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Comparing Financial Aid Awards

Comparing Financial Aid OffersIf you’re fortunate enough to have been admitted to multiple colleges you will now be faced with the task of deciding which one is going to be the most affordable option. If you’ve done your homework ahead of time you should have a ballpark idea of what your net cost is going to look like.

Note that I didn’t say net price.

Net cost is your out-of-pocket cost – it’s what the college will cost you after gift aid (read, free money!) is applied to your overall cost of attendance. If the school’s cost of attendance, which includes tuition, fees, housing, a meal plan and insurance, is $55,000 and they are going to award you with $23,000 in gift aid, your net cost will be $32,000.

If you’re noticing that I didn’t mention loans, then good for you! Loans, while a part of financial aid awards, are not gifted money. Loans have to be paid back, with interest, and therefore should be factored in after your net cost has been determined. They are helpful, but you can’t dismiss the fact that they have to be paid back later.

So, what do you do with all of this information as you try to decide where you will enroll?

First, gather all your award letters and take a close look at them. Award letters are not created equal. Some will be incredibly detailed and will include your EFC and the complete cost of attendance broken down into semesters with the award broken down into categories (gift aid, loans, work-study) while others will show just a total for the year.

Second, create a little spreadsheet for yourself so that you can compare apples to apples. Make columns for each school and then break down the costs and the awards so that you can see the total for each school.

Third, subtract the gift aid from the cost of attendance and you will get your net cost.

Keep in mind that the lowest net cost isn’t always the best offer. And this is where you have to look at what kind of loans you’re being offered and if you’re being offered work-study.

You already know loans have to be paid back, but if you were to take out a small loan and that makes up the difference between your top choice school and the second place one, that loan may make sense for you. Work-study can be a great help as well, but you have to remember that you will be required to work on campus for so many hours each week to earn it. Even then, it is not applied to your bill because you earn the money on a week-to-week basis like a paycheck.

At the end of the day, be honest with yourself in regards to how much you can handle. You are making a decision about the next four years based on information you have for your first year only. What happens when the cost of attendance goes up in your sophomore year? What if you’re working for your work-study money and its affecting how much time you have to study? What if you struggle and lose your merit scholarship?

These are all questions you need to ask yourself before making any decisions. Just keep in mind that you have to make a final decision by May 1st.

If you would like some assistance with your college search or financial aid process, contact me today for a free 60-minute consultation.

Here’s what other families like yours are saying about how Dobler College Consulting made a difference for them.

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Starting Your College Search? Here’s Why You Should Know Your EFC

Starting Your College Search. Here's Why You Should Know Your EFCIf you’re like most families, when it comes to finding colleges that will fit, cost is going to be a significant factor. Looking at price tags of $30,000 to $60,000 or more a year for college is overwhelming if not downright scary.

What’s even scarier is that most people don’t even know how much of that price tag a college will expect them to pay.

Sure, they have an idea of what they can afford to pay, but when it comes down to how much money a family will have to contribute towards college costs, and their true financial aid eligibility, most people are in the dark.

Parents of freshmen, sophomores and juniors, I’m talking to you. Go figure out your EFC.

EFC stands for expected family contribution. It is the amount of money you will be expected to contribute towards one year of college costs. While it won’t paint the entire picture for you, it will serve as a starting point before you venture into how generous a school is with their aid. You won’t know your official EFC until after you’ve completed the Free Application for Federal Student Aid (FAFSA) but knowing a rough estimate of your EFC now will help you plan your college search more strategically.

For example, let’s say your EFC is $25,000. If you are looking at a college where the cost of attendance is $45,000 you can immediately see that you could  be hoping to receive $20,000 in aid. Conversely, if the college’s cost of attendance is $20,000, you shouldn’t be expecting anything.

In the case of the former, $20,000 is a big difference to make up. The next step is to understand just how generous a school is and if they are going to help you out. By looking at how much of your need a college will meet, you can then do the math and determine how much you should be expecting, if anything. Staying with this example, a school who meets 50% of your need would have $10,000 in aid for you while a college who meets 75% of your need would have $15,000 in aid. How much of your need a college meets varies from college to college so look closely at the numbers so you know what to expect.

Outside of your ability to pay, some colleges also factor in how competitive you are as an applicant when they determine how much aid to award you. The stronger you are as an applicant, the more desirable you are to the college and, therefore, the more likely you are to receive aid.

So, do yourself a favor and obtain your estimated EFC now. Write it down, understand it and use it when you are researching schools and want to know what a school is going to cost you.

If you would like some assistance with your college search, contact me today for a free 60-minute consultation.

Here’s what other families like yours are saying about how Dobler College Consulting made a difference for them.

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Need Blind Versus Need Aware and Why You Should Know the Difference

Muhlenberg College

Muhlenberg College

If you’re like most families, you’re concerned with how much four years of college is going to cost you. My boys are two and six years old, and I worry about it already. And while so much of the college search is focused on working through the differences between colleges to find that “right school”, all too often one major difference is overlooked.

That difference is whether a school is need blind or need aware.

Need blind schools don’t consider an applicant’s financial need when making admissions decisions, but many are not able to meet applicants’ full need with their financial aid packages without adding work study (which rarely helps a family pay for college) and unrealistic loan options. Highly selective colleges like Yale and Harvard belong to a very small group of schools who are completely need blind and who meet full need. Due to massive endowments, they have unlimited financial aid budgets. If a student is admitted to these colleges they will have 100% of their financial need met.

Need aware schools do consider finances in their admissions decisions, but this control can give colleges the ability to meet full need for all accepted applicants. They must manage an annual financial aid budget that has limitations but by paying honoring these limitations, the colleges are trying to make sure that the student can actually attend. While some students would say a need aware policy is unfair and that decisions should not be made due to financial constraints, the reality is that there is only so much money to go around.

Some schools are a combination of both and while neither approach is perfect, you absolutely need to understand how their application review operates. Earlier this month I was visiting colleges in eastern Pennsylvania and several of them indicated that they are need blind until they get to the last 15-20% of their decisions. At that point, an applicant who has a greater ability to pay would get the nod over a student who was going to need significant financial aid in order to attend.

So how can a family best assess its options? Ask the right questions, of course.

When you visit a college or talk to admission counselors at high school visits or college fairs, ask them if they are need blind or need aware. Let them explain how they review applications so that you can fully understand how your ability to pay may affect your college applications.  You may be disappointed by what you hear, especially if you feel your family’s financial situation may affect your chances at a need aware college, but without knowing how a college will treat you, you run the risk of greater disappointment when the financial aid award doesn’t come close to making the school affordable.

In the college search and application process, information is everything.

If you would like some assistance with your college search, contact me today for a free 60-minute consultation.

Here’s what other families like yours are saying about how Dobler College Consulting made a difference for them.

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Answering Your Questions About The FAFSA

Answering Your Questions About The FAFSANow that January has arrived, it’s time for high school seniors and their parents to fill out the FAFSA, or Free Application for Federal Student Aid. The FAFSA is the form you are required to fill out if you want colleges to consider you for financial aid.

While families have their own unique circumstances, here are some of the top questions I come across this time of year and my answers which will hopefully help you along the way as well.

1. We make too much money, we probably shouldn’t bother filling out the FAFSA, right?

Wrong. Regardless of how much (or how little) you make, you should always fill out the FAFSA. Even if your EFC is very high, there are still non-need based loans like the Direct Unsubsidized Loan or Parent PLUS Loan which can help you spread out the costs. But, to qualify you must fill out a FAFSA.

2. How do parents who have joint custody and are both remarried with new spouses file the FAFSA??

When students come from divorced families, financial aid eligibility is based on the income and assets of the custodial parent. This is the parent who the student lives with for the majority of the year, even if it’s six months and one day. Even if the non-custodial parent has a considerably higher salary than the custodial parent, this parent’s income and assets are not factored into the federal financial aid eligibility calculation.

3. We’re going to have two kids in college at the same time, how will this affect our financial aid eligibility?

How many kids you have in college at the same time has a very big impact on financial aid eligibility. Consider that your EFC is divided by the number of children enrolled in college. If you have one child in college and your EFC is $40,000, then that’s what colleges would expect you to pay. If you have two kids in at the same time, the EFC will be $20,000 each. This is why it’s also important to file a FAFSA each year. Even though you may not get a lot with one child in college, if you have a second one entering a year or two later, you may end up qualifying for something.

4. We won’t have our taxes done until late March, can we just apply for financial aid then?

You can, but you shouldn’t. Financial is aid is very much a first-come, first-serve process. Additionally, some states like Connecticut have February deadlines for state grants which you don’t want to miss. If you wait until after you file your taxes, colleges won’t have as much money to give out as they would have if you had applied in January. File your FAFSA now with estimated income and then use the federal data retrieval tool after you file your taxes to update your information.

5. My daughter’s grandfather has put away money in a 529 for her which we plan on using this year. Since it’s his money and not ours, do we have to report it on the FAFSA?

Yes, you have to report any distribution from a 529. The more important factor here is that the 529 is owned by a grandparent and, therefore, may reduce your aid eligibility considerably. Where a distribution from a 529 owned by either parent is considered a parental asset, a distribution from a 529 owned by someone who is not the parent is considered student income. When calculating aid eligibility, student income and assets are assessed at a much higher level than parental assets so even though the intention is a good one, the outcome may not be helpful.

If you want some help and guidance on your college application and financial aid process, check out what other families are saying about Dobler College Consulting and then contact me today to set up an appointment for a free consultation.

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Reducing The Costs Of College

Dobler College ConsultingIt seems like every time I go out to meet a new student and his or her parents, the thing we spend the most time talking about is college costs.

And it’s completely understandable. With costs rising at astronomical levels over the last couple decades, there are very few people out there who aren’t worried about how they will pay for college.

Consider that in 1993, when I graduated from Naugatuck High School, the average cost for tuition, room, board and fees was $24,504 for a private college and $9,513 for a public school. In 2012 those numbers increased to $39,518 and $17,860, respectively.

Let me do the math for you. That’s a 61% increase for privates and an 87% increase for publics.

And that’s just in 20 years. If you go back to 1972, the cost of a private school education has gone up 137% while it’s only gone up 124% for public schools. How’s that for sarcasm?

Once you pick yourself up off the floor, you can look up these numbers yourself on the College Board website.

The funny thing is that even though these figures are out there for everyone to see, I still see so many college applicants falling in love with schools that will be completely out of their reach financially. I hear things like, “we’ll figure it out” and “well, maybe I’ll get more money” when the reality is that they won’t figure it out and they won’t get more money.

What they will get is disappointment. Frustration. Anger. Resentment.

If you don’t want to get what they’re getting, pay close attention to just how generous or stingy colleges are with their money. Understand your EFC and what it means in the context of what a college may offer for you financial aid. And, most of all, make informed decisions.

I’ve written a few posts about these very ideas and if you haven’t read them yet, now would be a good time:

What You Need To Know About The Costs Of College

Why Some Financial Aid Offers Will Underwhelm

Why You Should Know Your EFC

You can trust Dobler College Consulting to help you navigate the college admissions journey. Give me a call now at 203.525.4096 or drop me an email to schedule a FREE 60-minute consultation to discuss your needs for college admissions counseling.

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