Posts tagged ‘SmartMoney’

May 7, 2012

Outside scholarships may cancel out financial aid given by your college

by Grace

Do not assume that an outside scholarship will reduce your out-of-pocket college expenses.  This cautionary note comes from SmartMoney‘s 10 Things Financial Aid Offices Won’t Say.

“Outside scholarships help us, not you.”

Sure, you’re proud of the five scholarships your high school senior won from community groups and a local church, but don’t be relieved just yet. Unless you weren’t counting on any financial aid at all, those scholarships might not make a dent in the total amount you’ll owe. Why? Federal guidelines mandate that outside scholarship money be considered a resource in meeting financial need. This means you can’t use the scholarship dollars toward your expected family contribution, and the college can reduce the amount of aid coming your way. “Many parents mistakenly think their cost will be diminished and then are disappointed to learn that it will actually be the grant from the school that is diminished, thus saving the college money and not the family,” says Parnell Hagerman, associate head at the Oldfields School in Glencoe, Md.

But applying for outside awards can help students if they re looking at a financial aid package that features more loans than grants. Ask your college if it can reduce the loans first, says Patty Hoban, aid director at Willamette University in Salem, Ore. In that case, a few scholarships could still save thousands of dollars in interest. Secondly, it can reduce work-study, which is need-based.

Always check with the individual school.  It can be confusing because colleges vary in exactly how they treat outside scholarships.

Most schools have favorable policies that first apply the outside scholarship to unmet need, and then reduce self-help (loans and work-study) before touching institutional grants.

Go to the FinAid article on Outside Scholarship Policies for more details.

CollegeConfidential discussions include parents sharing their stories about how financial aid packages were affected by outside scholarships:
Merit aid cancels out need-based aid
Outside awards and structure of aid package

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January 25, 2012

Don’t wait too long to request college financial aid

by Grace

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.

August 19, 2011

SmartMoney’s college ranking based on ROI

by Grace

SmartMoney’s college ranking system is based on schools’ Return On Investment (ROI)

For decades, the best-known college rankings have tried to encompass everything from alumni giving and “academic reputation” to dorm amenities. But a few years ago, SmartMoney stripped all that away in favor of a simpler benchmark. With help from PayScale, a Seattle-based compensation-data company that maintains salary profiles of 29 million workers, we collected median pay figures for two pools of each school’s alums: recent grads (who’ve been out of school for an average of two years) and midcareer types (an average of 15 years out). For each class, we divided the median alumnus salary by tuition and fees (assuming they paid full price at then-current rates), averaged the results and, finally, converted that result to a percentage figure. The outcome: a measure of return on (tuition) investment that we’ve dubbed the Payback Score. For example, a hypothetical grad who spent $100,000 to attend college and now earns $150,000 a year would score 150. The higher the score, obviously, the better.

Another imperfect college rating system
SmartMoney’s system, like all the others, is far from perfect.  In addition to ignoring financial aid, it does not account for course of study, graduate school attendance or lower tuition paid by in state students.  Only the 50 top-priced schools are included in the ranking.  So while it does  give a generalized view of  the financial value of the listed colleges, your own situation can be very different.

Georgia Tech had the best ROI measured as average alumni salaries divided by the tuition and fees they paid.

Ivy League beat by public schools even though their salaries were lower.

This link – Colleges That Help Grads Get Top Salaries – has the interactive list with specific information for all colleges.

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