Marc A. Hebert's Money Sense: Mistaken views about college financial aid could cost youBy MARC A. HEBERT
December 08. 2017 6:39PM
Some private colleges are now crossing the $70,000-per-year cost for the 2017-2018 school year. Public colleges are also getting expensive. This means that financial aid is essential for some families, yet many don't know much about the process. In fact, there are some myths about financial aid that are worth exploring - here are just a few:
Some families think they make too much money to receive any aid. Family income does come into play, but it isn't the only factor. Furthermore, not all aid is need-based. The sizes of your assets and family as well as the age of the older parent also play a role. If you have two or more children in school at the same time, then that will factor in the calculation for the aid you receive.
In order to be considered for aid, most families will have to fill out the government's Free Application for Federal Student Aid (FAFSA) form. The word "free" is emphasized here, as you should never pay money to file this application.
The first thing this form does is allow students to be eligible for Unsubsidized Federal Direct Loans. You can't be granted these loans unless you fill out this form, and there are no income limits to receiving these loans.
I should also mention that the FAFSA helps determine whether a student is eligible for federal grants such as the Pell Grant. It is used by many schools to administer work-study and institutional scholarships.
The FAFSA is a stumbling block for some - in past years it was cumbersome to fill out. Once it went online at www.fafsa.ed.gov, it became easier to complete. The FAFSA needs to be done for every academic year.
There are detailed instructions and guides to help you through the financial aid process. The toll-free number for help with questions is 1-800-4-FED-AID. The advice is free.
Watch the deadlines for filing the FAFSA - both at the federal level and for the state and school deadlines. File early if you can. In some instances, aid is awarded on a first-come, first-served basis. Filing later means you could receive less aid than someone who applied as soon as the application process opened. Remember, just because you didn't get aid one year doesn't mean that you won't the next. Things change from year to year, and those changes could make a big difference in the aid you receive.
Some private colleges require a CSS/Financial Aid PROFILE form as the basis for determining aid. This form is a bit more detailed, but it is still worth the effort to complete.
Another common myth is that the more expensive the school, the more aid you will receive. This isn't necessarily true. Based on the information in the FAFSA, each school will determine your Expected Family Contribution (EFC), and this number will be consistent no matter what college your child wants to attend. The difference between this number and what the child actually receives is the cost of college. For you, it signifies the "demonstrated need." Colleges aren't obligated to meet 100 percent of your child's financial need, so you might end up with a big bill.
If your circumstances change after you file a FAFSA and the changes can be supported by evidence, you can ask the financial aid officer at your child's school to revisit your aid package. The officer has the authority to make adjustments if there have been material changes to your family's income or assets.
Remember, this is an area in which thoroughly researching the options is vital because what you don't know will cost you. There might be more ways to pay for college than just trying to receive financial aid.
Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at firstname.lastname@example.org. Your question and his response might appear in a future column.