There are so many reasons why every family should file the Free Application for Federal Student Aid (commonly called the FAFSA), but most families find it very intimidating. That’s why this year I’ve put together this list of five things you need to know about filing the FAFSA!

1. Where to File:
The FAFSA is available online at www.FAFSA.ed.gov. This is the official Department of Education website specifically for filing the FAFSA, and it is completely free.

DO NOT go to FAFSA.com–this is a for-profit website that will charge you to file the FAFSA!

2. When to File:
You can start filing as early as January 1st of the new year, and it is important that you file as soon after that date as possible! Why? Many colleges award their scholarship and grant money (the funds that you don’t have to pay back) on a first-come, first-served basis!

3. Who Can File:
Either the student him/herself or the parents of the following can and SHOULD file the FAFSA:

• High school seniors who will be entering college in Fall 2009
• Current college students who will continue next year
• Grad or med school students

You should file regardless of whether or not you think your student will be eligible for financial aid (read why here!).

To ensure that your student gets the most possible grants, work-study, and loan opportunities, you need to repeat this process for every year that your student will be in college.

4. How to File Before Your Taxes are Done:
One challenge of filing early is that you don’t have your tax forms available, but that doesn’t mean you should wait! Instead, make accurate-as-possible estimates on the FAFSA, and file! You can go back and make revisions in a few months when all of your taxes are done.

5. Preparation Means Faster Filing:
To ensure that your FAFSA filing process goes as quickly as possible, you’ll want to gather the following items beforehand:

• Your and your student’s FAFSA PINs (If you don’t have one yet, get it at http://www.pin.ed.gov/)
• Drivers licenses and Social Security numbers of both parents & the student
• Information about your & your student’s 2008 earnings and other income such as interest and dividends for 2008
• Account balances of savings, checking and investment accounts (Tip: You do not need to report the balances of any retirement accounts such as IRAs, 401(k)s or 403(b)s.)

The Bottom Line
The real truth about the FAFSA is that it is going to take some time to fill out, but it can be a very worthwhile endeavor. Best of all, the website will save your information for next year, so the next time you fill it out, it should be much faster!

Professional Help
If you could use some line-by-line assistance on how to correctly fill out the FAFSA, check out  www.myFAFSAassistant.com the first week of January when the 2009/2010 version of my video tutorial will be released.  For now, feel free to view the first video of last year’s version for free which will still be helpful in getting you prepared for filling out the version that will be released January 1^st.

Good luck and Happy Holidays!

All the best,
Deborah Fox

It seems students aren’t the only ones concerned about the economy. A group of over 40 higher education leaders–via a statement published by the Carnegie Corporation of New York –recently let their own economic worries be heard.

Dear President-Elect…

In open letter published this Tuesday in large, two-page ads in both the New York Times and Washington Post, the Carnegie Corporation requested the assistance of President-Elect Obama and his administration.

The higher ed leaders requested 5% (about $40 billion) of the new economic stimulus bill currently working its way through Congress. The ads themselves are estimated to have cost at least $25,000 apiece!

Sincerely, the Future of Our Nation

The two page letter says that colleges must partner with the government to help revitalize the economy and “educate and train the next generation of Americans.” It also states, however, that state budget cuts are threatening the schools’ ability to perform their duties. It even states that there are “dangerous signs that our future prosperity and security will be weaker than our past.”

The Details

The letter details how the Carnegie Corporation feels the funds would best be handled. They feel it should be distributed to each state based on it’s population, and allocated to colleges–both public and private–at the discretion of that state’s governor.

Most importantly, they request that the federal government make provisions that their funds cannot be used as an excuse by the state to further cut state funding to universities.

To learn more about the Carnegie Corporation’s hopes for higher ed’s financial future, you can view a copy of the open letter here.  It remains to be seen whether individual families will benefit directly or indirectly from any of the stimulus package.  Proposals by various higher education groups are calling for a direct increase in the amount of financial aid that can be awarded to families.  I’ll keep you posted once I learn more.

All the best,
Deborah Fox

photo: Carnegie.org

As the changing economy has continued to affect the college admissions process, the Chronicle of Higher Education (a leading higher education news source) recently released the first report from their new research division, Chronicle Research Services.

The report, titled “Financial Uncertainty and the Admissions Class of Fall 2008″ examines how students have changed their college application process due to concern about the high price of a college education.

More Students, More Applications, Less Enrollment

The high school graduating class of 2008 has been the largest thus far, and the Chronicle report shows that 78% of surveyed colleges had an increase in applications this year-but a decrease in matriculation. How can this be?

Just as admissions officers feared in July, students are applying to more colleges in hopes of pitting them against each other to garner higher financial aid awards-so while schools are receiving more applications, and even sometimes more deposits, those students often don’t end up matriculating!

Thinking Closer to Home

Now more than ever students are considering price above all other factors. According to the Chronicle’s report, some students are not only more reluctant to choose a school far from home, but also seem to be focusing on public and community colleges because of their appealing lower sticker prices. Unfortunately, with community college enrollment up by 8%, they are unable to accommodate the increasing demand for courses.

Foiled by Lack of Financial Aid

Even though more students than ever are seeking help from the Financial Aid office, less than fifteen percent of the surveyed colleges plan to tap into more money from their endowment funds or work out new loan programs. Only a little over half of the schools whose students requested more aid could actually offer it to them.  For the first time in the ten years I have been doing college planning, we are seeing a significant number of parents who have been so negatively affected by the current economic downturn that they are asking for their 2008/09 financial aid awards to be re-worked MID-YEAR, worrying they may no longer be able to afford to keep their student at the current college for the coming semester.  What is truly disturbing is that these requests are coming from families at virtually all income levels.

Families that have developed a roadmap on how to pay for college most efficiently are most likely to not only pay less for college, but also better navigate the treacherous waters we are in.  The economy is still changing, and I’ll be keeping an eye on how it is likely to affect your student’s college prospects.

All the best,
Deborah Fox

image: Pencils by jaylopez

Now more than ever families are looking for ways to save on college costs–so much so that students are feeling pressure to change long-time college application plans and even going so far as being indecisive about their final choices.

Searching for the Better Value

With the economy still on shaky ground, college-bound students are naturally responding by doing all they can to save on the cost of college, including amending their college lists.

According to the LA Times, this year, students are shying away from pricey private institutions in favor of public colleges and universities, anticipating this will help save them money.

But is this action the best way to get value for your dollar?

The Right Fit

While the low sticker price of public colleges can be tempting, families may actually end up spending the same–or even more–on education at a private school if they don’t ensure the right fit for their student. How?

Think of it like buying clothes because they’re on sale instead of because they fit well.  You are likely to have buyers remorse and potentially end up replacing them with new clothes that fit you better.

While it is important to consider the sticker price of a school, you also need to consider how it matches your student academically, culturally and socially or you could end up with a student who wants to change schools–and that can mean wasted time and wasted money. In fact, changing schools often means students need to attend a full year more of school to make up for differences in school credit requirements!

Does Public Cost Less?

The sticker price (the advertised price of a college) of public institutions is usually lower overall, but that doesn’t mean the actual price will be lower. One reason is private institutions are much more likely to offer higher amounts of scholarships and incentives to their students who are a great match for their school.  Plus, students are much more likely to graduate within four years at a private school which can save you one or two years of college costs.

You should also consider exploring how a college funding specialist can create your own personalized “roadmap” of how to pay for college most efficiently which can make both public and private schools more affordable!

Remember, while public colleges may be a good fit for your child, they may not be the ONLY option to make college affordable!

All the best,
Deborah Fox

photo: Ivy League too by hortongrou

Having trouble meeting college costs without taking on debt? Why not get a sponsor?

A new website called GradeFund is attempting to help students do just that. Students sign up to get funded by family, friends, and even corporate sponsors based on the grades they earn.

How it Works

Started by brothers Michael and Matthew Kopko, GradeFund was created to help students find a simple way to earn a little extra money for college. It basically works like a marathon scholarship, only instead of walking miles for funds, students earn good grades. Here is a breakdown of how their service works:

1. Students sign up as users and invite friends and family to “sponsor” them.
2. Family and friends sign up as sponsors, and designate an amount (from $1 on up) that they would like to award their chosen student on a per-grade basis. For example, a grandma might sign up to award $5 per C, $10 per B, and $20 per A.
3. At the end of each grading period (quarter or semester) students upload their transcript of grades.
4. GradeFund collects the appropriate amounts from each sponsor, deducts a service charge, and sends the rest of the cash directly to the student’s school (or to the student if the sponsor approves it).

For more information about how GradeFund works, you can view their about and how it works pages.

The Do-Gooders Do Better

The Kopko brothers claim they founded the site in hopes of helping make college more affordable for today’s students–but they didn’t stop there. They’ve also pledged to donate 5 cents to One Laptop Per Child for every sponsored A grade on their site.

Good Grades, Good Results

GradeFund is just one way you can encourage your student to do well in school–with the bonus of helping out with that ever worrisome college fund–but it isn’t your only option. Back in February I wrote about the ups and downs of paying for your child’s good grades. If you’re not sold on the GradeFund idea, you might want to peruse that article for other ways to encourage academic achievement.

Whatever method you choose, just be sure to give credit where it’s due–students thrive on encouragement!

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

photo: colorful symbols 2 by svilen001

With the economy currently in recession, it is only natural for families to become even more concerned about the high cost of college–and they have good reason to worry. It seems that as the economy turns downward, college costs are spiraling upwards.

College By the Numbers

The New York Times recently reported some staggering figures related to the affordability of higher education. Below are the highlights of their findings, which come from a biannual report published by the National Center for Public Policy and Higher Education:

• Between 1982 and 2007 family incomes increased by only 147%, while college tuition rose by a jaw-dropping 439%!
• As of 2007, the cost of a 4-year public college was 28% of the median family income.
• For that same year, the cost of a 4-year private college was 76% of the median family income.
• Colleges in states like Florida and Washington are expected to increase tuition by 15 to 20% for the upcoming school year.

What This Means for Today’s Families

Most families will find these figures shocking–imagine paying 28% to 76% of your income out-of-pocket for your child’s college education! And what about families who have more than one student in school at any given time?

If costs continue to rise in this manner, what will it be like for families whose students won’t attend school for five, ten, or fifteen years?

There are two things families need to think about in this critical time: early preparation and constructing a personalized comprehensive college plan.

Early Preparation

If you still have a good amount of time before your children will need college funds, it is important to get started saving NOW! Even if you can only put aside a very small sum each month, over time it can build to a respectable amount.  For a painless way to save, set up an automatic monthly contribution from your checking account where you won’t likely notice any effect on your monthly cash flow.

Be sure you educate yourself before you begin saving!  The appropriate college savings vehicle will all depend on your individual circumstances. Get professional advice from someone that has true expertise in explaining the differences of all the college savings options such as the Coverdell, 529 Plan, custodial account, etc. and when it is appropriate to use each.

Constructing your Personalized College Plan

There are ten critical steps to constructing your comprehensive college plan - let’s discuss the first four.  Step 1 is estimating how much you will need for future education costs.  Next, determine what funds you currently have available to earmark for future college costs.  Step 3 involves determining the projected shortfall (the difference between Step 1 and 2.) Step 4 is figuring out how the heck you are going to fund the projected shortfall!  (I’ll cover the next six steps in a future post.)

You’ve probably already thought about three potential ways you can fund your student’s college years:

1. Out of your own pocket
2. With grants from the government (if you can qualify)
3. With a merit or athletic scholarship

What many families don’t know is that there are many other ways to creatively pay for college! Families I work with are always surprised to discover there are literally dozens of strategies they can combine to reduce costs.  Tactics such as creating new income tax deductions (which we call “tax scholarships”), building academic competitiveness to help students get offered discounts , and optimizing cash flow to help efficiently pay for college and fund other financial goals (such as retirement!) as well.

As you read more and more troubling articles about the rising cost of college, don’t panic-instead, take action to learn what to do because, remember, knowledge is power!

All the best,
Deborah Fox

photo: going down by lusi

Since he took office in 2007, New York Attorney General Andrew Cuomo has been looking out for student interests–beginning with student loan investigations in summer of 2007.

Now Cuomo has his eye on possible connections between colleges and student health insurers. According to an article in the New York Times, Cuomo has subpoenaed reputable colleges such as Columbia, Georgetown, and Cornell. The schools are suspected of accepting payment to encourage students to purchase health insurance that they may not even need.

Some colleges require students to purchase their school-related insurance as a condition of enrollment, whether or not those students already have insurance through their parents.

Protecting Your Interests

Attorney General Cuomo’s investigation is a start, but it could be months or even years before its findings effect way college insurance requirements function.

Many students are insured under their parents’ insurance. If this is your situation, it is important that you pay strict attention to the insurance requirements of your child’s college. Follow these steps to help ensure you and your student are getting the best deal on insurance:

1. Inspect the Student Health Fees on your child’s tuition bill. Most colleges include a fee for health insurance right in their quarterly or semi-annual tuition bill, so be sure you look for that charge so you know how much the school is charging for the coverage.

2. Compare the school insurance with your child’s current insurance. Some schools have surprisingly good coverage at relatively low prices–it may even be better than the insurance you have now.  In other cases, however, the opposite is true.

3. Look into Student Health Insurance Waivers. Some colleges offer the option to waive their student health insurance coverage if you can prove that the student has coverage through a parent or other source. (This was an option available from my son’s college.)  Sign the waiver if you want to cut the health insurance fee off your bill. If you can’t locate a waiver, be sure to contact your student’s school to find out more about their individual school policy.

By comparison shopping for the best combination of benefits and pricing, you may likely free up some additional dollars that can go towards paying the college bills.

All the best,
Deborah Fox

photo: be healthy 2 by lusi

With the presidential race finally over and President-Elect Barack Obama preparing to take office in January, it seems a good time for us to begin discussing his plans for our higher education system.

Problems and Solutions

The President-Elect’s platform described what he sees as the most important troubles of our current higher education system:

• Rising college costs and the resulting student debt
• The complicated process of obtaining financial aid and tax credits

According to the official Barack Obama website, President-Elect Obama has proposed two solutions to amend these problems, :

• The American Opportunity Tax Credit
• Simplify the Financial Aid application process

The American Opportunity Tax Credit

As president, Barack Obama plans to introduce a new tax credit (in addition to the current Hope and Lifetime Learning tax credits) called the American Opportunity Tax Credit. This $4,000 credit is meant to help offset the high cost of tuition. Combined with the current credits and other academic, cash flow and tax reduction strategies, it could be a powerful tool to help families reduce the cost for college.

Like Bill Richardson’s once-upon-a-time loan forgiveness plan, this chunk of student aid has a string attached: Any student who receives the credit will be required to participate in 100 hours of community service. That’s a good deal for students when you look at it as $40 per service hour! ($4,000/100 hrs of service.)

Bye Bye FAFSA?

Most parents dread filling out the Free Application for Federal Student Aid (FAFSA)–in fact, some dread it so much that a staggering 1.8 million students missed out on aid in 2003-04 because they didn’t file it!

While many have tried to simplify the FAFSA, the President-Elect’s plan is even simpler: He wants to eliminate the FAFSA altogether. Instead, filing for aid would be as simple as checking a box on your annual tax return.

Whether either of these plans comes to fruition remains to be seen, as clearly the next president has many critical issues to tackle once he takes office.  Stick with me to keep up-to-date on the latest higher education developments in Washington!

All the best,
Deborah Fox

photo: Red, White, and Blooo by katagaci

With the current economy in a funk, I was shocked to read a statistic in a recent Kiplinger article that a staggering 70% of surveyed parents do not figure in their student’s potential postgrad income when deciding how much to borrow for college!

Bills, Bills, Go Away

It’s true that in many cases a student loan can be one of the lowest cost loans on the market. The federal government even picks up the interest on Perkins and subsidized Stafford loans while a student is in school at least half time.
What many families forget, however, is just how quickly their college tab can add up. Students often take out loans beyond the cost of tuition and fees for other college life items like computers, dorm decor, clothes, and living expenses.  They vaguely understand that the loan bill will arrive sometime after graduation. Too many students who access student loan money spend it like they shop with Monopoly money.

…Come Again Another Day

Would you buy a $100,000 car on a teacher’s salary? No way! That’s why I find it so surprising that some parents don’t have discussions with their children about the ramifications of debt–especially if their student is likely to enter a mid- to low-paying career. It might feel good to go to a prestigious school with a high price tag for a degree in Social Work, but if you don’t plan ahead of time how to have the available cash flow or savings to pay, your student will likely be bearing a hefty weight in loans for a long time after graduation.

Building a Better Future

The first step to helping your child build a better future is to teach them to be financially responsible. They need to understand what obligations they will incur when taking out a loan (especially since student loans will be in their names, not their parents!) and how the price of their college can affect their ability to live a comfortable lifestyle once they leave those hallowed halls!

The second step to a better future?  Smart planning. Most families have many options when it comes to reducing their out-of-pocket costs for college that they aren’t even aware of–and all of these options should be explored before you or your student ventures into the world of debt.

As a licensed financial planner who specializes in college planning, I work with families every day to help them reduce their college costs and pay for college most efficiently.  Most of you would be shocked to see how much you could potentially save if you would take time to proactively plan and implement a few dozen strategies.  It can make a world of difference!  So don’t wait–start paving your college roadmap as soon as possible-the sooner, the better!

All the best,
Deborah Fox

photo: Debt & Demand 5 by woodsy

With college legislation and student loan troubles all over the headlines, it seems like everyone wants to get in on the college news front.  The latest addition?  A new “College Ranking” list from Forbes Magazine.

Another Way NOT to Choose a College

Forbes, which joins U.S. News in the college ranking game, has recently released its methodology for upcoming college rankings-and they’re possibly even more disappointing than the U.S. News methodology.  They described their ranking methods as follows:

• 25% on student evaluations at RateMyProfessors.com
• 25% on # of alumni listed in “Who’s Who in America”
• 50% divided among:
  • Average student debt
  • % of students who finish in 4 years
  • # of students/professors who have won awards & honors

The 25% credited to RateMyProfessors.com may be the most questionable, as that site is not heavily moderated.  Anyone can sign up and rate a professor, and many students use it as a venting ground for schools and teachers they dislike.  In addition, some professors get high rankings from students merely because they are easy graders.  Unfortunately, it appears this is just one more ranking publication for parents and students to disregard during college search time.

The Best Methodology

Back in May I disclosed just how choosing the “right” college can save you money- it can result in a better financial aid package and your student is more likely to finish college in 4 years instead of spending extra time and money making up for lost transfer credits (or worse, dropping out altogether).  Beyond the finances, the right college will likely allow your student to make a smooth transition from high school to college.

So how do you find the dream college for your child?  You need to choose the school not with the highest ranking in a magazine (you’ll notice these change between publications anyway), but with the best ranking for your student specifically.  The school needs to be a great fit for your student’s personality, academic skills, and social and environmental needs.

Need help?  Review this article about how to choose the right college for your student (these tips have been working for my clients for years)-and then go for it!

All the best,
Deborah Fox

photo: Student Union by harrykeely