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The Facts About College Financial Aid

Most American families are offsetting the high cost of college by applying for some degree of financial aid by submitting their FAFSA (Free Application For Federal Student Aid) on or after January 2nd. Unfortunately, this is not a simple process as the college financial aid system is anything but user-friendly. There are an endless number of pitfalls in the application process, and it is far too easy for families to lose some or all of the aid they are eligible for.

Many families fail to even attempt application because they don't know how to, or they incorrectly assume they are not qualified, or simply because they are intimidated by the complicated and confusing process and all its paperwork. With far more qualified applicants than desks in all of America's colleges and universities, it is reasonable to expect a system intentionally designed to eliminate all but the most knowledgeable and persistent applicants.

According to a disturbing statistic from the US Dept. of Education, over 90% of all financial aid applications are rejected for errors and inconsistencies! As financial aid is awarded on a first-come, first-served basis, the loss of time in the resubmission process results in thousands of dollars of lost financial aid to eligible families who braved the college funding process blindly and alone.

This being the case, what's a family to do with one or more college-bound students facing as much as $160 to $300 thousand dollars to send their kids to a 4-year college? Many make the mistake of relying solely on the advice of guidance counselors, college financial aid officers (FAO's), and even their accountants. Sadly, these families are not getting all of the financial information they need and are in for a rude awakening!

Nationally, guidance departments are facing their worst crunch ever, and are overloaded with as many as 800 or more students for each counselor! Budget cuts have added to the problem causing schools to increase the responsibilities of guidance counselors in areas other than guidance, leaving them with even less time for their students - and there is no relief in sight!

Despite these obstacles and to their credit, guidance counselors still manage to effectively advise students in career planning and college selection. However, when it comes to college funding, they come up short in providing the necessary financial information that could save families thousands of dollars!

Counselors have little time and lack the expertise to show parents how to reduce their Expected Family Contribution (EFC), the minimum the federal government determines that each family will pay for any college, based on the information submitted on the FAFSA. Additionally, knowledge of specific legal financial aid strategies and their correct application would help families avoid or reduce an array of assessments that could cost them thousands of dollars for each year their students are in college!

For example, parents and most guidance counselors are unaware that students have no asset protection allowance. Consequently, students with assets in their own name are assessed by the federal government at 35% for each year they are in college! Thus, a student with $1,000 will be assessed $350 for each year the $1,000 remains in their name. After 4 years, they will have lost $1,400 in financial aid for having only $1,000 worth of assets! This is tragic as it can be legally avoided - if you know how.

Periodically, guidance departments present "in-house" Financial Aid Nights which focus on filling out financial aid forms and understanding the basics of the process. Nevertheless, year after year, 9 out of every 10 families applying for financial aid continue to be rejected for filling out their forms incorrectly. Clearly, parents are not getting enough guidance on the college funding process.

Well-meaning guidance counselors invite FAO's to speak at their high schools, trusting them to put the best interests of the students above the financial interests of their college. By evening's end, parents are often left with a false sense of security that the college of their choice will award their student its best possible financial aid package. This is hardly ever the case!

Much like frugal employers whose goal is to hire the most talented applicants for the least amount of pay, FAO's seek the most promising students for the least amount of financial aid. Relying on an FAO to cut your college costs is like expecting an IRS agent to help reduce income taxes! FAO's can be helpful, but their loyalties are with their schools - not their applicants!

Accountants may offer some assistance, but far too few have experience with college funding. Although they are experts with income tax forms and tax strategies, college financial aid forms and college funding strategies are a horse of a different color. The good-intentioned application of accounting principles to college funding can actually hinder a family's chances of getting all the financial aid they are entitled to!

There is an endless amount of misinformation on the subject of college funding, and a good deal of it is from so-called reliable sources. In fact, one instruction on the current FAFSA, if followed, will cost families thousands of the financial aid dollars they are eligible for! (See our website for FAFSA ALERT!) So, "who you gonna call?"

One of America's best kept college secrets is the existence of the college funding professional! This small group of admissions and financial aid experts assist parents through the college funding process and help families provide their students with the best possible college education for the least possible cost. One would naturally assume they are in great demand and buried with invitations to lecture at America's high schools. Sadly, this is not the case!

It would surprise and outrage parents to learn that, on a national scale, most guidance departments refuse the services offered by college funding professionals, often stating that bringing in "outsiders" is against school policy, even when such services are offered absolutely free! The distressing result is, every year, parents enter the college funding arena without the necessary ammunition to do battle with the system - and severely overpay for college!