Burned by college net price calculator estimates

Price calculators were supposed to make estimating the cost of going to college easier. But some families are feeling burned by them….

Net price calculators (NPC) became a mandated tool on all college websites last fall, but the Wall Street Journal reports that some estimates have turned out to be inconsistent with the actual costs families learned about this spring.  There can be several reasons for the inaccuracies, including errors in entering data, changed personal circumstances, outdated college costs, and flawed calculator design.

Families should understand that the NPC estimates can be a useful first step in comparing affordability among various institutions, but should not be relied upon for total accuracy.  It’s important to review the final report carefully for questionable results, such as the example where an NPC produced an ”estimated out-of-pocket cost” of $0 while also including loans amounting to more than $20,000.  Contact the college when you discover questionable numbers like this.

Some tips on interpreting NPC resuls from The Institute for College Access & Success:

• Be wary of estimates that include unrealistic amounts of self-help. We have found calculators that subtract $20,000 or $30,000 worth of expected loans to get to what might be called a “final” or “out of pocket” cost figure of zero. This can make colleges look more affordable than they really are. It may look like you will have no out-of-pocket costs, but the costs are just delayed.
• The results are only estimates and colleges can calculate them differently, so use them to make ballpark comparisons between colleges. Don’t draw conclusions based on differences of several dollars or even several hundreds of dollars – talk to the schools’ financial aid offices to find out more.
• The estimates are only for your first year of college and apply to a particular academic year (e.g., 2011-12). If you expect to enter college at a later date, know that the college’s costs and financial aid policies may change.
• Not all grants and scholarships are available for all years of college. You can contact the college’s financial aid office (or try searching its website) to find out whether you can expect the same amount of grant assistance after your first year.
• As all net price calculators are required to tell you, the estimates are not final or binding financial aid awards. To get an actual aid offer, you have to apply to the school for admission and fill out the FAFSA (Free Application for Federal Student Aid, http://www.fafsa.ed.gov/) to qualify for federal financial aid, and you may have to fill other applications for aid from your state or college. Net price calculators can help you decide whether to take those next steps.

Helpful FAFSA Q&A from Mark Kantrowitz

Mark Kantrowitz answered FAFSA questions from readers of the NY Times The Choice blog.

To help readers of The Choice fill out the Free Application for Federal Student Aid, or Fafsa — the form that so many families will begin tackling this month to initiate the process of receiving financial aid from the federal and state governments — Mark Kantrowitz, a financial aid expert and founder of the Web sites finaid.org and fastweb.com, is taking questions this week in our virtual Guidance Office. Mr. Kantrowitz is the author of “Secrets to Winning a Scholarship,” published last February.

I always learn something new from reading these types of articles.  Did you know that in completing the FAFSA, a parent’s two-year associate’s degree counts as having “completed” college?  However, this may be a trick question if a student is trying to qualify for some types of financial aid.  Here’s the explanation from Part 2.

Q.  I’m not sure how to answer the question on parent’s education level. I have an A.S. degree and took some classes at a four-year college but never got my baccalaureate degree. Have I “completed” college? – PSB

A.  The purpose of this question is to determine whether the student is the first in his/her family to attend college (i.e., the highest level completed by either parent is middle or high school). Some states and colleges provide special grants and scholarships to these “first-generation” college students. First-generation college students are at higher risk of dropping out.

Note that these questions should be answered based on the birth or adoptive parents, not step-parents, foster parents or legal guardians.

For the purpose of this question, receipt of an associate’s degree is normally considered to have completed “college or beyond.”

The question is badly worded because some programs for first-generation college students distinguish between “no college,” “some college, no degree,” receipt of an associate’s degree and receipt of a bachelor’s degree.

If you are unsure as to the proper answer, select the “Other/unknown” option.

Here are links to the complete series.

Part 1: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 2: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 3: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 4: Answers on the Fafsa, the Free Application for Federal Student Aid

Part 5: Answers on the Fafsa, the Free Application for Federal Student Aid

Last of 6 Parts: Answers on the Fafsa, the Free Application for Federal Student Aid

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• File your FAFSA ASAP – financial aid is often first-come first-served (costofcollege.wordpress.com)

How many students complete the FAFSA at your high school?

If you’re curious how many students at your local high school complete the FAFSA, you can now check online.

For the first time, the Education Department is publicizing the number of seniors in each high school who have submitted and completed the Fafsa, which determines eligibility for many forms of financial aid. Students may have submitted their forms, but they may still be missing required information. Until the missing data is provided, the government cannot determine whether the student qualifies for federal aid.

High school counselors can use this information to see if their students are getting this part of the college application done.  I looked at our local high school to see what percentage of graduating seniors complete the FAFSA.  Out of about 210 students, only 121 (58%) had submitted FAFSA forms.  Over 90% of this school’s graduates typically go on to attend college, but apparently many do not anticipate qualifying for financial assistance.  Considering that this is a relatively affluent area in a high-cost part of the country, they are probably right.

Just out of curiosity, I looked at two other nearby high schools.

New Rochelle High School
Only 38% of the 770 high school seniors had submitted the FAFSA.  Since their student population is economically and ethnically diverse with over 90% of their graduates going on to college or other institutions of higher learning, I am somewhat surprised by the low percentage.  College Goal Sunday, a program dedicated to assisting students and families in accessing financial aid for college, hosted an all-day event at this high school in February.  I participated that day, and my impression was that  the school heavily promoted the availability of financial aid but many students remained unaware or uninterested.

Scarsdale High School
Only 23% of Scarsdale’s 370 high school seniors have submitted the FAFSA.  Virtually all their graduates go on to college, but it is unlikely that many from this very affluent community qualify for financial aid.

If you are curious you can check your local high school at Data Center FAFSA Completion by High School.

Related articles

• Boost your chances for college financial aid with these FAFSA tips (costofcollege.wordpress.com)
• File your FAFSA ASAP – financial aid is often first-come first-served (costofcollege.wordpress.com)

Postponing remarriage to get more college financial aid

There are a many “tricks” that will increase your odds of getting college financial aid, including postponing remarriage so that household income looks low.

I Do! (In a Few Years)
The Fafsa asks a seemingly absurd question: “Who is considered a parent?” Yet frequently families react with frustration when I explain how the government defines parents for financial aid purposes. If both parents are alive and married to each other, they check off the “married” box and include their information on the Fafsa.

If there has been a divorce or legal separation, you need to determine who the student lived with more than 50 percent of the time the previous year. That’s the custodial parent. Only the custodial parent’s income and assets appear on the Fafsa; the noncustodial parent’s income and asset information don’t (though a child support question and another untaxed income question can reflect household support).

This is true even if the divorce arrangement says the noncustodial parent has to pay for the whole expense, or things are split evenly.

Here’s the surprise for some stepparents: Let’s say mom, the custodial parent, marries stepdad. Both mom and stepdad’s income and assets appear on the form. Maybe when they married they had a deal: he would pay for his children, she would pay for hers. Not happening. Of course, I don’t recommend holding off on saying, “I do!” (again) until after all the children have their degrees, but be aware of the rules.

Related articles

• Boost your chances for college financial aid with these FAFSA tips (costofcollege.wordpress.com)

Reminder – automatic zero EFC maximum income DROPPED TO $23,000

Last month Congress made it harder to qualify for an automatic zero EFC by reducing the maximum income allowed from $32,000 to $23,000 for the 2012-13 Award Year.  A zero EFC usually makes a family eligible for the highest amount of financial aid.

This significant change seemed to have stayed mainly under the radar, even though it will hit low-income families hard since over 4 million students qualify for the automatic zero provision this year.   Perhaps some provisions of President Obama’s 2012 “Blueprint for Keeping College Affordable and Within Reach for All Americans” will counteract this benefit cut to poor families.

Here are more details about how dependent students can qualify for the automatic zero EFC, updated from last year’s post.

For the 2012-2013 school year, a dependent student automatically qualifies for a zero EFC if both (1) and (2) … are true.

1) Anyone included in the parents’ household size (as defined on the FAFSA) received benefits during 2010 or 2011 from any of the designated means-tested Federal benefit programs: the SSI Program, the Food Stamp Program9, the Free and Reduced Price School Lunch Program, the TANF Program, and WIC; OR
The student’s parents:
• filed or were eligible to file a 2011 IRS Form 1040A or 1040EZ11,
• filed a 2011 IRS Form 1040 but were not required to do so, or
• were not required to file any income tax return; OR
the student’s parent is a dislocated worker.

AND

(2) The 2011 income of the student’s parents is $23,000 or less.
• For tax filers, use the parents’ adjusted gross income from the tax return to determine if income is $23,000 or less.
• For non-tax filers, use the income shown on the 2011 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) to determine if income is $23,000 or less.

Federal Pell Grant Program of the Higher Education Act – Background, Recent Changes, and Current Legislative Issues  (pages 20 & 22)

Related:  Congress curtails Pell Grants and federal loan grace period 

Boost your chances for college financial aid with these FAFSA tips

Lynn O’Shaughnessy offers some excellent FAFSA tips that can help maximize your chances of getting financial aid.

1. Don’t provide retirement assets
Families can dramatically hurt their chances for financial aid if they include assets from their 401(k) plans, Individual Retirement Accounts, 403(b) and other qualified retirement accounts on the FAFSA. The financial aid form only requires that you share non-retirement assets.

2. Don’t include business assets
Parents who have a family-owned and controlled small business do not have to report the company’s net worth on the FAFSA if it has fewer than 100 full-time employees.

3. Skipping deadlines
Colleges impose deadlines on families to submit their financial aid forms, and these dates can be much earlier for students applying through early decision and early action options. Find out what the deadlines are, and don’t miss them.

4. File early
Although there are essentially no federal deadlines for seeking financial aid, states do impose deadlines for families who hope to qualify for financial aid through their state programs. State deadlines can be as early as February. In some states, aid is given out on a first-come, first-served basis, so it’s best to file your FAFSA well ahead of the state deadline.

5. Seek help
Confused? FAFSA staffers can help. You can contact the Federal Student Aid Information Center via online chat, phone or email. Here’s where to find the financial aid contact information.

6. List the most current marital status
You need to provide your marital status — divorced, separated or married — on the day that the FAFSA is filed. Separated and divorced parents will sometimes enjoy a financial aid advantage.

7. Have the right parent complete the FAFSA
In families of divorce, the parent who has taken care of the child during the majority of the 12 months dating from the day the FAFSA is submitted is considered the custodial parent. This can be especially advantageous in families when one ex-spouse earns significantly less than the other. Ideally, the child would live with the lower-earning parent for at least six months and a day. This parent would complete the FAFSA, and the other parent’s income would not be included. If the custodial parent remarries, however, the income from the new spouse would also be included on the FAFSA.

8. Avoid blank answers
If the answer to a question is zero or not applicable, write “0″ or “Not Applicable” on the online form. Leaving blank answers can cause miscalculations.

9. Pay attention to graduation rates
When you complete the FAFSA and designate that the application be sent to specific schools, the FAFSA website will provide you with the graduation rates of each school on your list. Try to avoid schools with low graduation rates.

10. Don’t inflate your education
Plenty of schools will give applicants brownie points if they are considered first-generation college students. If parents didn’t graduate from college, select “high school” as the highest education attainment.

Regarding #7:  Every week it seems I hear about another variation that raises doubts about who the “right parent” is.
The latest one was a case where the parents are divorced and the student lived with a grandparent for most of the past year.  The answer hinges on which parent actually has legal custody, but there may be other mitigating factors.  It can get complicated, and sometimes it is advisable to notify the college about unusual circumstances.

Related articles

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College Goal Sunday helps students obtain financial aid

College Goal Sunday is a program dedicated to assisting students and families in accessing financial aid for college.  Events are held nationwide where students can go to:

• Get free on-site professional assistance filling out the FAFSA (Free Application for Federal Student Aid) form.
• Talk to financial aid professionals about financial aid resources and how to apply.
• Get information regarding state-wide student services, admission requirements, and more!

Check out their website to find a location near you.  Act quickly because you must pre-register and some sites are very popular.  I will be at the New Rochelle College Goal Sunday on February 12, but it has filled up and is no longer accepting registrations.  Yonkers is nearby and still has open slots.

(Cross-posted at Kitchen Table Math)

Don’t wait too long to request college financial aid

SmartMoney‘s 10 Things Financial Aid Offices Won’t Say is a gold mine of wisdom for families seeking financial aid.  The entire list is good, but the first item is particularly timely.

1. “You waited until April? Sorry, we gave your money away.”

At first glance, the amount of financial aid available to students seems like a goldmine. According to the College Board, graduate and undergraduate students received more than $168 billion in aid during the 2008-09 academic year; more than $109 billion came from the federal government alone not including education tax benefits. But thanks to the down economy, competition for that money is expected to be tougher for the coming year. Don’t miss out on aid because of confusing deadlines for the Free Application for Federal Student Aid (FAFSA). Available at fafsa.ed.gov, the form must be completed to be considered for government grants and loans and both the government and prospective schools will review it. The federal deadline on the form is June 30, 2011, but schools’ financial aid deadlines listed in the colleges’ materials are as early as this February.

“Families need to submit their financial aid info as soon as they can after Jan. 1, preceding the student’s freshman year,” says Barry Simmons, director of university scholarships and financial aid at Virginia Tech. While the FAFSA asks for the previous year’s tax information a common reason parents postpone applying until April parents can estimate tax figures based on last year’s return and update them later.

A financial aid administrator posting on CollegeConfidential puts it this way.

Aid is limited, and when it’s gone, it’s gone. I would tell you that.

Another reminder that January is a good time to file your FAFSA.

File your FAFSA ASAP – financial aid is often first-come first-served

Do not procrastinate in filing your FAFSA because it could mean less financial aid.

“There are several states [and colleges] that have a first-come, first-serve basis where they have a limited pool of funds and when they run out of money, they stop awarding money,” says Finaid.org and FastWeb.com publisher Mark Kantrowitz.

The FAFSA form to use if you plan to attend college between July 1, 2012 and June 30, 2013 became available online on January 1, 2012.  The federal deadline for filing is June 30, 2013, but state and college deadlines are usually earlier.  For example,  the cut-off date for Connecticut is February 15, 2012.  You can check deadlines for all states by going to the FAFSA website.
…
BACK TO BASIC$

What is FAFSA?

The Free Application for Federal Student Aid (known as the FAFSA) is a form that can be prepared annually by current and prospective college students (undergraduate and graduate) in theUnited States to determine their eligibility for student financial aid (including the Pell Grant, Federal student loans and Federal Work-Study).^[1]

Despite its name, the application is the gateway to be considered for the nine federal student aid programs and the 605 state and most of the institutional aid available. The U.S. Department of Education begins accepting the application beginning January 1 of each year for the upcoming academic year. Each application period is 18 months; most federal, state, and institutional aid is provided on a first come, first served basis. Students are advised to submit a FAFSA as early as possible for consideration for maximum financial assistance.

Related articles

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Why does the EFC come as a shock to many parents?

Parents who fill out the Free Application for Federal Student Aid, or FAFSA, are often shocked by how much the federal government thinks they can afford to pay for college when they receive their official “Expected Family Contribution,” or EFC.

According to Kim Clark at USNews Education, some fundamental aspects of the federal formula for calculating the affordability of college are the reason for the shock.

1. Outdated budget estimates. The Education Department bases its estimate of what families can afford today on a government budget for a “family maintaining a lower standard of living” in 1967. That budget has been adjusted for inflation every year. But it has not been adjusted for changes in family spending patterns. During the 1960s, fewer wives worked, for example, so families spent much less on child care. The antiquated budget also can’t account for modern technological expenses such as cell phones, computers, or internet access.

2. No regional adjustments. The government doesn’t account for the different costs of living in different cities. The Council for Community and Economic Research, which produces widely used data for tracking cost of living, estimates that living in New York City, for example, costs more than twice as much than living in, say, Pueblo, Colo. Yet the federal government assumes Brooklyn, N.Y., families paying, say, $2,000 a month for a three-bedroom apartment can afford to spend as much on college as similar families with comparable income paying only $1,000 for a similar home in lower-cost communities.

3. Unrealistic family spending assumptions. The government’s formula doesn’t make any accommodation for parents whose disposable income is reduced because of their own student loan bills, even though a growing number of parents are still paying off their own student loans as their kids enter college.

These policies mean the EFC is “at best, a very harsh assessment of families’ ability to pay,” says Mark Kantrowitz, publisher of FinAid.org. At worst, he says, it is “somewhat unrealistic…and archaic.”