Yesterday I reviewed a great book on getting into and paying for college, Getting into College and Paying for It. Today, we have an excerpt from the book courtesy of the author. Today, we'll cover "The Truth About The College Funding Process" which is part of the introduction of the book written by Harvey Lee Ratner. Here goes:
The Truth About The College Funding Process
“Any truth is better than make-believe…rather than love, than money, than fame, give me truth.” Henry David Thoreau
Most families are offsetting the high cost of college by applying for and accepting various forms of financial aid. However, this is a path fraught with sharp curves, ruts and dead ends. The College Admissions/Financial Aid Process is not user-friendly. There are an endless number of pitfalls making it far too easy for families to lose some or all of the aid they are eligible for.
Many fail to even apply for financial aid because they don't know how, or because they incorrectly assume they are not qualified, while others are simply intimidated by the complicated and confusing process and all of its paperwork. Overwhelmed by applications, it is reasonable to expect that America's colleges and universities utilize a system intentionally designed to eliminate all but the most knowledgeable and persistent applicants.
According to a disturbing statistic from the US Department of Education, over 90% of all financial aid applications are initially rejected for errors and/or inconsistencies! The time lost in the resubmission process often results in thousands of dollars of lost financial aid to eligible families who braved the College Funding Process blindly and alone, leaving many students without sufficient funds to attend college at all.
This being the case, how is the average American family supposed to afford $185,000 and more for each student they plan to send to a four-year college? Many make the mistake of relying solely on the advice of guidance counselors, college FAO's, and even their own lawyers, financial planners and accountants. Unfortunately, these families are not getting all of the financial information they need and are in for a rude awakening!
All across America, guidance departments are facing their worst crunch ever. Overcrowding in the classrooms is commonplace, and guidance counselors around the country are responsible for as many as 800 or more students each. 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 much to their credit, most guidance counselors still manage to effectively advise students in career planning and college selection. However, when it comes to college financial planning and its application, they lack the expertise to provide the necessary financial information that could save families thousands of dollars!
Few counselors have the training to show parents how to reduce their Expected Family Contribution (EFC) – the minimum amount the federal government determines that each family will pay at any college. Nor do counselors have the knowledge of specific financial aid strategies and their correct application, which would help families to legally reduce or avoid an array of assessments that will otherwise cost them thousands of dollars for every year each of their students are in school.
Most guidance counselors, for example, are unaware that in the financial aid formulas students have no asset protection allowance. Consequently, students with assets in their own name are assessed 20% per year for each year they are in college. Thus, a student with $1,000 in the bank will be assessed $200 for each year the $1,000 remains in their name. After four years, the student will have lost $800 in financial aid for only $1,000 worth of assets! This is tragic as it can easily be avoided – legally!
Periodically, guidance departments present in-house financial aid nights that 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 in the financial aid process.
Well-meaning counselors invite college FAO's to speak at their high schools, trusting them to put the best interests of the students before the financial interests of their colleges. By evening's end, parents are often left with the misconception that the financial aid package awarded by the college of their choice will leave them with no unmet or additional financial need. This is hardly ever the case!
George Bernard Shaw said it best: “A government with a policy to rob Peter to pay Paul can be assured of the support of Paul!” Much like a frugal employer whose goal is to hire the most talented and promising applicants for the least amount of pay, an FAO's primary responsibility is to secure the attendance of the most promising students for the least amount of financial aid! FAO's can be helpful of course, but their loyalties are with their schools – not their applicants.
Accountants may offer some assistance, but far too few have had any first hand experience with the college financial aid process. Although they are experts in the tax code, completing tax returns and the implementation of tax strategies, college financial aid forms and strategies are a horse of a different color!
The application of accounting principles to college financial aid can actually hinder a family's chances of getting all the aid they are entitled to.
There is an endless amount of misinformation on the subject of college financial aid, and unfortunately, a good deal of it is from so-called reliable sources. So, “Who you gonna call?”
One of America's best-kept secrets is the existence of the college admissions/ financial aid professional. It is the mission of these financial aid experts to assist parents through the maze of the College Funding Process and to help students obtain the best possible education for less than they ever dreamed possible.
One would naturally assume that such experts are in great demand and inundated with invitations to speak at America's high schools. Surprisingly, this is rarely the case.
Parents should be appalled to learn that, on a national scale, most guidance departments resist the services offered by college funding professionals, citing that old medieval nonsense, “Bringing in outsiders is against school policy.” This is far too often their reaction despite the fact that such services are always offered absolutely free! Unfortunately, far too many of our educators place outdated horse and buggy policies and bruised egos ahead of the best financial interests of their students. Thus, every year, millions of families enter the college funding arena unprepared and without the necessary financial ammunition to do battle with the system – and grossly overpay for college!
The purpose of this book is to take parents step-by-step from beginning to end, eliminate the guesswork and show families how to play the college admissions and financial aid game – and win.
That having been said, and given that you are now in the proper mindset to proceed, I put you in the very capable hands of one of America’s leading experts on college admissions and financial aid, Reecy Aresty.
I wish you and your family the best of luck and remind you that before you have to pay the bill, the student has to be admitted…
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A couple points to reinforce from this piece:
1. "One of America's best-kept secrets is the existence of the college admissions/ financial aid professional. It is the mission of these financial aid experts to assist parents through the maze of the College Funding Process and to help students obtain the best possible education for less than they ever dreamed possible. One would naturally assume that such experts are in great demand and inundated with invitations to speak at America's high schools. Surprisingly, this is rarely the case."
I never knew such a profession existed. I don't see a lot written about it. Maybe that's why they are rarely used.
2. "The purpose of this book is to take parents step-by-step from beginning to end, eliminate the guesswork and show families how to play the college admissions and financial aid game – and win."
The book delivers on its purpose. You'll earn the purchase price over and over again in the extra aid you get for your child (not to mention getting him/her into their college of choice).
I am sorry but it does not cost $185,000 to go to college. A very good education can be had for $10,000/year including books tuition and rom and board at state schools. If you live at home, you are looking at 20k to 25k for a college degree. If we are going to engage in financial planning, lets' get real and quit scaremongering!!!
Posted by: ciwood | September 07, 2006 at 09:05 AM
I think he's using the "retail" price. As we all know, the "real" price is much less. (Just like buying a car.)
Posted by: FMF | September 07, 2006 at 09:47 AM