Show Me the Money!

In today's Washington Post Magazine there was an article talking about how adolescents are becoming more financially savvy in the current recession.  Their families have undergone a great deal of economic strain due to lost jobs, reduced salaries, and falling returns on investments.  This, combined with state educational requirements regarding economic and financial literacy, is producing teenagers who are more mindful about money issues.

Certainly, as a school counselor, I have seen the impact that the current economy has been having on students and their families--increased stress over meeting day-to-day expenditures, more discussions about applications for free-and-reduced lunch, and, most often, concern over how they are ever going to be able to afford a college education.  I have written several times about the growing levels of anxiety over rising college-costs as well as the increasing level of selectivity of schools.  In the last several years, at every parent night, every parent coffee, in every parent/student meeting that I have about college, the number one question is often no longer "how do I get my kid into college?" but instead "how do I pay for college?"  As school counselors, we receive a great deal of very valuable training in our graduate programs, but very rarely does it involve coursework specific to college admissions and financial aid.  I am not going to debate the pros and cons of that here--we are, contrary to what some people think, more than just college counselors, and the training we receive in counseling theories, mental health, groups, human and adolescent development, assessment, and careers is absolutely vital and necessary in modern public education.  Someone with a certificate in "college counseling" is not going to be aware of how to best develop school-wide bullying and harassment initiatives, how to do depression screenings, intervene with families using systems theories and techniques to effect change, or run study-skills, grief, and social skills groups that help to remove barriers so that students can focus on their academic success.  However, for those of us in high-school counseling,  college admissions is an important piece of our job as well as one of the most visible, and we do need to work towards gaining training and competence in that area, especially if it is one with which we are not overly familiar.  

That being said, let's talk about college financial aid.  I have two Master's degrees that were funded with a mixture of assistantships and student loans.  I attended a private undergraduate institution where I received almost full-tuition every year, entirely from merit scholarships (academic and music).  I can fill out a FAFSA in probably ten minutes flat (having done it 8 times over my life thus far) and have, through some tough personal experiences through all of this education, spent many an afternoon in college financial aid offices.  Further, I've always been fascinated by the college admissions process, and have made a point over the years to talk to admissions counselors, families, students, as well as read blogs, articles, etc. to gain more knowledge.  So, while I would never tout myself as an "expert" in college financial aid, I have learned a few things along the way that I hope will be helpful to you.  This post will touch on the many various forms of financial aid, but will be primarily focused on scholarships.

• Everyone should fill out the FAFSA.  Everyone.  I get asked this question all of the time by families.  There seems to be a thought out there that if you make too much money, it's not worth filling out the FAFSA because you won't qualify for any federal grants or loans.  Indeed, you may not necessarily qualify for federal aid (certainly not grants, but I would venture to say that most people who fill out the FAFSA don't qualify for Pell grants--that threshold is pretty low), but colleges use this document as a base-line for all of their students to put together financial aid packages.  It is vital that every family fill out the FAFSA to get the process started at the schools that they have applied to.  For those families that want to get ahead of the game, point them in the direction of the FAFSA Forecaster.  Again, regardless of the results of the forecaster, all families should fill out the FAFSA.  They can't officially file until January of their senior year as the information is based on the previous year's tax returns.  That being said, I always advise families to do their taxes early that year so they can file the FAFSA in February or March at the latest.  If you look at the "priority" deadlines for financial aid awards at many colleges, it tends to be March 1.  Have I mentioned that all families should fill out the FAFSA?
• College-based (need and merit) scholarships should be the focus.  Outside scholarships should be secondary.  Parents are often ask me about when they should start applying for scholarships and how they find those scholarships.  This is definitely a time for some education, and I strongly recommend that you put this information out in your e-newsletter or make it a talking point at your post-secondary planning nights.  The little $1,000 and $500 one-time-only awards are helpful, but when you are looking at $20,000 a year over the course of four years, they aren't going to go a long way--they are a drop in the bucket.  The large financial awards that are typically renewable each year come from the colleges and universities themselves--this should be the main focus.
• Where do we find information about merit based aid and scholarships from the colleges?  One place to look is at the colleges and universities themselves--what do their financial aid pages say about merit and need based monies?  Are there separate applications for some of the scholarships, or are students automatically in the running for them simply by applying?  Is there an earlier application deadline if students want to be considered?  Then, there are a few websites that I highly recommend.  The first is MeritAid.com.  This website can match students to colleges that they may stand a strong chance of getting merit scholarships from based on their academic criteria (GPA, test-scores, etc.).  Further, it has the same general information on colleges and universities that you can find at many websites (number of applicants, size of the school, etc.) but it also has statistics as to how many students applied for aid and how much, on average, each student receives.  Thus, if a student is considering a private college (and I wish more would--the sticker price is high, but for strong students, athletes, and musicians/actors/artists there are amazing scholarship opportunties), they may be apprehensive if only 29% of students receive any type of institutional aid, but they may feel more confident if the college provides institutional aid to 89% of its population.  You and the students do have to register for an account.  Another extremely useful tool comes from College Board and is their Big Future website.  This website is a full-service college admissions website, but like MeritAid it can help match students to colleges, and it also gives very easy to find and understand information about the percentage of students receiving aid, both need-based and overall, as well as additional information as to what type of merit-aid might be available as well as deadlines.  Just type in a college and click on the "paying" tab.
• I need merit based scholarships to go to college.  What can I do to increase my chances?  This is one I get a lot from families, but the answer often challenges what they have long held as a belief, that being that they should attend the best college they can get into.  The simple answer is that merit based money is exactly that--merit based.  The student has something that the college or university wants, so the university is going to entice that student to go there by giving them scholarships.  In my experience there are three areas that this typically falls into--academics, talent, and athletics.  Thus, if merit aid is something that a family feels they need to have in order to get into college, then they need to be applying to schools where academically that student is above the average threshold for those students who are typically admitted, one where that student has a talent that is desirable to the school (they need more viola players, they are looking for more tenors, they are trying to recruit actors to build a theater program), or they have proven athletic skills or interests that the school finds valuable.  Thus, for example, a student might apply and get into their top choice large Division I school called HighBrowU, but they were towards the bottom of the applicant pool and did not receive any merit aid at all.  The same student with the same academic criteria might also have applied to a smaller school called LiberalArtsU and be towards to top of their applicant pool and be offered academic scholarships as well as an athletic scholarship to play on their Division III soccer team.  If merit scholarships are what you are looking for, than students should really look at the statistics of past applicant pools as well as their own talents and abilities to find schools where they would be a sought-after candidate.  Again, MeritAid.com.
• What about non-school based scholarships?  These are the scholarships that are typically your one-time, single dollar amount awards.  In my opinion, these are a wonderful addition to a college financial plan, but they probably should not be the major player in the plan.  You can find information about these scholarships through Naviance if your school district has that platform.  Outside of Naviance, there is College Data's scholarship finder, which, similar to MeritAid can help match students to a plethora of scholarships across the country.  The schools and immediate community are another great resource--I know that our parent booster groups offer scholarships, area churches/mosques/synagogues/temples offer scholarships, and area businesses and community groups offer scholarships.  A new website has been getting a lot of attention recently, ScholarPro.  This is a fee-for-service website, meaning that there is a cost involved, but the strength of it seems to be in that you fill out the applications online, which can centralize what can be a maddeningly time-consuming process for students and families.  That is something to warn your students and families about ahead of time--these one-time scholarships often involve separate applications, often with essays.  Plan ahead for time to fill them out.

So, your families have done their searches, filled out the FAFSA, contacted the financial aid offices of the colleges, and round about March and April they get financial aid package proposals which could be a mix of federal grants, federal loans, and college/university scholarships/grants/aid.  What next?

• Compare the proposals.  Let's say the student and family have it narrowed down to four schools, and amidst all the mumbo-jumbo on the pages they want to compare the proposals to see what the ultimate bottom line is going to be, at least financially.  Two websites come to mind.  First, again, College Board has a cost-comparison tool as part of their Big Future platform.  Students just fill in the appropriate information in the boxes.  Similar to this is a cost-comparison website recently out from the Consumer Financial Protection Bureau.  
• Ask the right questions.  From personal experience, I am telling you that families should always ask at least two questions of the financial aid office.  First, is the aid automatically renewable each year of attendance, up to four years?  Secondly, how will the aid award be modified each year to encompass tuition increases?  This second one is a big one that most families don't think to ask, and then come March of next year they see their expected family contribution jump by several thousand dollars.  Whatever you work out on the tuition increase topic, make sure to get it in writing, and expect that there may need to be a discussion each and every year with the financial aid office.  Other important questions should be about minimum requirements needed to maintain scholarships (oftentimes academic scholarships come with GPA requirements) as well as what would happen to the aid if for some reason the student would need to extend their education by a semester or a year.
• Feel free to negotiate...within reason.  If a student and their family have multiple offers, but they are really leaning to one school and just need a bit more aid to make that decision, it is always worth a call to the financial aid office to see if something can be worked out.  The worst they can say to a family is, "no."
• Talk to the financial aid office about any changes to the family situation.  A lot can happen in a family between the time you fill out the FAFSA and the time that a student begins school.  Sadly, parents lose jobs, cutting the family's income by sometimes more than half.  Parents may divorce.  Parents may even die, be injured, or be hospitalized, which can at times result in the loss of two incomes if one parent ends up becoming a caretaker.  As soon as an event like this happens, students should contact the financial aid office to let them know that their previous FAFSA is no longer reflective of the in-the-moment family situation.

This is just part of the picture when it comes to college financial aid--I did not spend much time discussing student loans, although my rule of thumb is that the pecking order is federal subsidized loans, then federal unsubsidized, and then, if all else fails and you have no other choice, parent PLUS loans and lastly, private loans, although, quite honestly, the latter should be avoided if at all possible, as college debt can have far-reaching implications for students and families.  Additionally, here are some great tips for cutting those college costs before going and once students are on campus.

My hope is that this entry is helpful.  If you feel any of the information is incorrect or should be further clarified, please feel free to share in the comments section at the end.  I would only ask that this be used as a forum to help share information to increase the knowledge base of school-counselors more than anything else.