“Yes, You CAN Afford To Send Your Child To College...

Even If Your Expected Family Contribution Seems Sky-High”

Dear Parent, 

Note:  Please pay attention to the bolded paragraph at the end of this newsletter!

If you’ve been following our suggestions and submitting all your paperwork on time, by now you should have received your Student Aid Report (SAR) from our office. We have processed it electronically, and have mailed or emailed to you a copy for your review.

Page 1 of the SAR contains a very important piece of information: your Expected Family Contribution, or EFC. The EFC is the “minimum” amount of money you are expected to contribute toward the cost of one year at each college to which your child has applied. It may be “expected” you will contribute one-third from current income, one-third from your accumulated assets, and borrow the remaining third in your name. This may not always agree with “good financial planning”!  Therefore, we’ll show you how to “fund” this in the most cost effective and tax-advantaged way possible if we have not already discussed this in our office.

 So, this is the moment of truth! If your EFC (located in the upper right hand corner of the SAR) is 08150, for example, simply put a dollar sign in front of the number and you have $8,150 as your minimum Expected Family Contribution (or out-of-pocket costs) at any school for one year. Your income, assets and other financial information you supplied when we processed the Free Application for Federal Student Aid (FAFSA) determines this figure. The EFC is based on what is known as the Federal Financial Aid Methodology. Don’t worry about what that means for now. It’s significant only because there is another formula—the Institutional Method—that is used by many private colleges and universities to determine your EFC at those schools. The Institutional Methodology factors in home equity, younger siblings’ assets, and some other financial resources. For that reason, your EFC under the Institutional Methodology may be higher or lower than it is under the Federal Methodology.

Right now, you might be asking: 

“How can we possibly afford so much out of our own pockets for a public college...and even more if our child goes to a private school?”

By the way, if your EFC is below $3000, congratulations! You should receive some federal grants to help, thereby reducing your “out of pocket” costs for your child’s college education! However, it’s far more likely that you are among the majority of families who have an EFC which is a significant figure. You even may be feeling a little light-headed and short of breath right now if your EEC is much higher than you had hoped it would be. But you’ll be feeling better in a moment. I’m about to tell you how and why your EFC is not necessarily cast in stone.

And, even if you can’t get your EFC reduced, there are ways to pay for your share of your child’s college education—without going broke! I call these cost-lowering strategies “Affordability Methodologies,” just for fun. Here they are...

         Affordability Methodology #1: Update Your SAR. You may be able to amend your financial information and get an updated SAR, with a new and hopefully lower EFC. When can you file amended information? There are several situations that qualify, but one of the most common occurs when a person “overestimates” their income on the original FAFSA or misstated their assets.  We usually don’t make this error, but we are humanJ.

         Did you and your spouse separate or divorce after filing the initial FAFSA? You may be able to get a lower EFC if you re-file with the new marital status information.

Affordability Methodology #2: Look Into Tax-Advantaged Funding. For those of you that do not have a Financial Planner who specializes in both tax strategies and EFC reduction, we can provide a “College Funding Financial Plan” for you that may go beyond what we’ve already discussed.  If you own any part of a business and would like to look into “tax scholarships”, give us a call.  Conventional Financial Planning often leaves you worse off!

These are a couple other “Affordable Methodologies” that may help you pay for the high cost of college such as cash flow loans, borrowing against your retirement plan (last resort), scholarships (if you have the time and qualifications), ROTC, and even W.U.E. Schools (http://www.wiche.edu/SEP/WUE/index.asp). But we may cover those in upcoming issues of this newsletter.

In the meantime, we’re happy to help you with any of your college funding questions, concerns or plans.  I invite you to call us at (602) 889-6500 to schedule another appointment to explore your options.

 It’s essential that each of you forward copies of your Financial Aid Award Letters to us for review.  Without doing this, it’s easy for colleges to make the “offer” look better that they really are! You and your student need to be able to make the best possible financial decision in “funding” his/her college education.  We’re getting several Award Letters from parents each day via our fax (602) 889-1991, and we sure don’t want to miss yours!

Until next month…Best Wishes!

Randy Stoltz, President

College Credit Cards

Dear Parent,

For many students, college is the first time they will be away from the rules and restrictions that came with living with their parents.  Many of them are forced, for the first time, to budget their money.  This is a great opportunity for parents to talk to their children about the privilege and responsibility that goes along with using a credit card.  Teaching students about responsible credit card use now can save them from having to dig themselves out of debt after they graduate. 

Many students may already have a credit card, but if they don’t, you can be sure that there will be plenty of opportunities to get one once they arrive on campus. Credit card companies solicit college students through a variety of methods, including direct mail marketing, the Internet, and tables set up on campus offering students “freebies”, such as T-shirts, water bottles, Frisbees, coffee mugs, etc. in exchange for having the student fill out an application.  Companies view students as future customers and are more than willing to extend them $1,000 or more in high-interest credit, under the premise that this is a good way for the student to build the good credit history needed after graduation.  Students can get a credit card regardless if they are supported financially solely by their parents. 

The college years are an important time to build the good credit history the student will need after graduation. The student will need to provide a credit report to apply for an apartment or finance a large purchase such as a car. Employers often review a credit report when they hire and evaluate employees for promotion, reassignment, or retention. Problems with credit cards, such as late or missed payments, stay in the student’s credit report for seven years.

The disadvantages of owning a credit card can outweigh the advantages, especially for students who have student loans and credit card debt to repay after.  Some students use their credit cards to pay for education-related expenses such as books and supplies.  Students who have not adequately planned for their financial future may be unable to handle payments for credit cards, student loans, and living expenses after college.  Imagine being 30 years old and still paying off a slice of pizza you bought when you were in college. Sounds crazy, but for plenty of students, problems with credit card debt can lead to that very situation.   That is why it's so important that parents speak to their children about money management.  The key is teaching students money management skills before they get a credit card.

In addition, it's better to finance college expenses with school loans instead of credit cards because school loan debt is ranked more approvingly by credit bureaus.

Until next month…enjoy your summer and best wishes!

Randy Stoltz, President

A Few Tips to Prepare for Moving Day!

Dear Parent, 

Here are some things to think about to prepare for the day that is going to come all too soon - moving day! There are a few things you can do before your child leaves for college that will reduce the anxiety he or she is bound to feel.  After all, the freshman year is about entering into a new environment that will be both socially and academically challenging.  For many, it will be the first time away from home, so here are a few things you can do to help!

Tokens from Home:  Make a list of things from your area that your child might not be able to find at his or her new school. Slip these into their packed things so they find surprises while moving in.  Also, save some of these items and send a care package a few weeks into the semester.

Address Book:  Fill out an address book with all of your pertinent information along with information on how to contact relatives, family, and friends. Encourage your child to fill in names and numbers and e-mail address of friends so he or she can keep it all in one place.

Phone cards:  If your child doesn't have a cell phone, stock them up with phone cards. This way, they'll call if they're missing home.  However, encourage them to go out and meet people instead of spending all their time talking with high school friends.

Family dinner:  It might be a good idea, even if you've already thrown a graduation party, to have an informal meal with family and close friends a week before your child moves away. This will be a reminder of all the people they have who will love and support them in their future endeavors.  You might even want to leave out a few disposable cameras and encourage everyone to take pictures so both you and your child have memories of the event.

More than anything relax and enjoy the process!  This is an exciting time in the life of your student…and for you too...and anxiety can be “running high” for everyone.  Don’t let those last minute details rob you of the moment! 

Good Luck and Enjoy!!

Randy Stoltz, President

How to Avoid The Biggest Blooper That Can

Seriously Reduce Your Child’s

Financial Aid Opportunities

Dear Parent, 

FAFSA. SAR. CSS Profile. Common Admissions Application. Priority filing...If all this sounds like Greek to you, you are not alone. When you apply for financial aid for your child’s college education, you enter an unfamiliar maze of jargon and double-talk that few people can interpret without specialized training. And all the specialized lingo makes it difficult to do the one thing you must do perfectly: Fill out all the financial aid forms correctly and completely. 

I see it all the time: Otherwise well-meaning, intelligent families leave out one vital piece of information or transpose a couple of numbers, and the next thing they know, their application is returned to them, or you pay more for college than you should because of the inaccuracy.  When these corrected applications are returned, they go straight to the bottom of the pile in the financial aid office. And, trust me, that’s not where you want your application to go.

Perhaps the biggest mistake people make when applying for college funding is failing to fill out all the forms on time, thoroughly and accurately. In the best-case scenario, this error can result in a delay in the approval and notification process, so you’re in suspense much longer than you need to be. In the worst-case scenario, paperwork errors can cause you to totally lose out on financial aid for one year. In between these two scenarios are the many, many families who simply don’t get as much funding as they could have received if they had only filled out the forms completely, correctly and on time.

    This subject is especially important right now, because January is the month when we will be processing your FAFSA—the Free Application for Federal Student Aid. So, here are some timely tips to help you coordinate with us the somewhat confusing and nearly always intimidating process of applying for financial aid 

            Timely Tip #1: Do It Now!

The priority filing date for all federal financial aid, and for most state and private college aid is NOW. We are updating all your financial information so we can process the FAFSA online during January/February. If you haven’t already filled out our request for updated financial information, don’t wait! Do it now! We can’t complete the FAFSA without it. This is essential because financial aid is awarded on a first-come, first-served basis. The longer you wait, the less likely you will be to get the money you deserve. You may even completely miss out on financial aid if you delay. Many more colleges are having Financial Aid Closing Deadlines due to the increase in applications. Many of these dates are showing up as early as February! If you miss this date, you’re totally out of luck on receiving anything! 

If your child is applying to a private college or university, it’s essential for you to find out that institution’s filing deadlines for supplemental financial aid applications—forms that must be filled out in addition to the FAFSA. Most private colleges (not all) require what is known as the CSS Financial Aid Profile Application (more simply called the Profile Form). You must register with the College Board and pay a processing fee to obtain Profile forms. If you don’t already have it ordered, please call us today to see if your student’s universities need this form!  There are about 350 private colleges that require it and it’s faster to just call us at (602) 889-6500.

Other forms may be needed too, depending on the school and, often, how selective it is in doling out funds. The deadline for these supplemental forms varies from one school to the next, and may have already passed if you plan on applying to a Tier one school! So, as you can see, it’s never too early to get in the know about these all-important dates. Please call us with any questions. 

Timely Tip #2: Schedule a date to have your taxes done as soon as possible!

Filing an Income Tax Filing Extension isn’t an option during the college years, so you need to get them done as soon as possible. While we will be filing your financial aid forms using “estimates” of income and “actual numbers” on assets, sending us copies of this year’s (for last year’s income) tax return is very important! Your initial Award will be “conditional”, and your student “may not” receive their money until we update the SAR with final tax return data. 

Timely Tip #3: Make sure you have a “back-up school”.

            It seems elementary, but you always need to have a ‘Plan B” in selecting schools. Last year, over 90% of our clients attended their “first choice” school, but naturally some didn’t. For those, it was imperative that “Plan B” was in place. Each family needs to have a “for sure” school that we know will admit or accept him/her, and if everything falls apart, you can easily afford without any grants or scholarships. For most of you, it will be our “Big 3” in-state colleges. 

Timely Tip #4: Fill Out All The Forms You Need.

One or more additional forms may be required, depending on your family’s circumstances. For instance, if you own a business or an investment-oriented farm (a farm that you don’t live on), you probably will need to fill out a “Business/Farm Supplement” along with the Financial Aid Profile (for schools that require the FAP). The Business/Farm Supplement provides detailed information on the profits or losses of your business or farm.

And, if you are divorced or separated, your ex-spouse will be asked to fill out a “Divorced/Separated Supplement.”Those are just a couple of the possible additional forms. What supplements do you need to have completed? We can help you answer that question.

Timely Tip #5: Be Prepared To Receive The Student Aid Report (SAR).

About two weeks following our processing your FAFSA, you will receive your Student Aid Report (SAR) in the mail, or Email, from the U.S. Department of Education. This is the results of processing your FAFSA. Please don’t file it away, instead get it into our office immediately! We need to verify that all the information is correct, and if not, make any corrections. You will then start receiving your “Conditional Financial Aid Award Letters” from the colleges to which you’ve applied. If it is correct, then we will hold it and use it to send in your final Income Tax information when your taxes have been completed. In turn, that will produce your final SAR and allow you to receive your final “Financial Aid Award Letters”. At this point, we will determine if we need to appeal for an improved award from the schools.

I’ve shared some of the more important steps we need to take to increase your chances of getting the maximum financial aid that your family deserves. There are many, many other strategies that can give you the same results. Our goal is to take advantage of every opportunity to get the maximum amount of “funding” for you and your student!

That sums it up for another month. Until next month…Best Wishes!

Randy Stoltz, President

What You MUST DO NOW To Get The College

Funding You Need…and Deserve! 

Dear Parent,

 Well, here we are in the month of February. If you’ve given us your updated financial information and have stayed on schedule, your child’s FAFSA (Free Application for Federal Student Aid) has already been processed by our office, and you have the “preliminary” results in hand. This is a crucial time in the college funding process. So let’s take a look at what you need to know and do to maximize the amount of funding that your child can receive. 

As soon as your new Income Tax Returns are completed, please make sure to get us a copy of your 1040 (federal) and your W-2’s right away by faxing to 602-889-1991. If your income is a lot higher on your tax return than estimated, we will not automatically update the SAR (as this may be in your best interest).  Let us know if the college is requesting a copy of your taxes. This only happens about one-third of the time…the other two-thirds, your “estimated EFC” will be sufficient and the financial aid award may not change.  But, if they do request a copy of your tax return, then you need to send the university a copy, usually only the first two pages. If the college requests copies of your W2 and taxes, we will need to electronically update the final numbers on the FAFSA which will produce a “final” Student Aid Report (SAR) to each of the schools we listed on the FAFSA. Here’s the scoop on the SAR: 

                  1.  If your child qualifies for a federally subsidized Pell Grant, it will be noted on the SAR. However, don’t be discouraged if he or she doesn’t qualify. Pell Grants are reserved for students with the greatest financial need.                       

                 2.  Part I of the SAR will reveal your EFC. This is a very important number—it is your “Expected Family Contribution.” This is the minimum amount of money you are expected to come up with to send your child off to any college or university, based on a nine-month enrollment period. Many parents experience a sinking feeling when they see the EFC for the first time. It may seem like a lot of money. But don’t get stressed out about it. There are many ways to come up with this money—or other funding options—that do not require bankruptcy! We’ll can explore your options with you and help you uncover some of these often-overlooked sources of money. 

                  3. Carefully check every detail on the SAR to you to make sure it’s accurate. If you find any errors, please let us know as soon as possible. We will correct them for you. 

Now let’s turn our attention to the other major form in the “alphabet soup” of college funding: the CSS/Financial Aid Profile.  If you needed the CSS/Profile (most do not), we would have submitted this form if your child wants to attend a private college that requires it. On the form, we listed all the private schools your child is interested in applying to, so the College Board, which receives the Profile, will send it on to each of those schools. Here’s what happens next: 

1.   Approximately three to four weeks after we submit the CSS/Profile to the College Board, you will receive an Acknowledgement Form. Carefully examine it. Make sure it lists every college or university where the College Board should send a copy of the Profile. This is also your opportunity to add any new private schools your child may have added to his or her “wish list.”

2.      You also will receive a Data Confirmation Report in response to submitting a CSS/Profile. It’s a summary of your answers to certain sections of the Profile. Look over this information carefully to ensure that it is accurate and complete; if not, contact us immediately so we can return the form as soon as possible.  

Okay, so what’s next? Before you sit back to take a long breather, there are a few more things you must do at this point: 

1.      Even though the FAFSA processing center and the College Board are supposed to send your corrected SAR and CSS/Profile to the schools you designate, it doesn’t hurt—and may help—if you call each school yourself. That way, you can make sure the targeted colleges and universities have what they need to develop your child’s financial aid package.

2.      Contact the financial aid offices of the schools on your child’s list to find out if they need any other information. Some may request copies of your tax return. Many will ask you to submit their own financial aid application—even if they also use the FAFSA or Profile. (Yes, it’s true: another application to fill out!) Again, if you’re using our Platinum service, make sure these forms are forwarded to us to complete and return on time.  

3.      Also be aware of application deadlines for private scholarships or awards. Although I usually advise parents to avoid pinning a lot of their hopes on “private” scholarships, I do recommend applying for any that seem within reach. Remember: Not all scholarships require the student to be brilliant. Quite a few are based on non-academic traits, such as the student’s religious affiliation, ethnic background, etc. The Acceptance Letters should spell out all of the school’s scholarships, and include instructions on applying for them. 

4.      Please make sure you read every word of your Acceptance Letters! Too many people simply read the opening paragraph or two, and then file it away. They are full of vital information, and none of it can be overlooked! Often, in addition to telling you what they are offering in “Merit” money, they tell you other money available within the school, and how to go about qualifying for it. Don’t leave money on the table if you can help it!

 Be prepared to start receiving Financial Aid Award Letters from the schools sometime in late March…possibly sooner!  As soon as you receive them, please forward a copy to us for analysis.  For our Platinum members, we may need to “appeal” for more money, provided we can base the appeal on a fact or circumstance (works for some private universities, but will not work at all for the big 3 in-state U’s). All negotiations must be completed by May 1st, and the school of your choice must have your signed “acceptance” in hand no later than May 1st! If they don’t, they assume you’re not coming, and will award your “funding” to someone else they have put on their “wait list”. 

These are the most important things you need to know at this time.  If you have any questions, don’t hesitate to call. 

Until next month…Best Wishes!

 Randy Stoltz, President

Developing A Funding Plan

Dear Parent, 

When developing a funding plan for retirement and college simultaneously, long-term solutions for each plan are developed.  When thinking only in terms of funding college, and not retirement, you may be forced to consider conservative short-term investments to meet immediate college funding needs.  These conservative short-term investments may produce lower yields during college years and the years immediately proceeding the college years.  If taking a holistic long-term approach to funding college and retirement concurrently, you can invest in higher yielding investments because of the longer time frame.  You will not be forced to invest in conservative low yielding, short-term investments for college that could have a significant negative effect on your future retirement funds. 

Since there are many attractive loan programs available to you and your children to fund college, you are not forced to use conservative short-term investments or liquidate long-term investments to pay for college costs. 

To make funding education and retirement a non-issue, you must consider how to:

• Maximize cash flow in order to invest funds in education and retirement accounts
• Utilize the numerous education tax incentives provided by the IRS to reduce taxes and produce “tax scholarships”
• Qualify for merit and need-based financial aid offered by colleges

Other questions that you need to consider are: 

• How old will you be when your last child graduates from college?
• How are you going to fund your retirement after paying for college?
• Have you developed a financial game plan to fund these two major events?

Since, like many parents, you may have assumed that funding your children’s education is a challenge separate from funding your own retirement, you may not have realized that the real crisis facing you is a current cash flow problem and a future retirement shortfall.  Saving for college and saving for retirement are somewhat mutually exclusive.  You cannot use the same dollars twice.

College funding and retirement both involve income and asset planning.  Proper financial planning for retirement may seem like a major task, and it certainly is.  But then, nearly 30% of one’s lifetime may be spent after retirement, and doesn’t 30% of your life deserve adequate planning?  Does this prevent you from saving for education costs and your retirement at the same time?  The answer is absolutely not!

The amount saved for college is dependent on the adequacy of your retirement plan.  If you are on track to meet your retirement goals, you can then start investing for your children’s education costs.

If you are unsure where to start or how to proceed, I would be happy to assist you.  College is one of your single biggest investments.  College funding laws and strategies change each year.  A qualified professional college financial advisor can maximize your eligibility for financial aid and education tax incentives, keep you informed, give you direction, answer your questions, and complete the paperwork in a timely manner.

Remember though, that financial planning comes right down to you as an individual.  No one will do the planning for you.  You must do it yourself.  Planning is a process that should be ongoing.  You should review your plan frequently to determine how well you are meeting your plan’s objectives and to revise those objectives in light of your real life situation. 

Setting financial goals may seem an intimidating process, but it doesn’t have to be.  All it takes is some simple steps.  If you have not already…what’s holding you back from creating a financial plan?  Don’t let it go any longer.  As you head into a new year…start it off with creating a financial plan for you and your family.  I am available to help you with the process!

Until next month…Best Wishes…and Happy New Year!