts may or may not change annually. Merit aid often requires that students maintain a specific Grade Point Average (usually at least a 3.0 or above). Also, some schools require that families complete forms each year to maintain aid. On the positive side, as students enter their major, they may also be eligible for more departmental-based scholarships.
- A multi-year funding plan is a helpful tool – Consider completing a year-over-year analysis of costs that includes tuition increases and the amount of repeating financial aid awards. A multi-year funding plan is a tool to help families and students plan ahead and ensure that any total borrowing is manageable over the long-term.
Scholarships – All high school students should be searching for scholarships. Any student can begin completing a scholarship profile (the earlier, the better!). There are several scholarship search sites available. Also, scholarship searches shouldn’t stop when students get to college!
- Juniors – Take time now to complete your online scholarship profile and begin to see results. You can update your profile(s) over time and create e-mail agents to receive notifications of deadlines or new scholarships. As you create a “short list” of schools to which you plan to apply next fall, you can begin searching on those college web-sites for honors and scholarship programs. The colleges to which you will apply are a great source for finding scholarship aid. Be sure to check honors programs or departmental scholarships that may help offset costs and also offer academic advantages or cultural opportunities. Additionally, independent sites for scholarship searches include www.fastweb.com and www.schoolsoup.com.
- Sophomores and earlier – It’s never too early to begin a scholarship search through one of the standard web sites (see links above). Also, if you already know a “college you’ve dreamed of”, now is the time to research that college’s a) admission requirements and b) honors or scholarship programs. That way, you can plan your curriculum and set goals to increase your chances of getting into your first-choice college and/or receiving scholarships.
Juniors
- Campus Visits – During spring and summer, you can be visiting campuses and form your “short-list” of schools to which you want to apply. Be sure to create a “fit list” of what you’re looking for and write down pros/cons from your campus visits. As you evaluate colleges of fit, both www.petersons.com and www.collegeboard.com provide online college searches based on your criteria. Also, here’s a comprehensive list of questions to consider as you visit colleges http://www.makingitcount.com/content/common/ToughQuestions.pdf
- College Admissions Testing – Create a “testing timeline” based on requirements (SAT I, II and ACT). This will minimize stress during fall of your senior year by getting SAT’s / ACT’s “out of the way”. If you took Algebra II before junior year, junior year is the time to “get scores up”. One way is to use the College Board’s Question & Answer Service (QAS) to study what you missed before. QAS is available for SAT’s taken in January, May and October as long as you order within five months at www.collegeboard.com. If you simply “don’t test well”, an increasing number of colleges are becoming “test optional”. Here’s a searchable list of colleges on the test optional list http://www.fairtest.org/
- ACT – The ACT may be an alternative college admissions test for some students. The ACT is a widely accepted college entrance exam that covers English, reading, math and science. ACT writing is optional, but as a general rule, should be taken by students who may want to substitute the ACT in lieu of the SAT for college admission. Here’s the ACT test schedule along with some background about the ACT http://www.actstudent.org/regist/dates.html. There is also a section just for parents!
- Curriculum – Remember that transcripts are the number one factor in college admissions’ decisions. You should continue to “stretch” yourself academically and keep up your grades.
Sophomores & Freshmen
- Curriculum planning – Plan your long-term curriculum based on honors and AP / IB courses available at your High School. You should “stretch” yourself academically and keep up your grades because transcripts are the number one factor in college admission decisions. Ensure you are taking the right pre-requisites during the first 2 years for those advanced courses you will take later.
- Career assessment – Before you get into the rush of college applications and standardized tests, now is a great time to take career assessments and research colleges or majors that interest you. The earlier you begin research, the more informed decisions you can make about campus visits and building a “short list” of schools to which you’ll apply senior year.
- Campus Visits – You can start visiting campuses now! See the Campus visit section of this newsletter, and the tips and links.
- Scholarships – It’s not too early to start searching for scholarships (see links at Scholarships). Also, document your student resume to help remember your accomplishments and awards for applications you’ll complete later.