As Seniors begin their college applications and Juniors build their college lists, parents should be identifying how they are going to pay for their child's education. The Motley Fool has released a quick and informative interview with finance expert Dan Caplinger that will help walk you through some of the basics. You can view the film here.
Starting next Fall, the process for the FAFSA will be changing. The FAFSA (Free Application for Federal Student Aid) will transition from using your most recent tax information and estimates to using PPY information. PPY stands for prior-prior year, and references the tax information that will be used to fill out the FAFSA. The FAFSA currently requires tax information from the previous year and is open as of January 1st. As of October 1st of 2016, students will complete the FAFSA using information from two years prior, or their "Prior-Prior Year". In other words, seniors graduating in Spring 2017 would file the FAFSA using tax data from 2015, which would be available to them as of October of 2016. This should hopefully ease the process for filing the FAFSA, but we are not sure what the impacts to financial aid deadlines may be. Hopefully, the impact to actual application deadlines should not necessarily be impacted.
Scholarshare is the name of California's 529 College Savings Plan. As many families look to set aside funds for college, these funds provide many benefits that do not exist within traditional savings plans. The main benefits of such a plan are that earnings are tax free on any qualified withdrawals; funds can be used for books, supplies, and fees as well as other expenses associated with college; Almost anyone can open a 529 account for a specific beneficiary, including grandparents, aunts, and more; and to limit barriers to entry, accounts can start with as little as $25.00. As always it is important that individuals consider risk, charges and expenses when making any investment. To learn more about Scholarshare, click here.
The Free Application for Federal Student Aid (FAFSA) is now available. You should complete this form as soon as possible to make yourself eligible for federal student aid. However, this process can be somewhat complicated without the necessary documents. Take sometime to get all of the necessary documents ready before beginning the process to make it that much easier. For a list of required documents, click here.
As the New Year approaches, many of you will be looking for ways to finance your college education. The first step for most families, is to complete the Free Application for Federal Student Aid or FAFSA. The FAFSA opens after January 1st for submission and families are encouraged to create an account and start the process as soon as they are able. The second step for many private schools is to look at the need to complete a CSS profile. This program, run through the College Board, provides additional information that can be utilized by private schools to determine aid. As you complete the process, familiarize yourself with some of the terms found below:
EFC (Expected Family Contribution)- This number, the amount you and your family are expected to contribute to college, will help determine your aid package.
Aid Package- The combined amount of financial assistance provided by the financial aid office of a particular college or university.
Grant- Awards that do not need to be paid back.
Loan- This one seems like a "no-brainer", but there are different types of loans, such as subsidized and un-subsidized loans. There is no easy answer here, but read the fine print. Some schools even offer 0% loans for in-state students.
Scholarships- Monies awarded by merit or merit plus need that do not need repayment.
Remember that although services such as Right Fit College Consulting can support you in this process, never pay for eligibility for a scholarship or pay someone who will guarantee financial aid. There are a lot of scams out there,
As schools begin to send out aid letters, it is important that you are aware as to the different ways aid can be distributed. The best thing to find within your aid is monies in the form of scholarships and grants. These items do not need to be repaid and truly bring down the cost of attendance. Schools will often offer loans as a part of the aid package, but do not be enticed by PLUS loans or unsubsidized Stafford loans as you could get these anywhere. You should be looking for loans such as the Perkins loan which provide you with a lower rate than you would normally be eligible for. Finally, make sure everything is included in the cost of attendance. What about housing, food, etc.? While your decision should not be made by finances alone, you do not want to overextend yourself and dip into home equity or take out risky loans to pay for college.