Financial Aid Scoop!

"Avoid these FAFSA mistakes!"

2009-10-15T13:45:00.002-04:00

As of the date of this writing, we're in the throes of college application season for high school seniors. No doubt your little student is busy like a beaver with college apps, SAT/ACT prep., drafting essays and regular schoolwork!

But you've got to roll up your sleeves and get to work, too! Because if you have not yet finalized your plan to pay for college, it's almost too late.

The FAFSA will be available after January 1, 2010. It's not too far in advance to start thinking about how you're going to look on paper to the financial aid officers who will review your application.

Here are some common mistakes to avoid:

* Not knowing the "priority" deadlines for filing. Most schools want the forms in by March 1 or March 15. You should get yours in end of January, early February at the latest.

* Disclosing your retirement account values.
Don't do this when the form asks you for your investment information. Although it says very clearly in the directions that retirement account values need not be included, many bleary-eyed parents still do so.

* Speaking of investment information, you should know that, in general, child assets count against you "more" than parent assets! Yup. As unfair as that may seem, them's the rules.

* Some assets don't count against you at all.
Not just retirement accounts. Read the rules carefully.

And here's the biggest mistake:

* Not applying because you think you
won"t qualify because you earn too much.
Don't fall for that one - six-figure earning families regularly receive five-figure financial aid awards these days. Colleges are starting to wake up to the plight of the "forgotten middle class."

I hope you print these tips and refer back to them when you fill out the FAFSA in a couple of months.

But these tips are just scratching the surface of what you really need to know about how to pay for college.

I strongly urge you to attend on of our upcoming free workshops on college funding strategies:

There"s one this Saturday morning in Pembroke Pines and one next week in Pinecrest. We're about 55% full in Pembroke Pines, so don't dilly dally!

Your College Planning Pal,

-Andy

P.S. Would it help if I told you where to sign up?

www.LearnCollegeFunding.com

New SAT Scam!

2009-08-18T14:19:00.004-04:00

For free test tips and discounts, visit: SmokeTheSAT.com

What the Hell is College Pete Doing In There With That Student?

2009-08-11T15:59:00.003-04:00

What on God's green earth is College Pete doing in there with those students? A sneaky behind the scenes look at what you should be doing with your college - bound children!

College Pete on Financial Aid's "Secret" Timing

2009-08-05T21:37:00.009-04:00

Here's a sneak preview of the first post for the FinanciaAidBuzz - a blog site that we're building out. This video features college funding expert "College Pete" Ratzan walking you through the "secret" timeline of financial aid...what and when college financial aid officers will be looking at to determine how much money you'll receive in financial aid! Caution - you may be shocked by what Pete has to say! More info at our main website, CollegePlanningAdvice.com!

Is Your Guidance Counselor Stupid (About Financial Aid)?

2009-08-04T12:01:00.007-04:00

Frequently, parents of college-bound teens wonder if their high school guidance counselor or college advisor can help them figure out how to pay for college. Sometimes parents will even turn to the financial aid office at their child's college for advice! Andy discusses the pitfalls of choosing these options....

Show me the college money...and goofy, sarcastic captions

2009-07-31T23:06:00.001-04:00

The "Deep, Dark Double Secret" Financial Aid Formula...

2009-07-30T07:42:00.000-04:00

The Department of Education's formula that calculates how much aid you'll receive. More info available at: www.LearnCollegeFunding.com.

How a client who you never would think would qualify for financial aid received $14,000 at the college of her choice!

2009-06-16T16:24:00.008-04:00

Three questions you must ask!

2009-06-16T11:52:00.004-04:00

Here's a short, 3 minute (and change) video about the three questions you must ask every college years before you apply for financial aid. Check it out so you're not blindsided when it's too late!

Visit our website for more info on other questions you must ask re: financial aid, the FAFSA and other college planning topics! (If the link does not work, cut and paste this into your browser:
www.CollegePlanningAdvice.com)

- "College Pete" n Andy
College Planning Specialists of Florida
1825 Main Street
Weston, Florida 33326

www.CollegePlanningAdvice.com

*For more information on our free, community workshops, please visit:

www.CollegePlanningAdvice.com/events

Free Advice Turns $9,500 into $37,500

2009-06-12T19:44:00.002-04:00

Did you know that one little piece of free
advice turned $9,500 into $37,500?

A short while ago, a successful, well-
known Miami entrepreneur attended one
of "College Pete's" free community workshops on
college funding.

This woman, I'll call her Amy, listened
attentively and took notes. She learned
information such as:

* The three questions you must ask each
college years before you apply;

* The "double-secret" formula used by
the financial aid offices to determine how
much aid you'll receive; and

* What to do if you feel like you got stiffed
by the financial aid office.

Amy walked away from that workshop a
determined woman. Her daughter had received
a paltry $9,500 award from a prestigious
university in the Northeast, but felt she
deserved more - a whole lot more.

Amy took one simple strategy that Pete
shared at the workshop and tried to implement
it with the financial aid office at this university.

She recently emailed Pete the result:

A financial aid package worth $37,500!

I bet you're wondering what the "golden
nugget" from Pete's lips was, right?

He'll tell you at the next workshop. He's
holding two this month - one in Weston,
one in Miami.

If you're stressed about how the heck you'll
afford to pay for college, especially given
the latest news about tuition hikes, you should
register now before it's too late. Seats
tend to fill up quickly.

www.CollegePlanningAdvice.com/events

Amy felt that this tip literally changed her
daughter's life. Don't miss this opportunity to do
this for your son or daughter. Claim your seat
today.

For more information, visit our website,
www.CollegePlanningAdvice.com.

It's gonna cost me HOW MUCH????

2009-06-11T06:07:00.002-04:00

"College Pete" and I hear that question virtually
every time we give our community workshops
on college funding. Thanks to the latest news
from FAU and other colleges who have decided
to jack their tuition by 15% this year, practically
every parent of a college-bound child is
buzzing about college costs now. This is a good
thing.

See, most parents don't really focus on the
cost of college until their children's senior
year. This is a mistake.

Why?

You wouldn't shop for any other major
purchase without having some idea of the price
before-hand, would you? A car? A house? A
Jack LaLanne Power Juice-o-matic?

Do you think that college tuition is the only
cost you'll pay for your little Einstein?

You're dead wrong.

Tuition is only a fraction of the picture. A
small fraction at that, in some cases.

Kid's gotta eat, right? And live somewhere?
What about books, health insurance, auto
insurance, gas, even spending money for
"personal" expenses (some would call this
"beer money.")

And then there are the fees. Oy, those fees!

So you'd better get a handle on ALL of these
costs looooooong before your child even
thinks about applying.

Most colleges publish their "total cost of attendance"
for one year of college, per child, on their websites.
Typically, they also describe their financial aid
policies.

Do your research.

We hold free community workshops around
South Florida - Weston and Miami this
month; other locations include Pembroke
Pines, Davie, Coral Springs, Parkland, Boca
Raton and elsewhere. Sometimes we
even hold webinars.

Please click here to view our upcoming
schedule - we typically book up a few days
before each workshop so you should
pre-register before it's too late:

www.CollegePlanningAdvice.com/events.

Hope to see you there!

SAT myths

2009-06-09T16:09:00.002-04:00

Pete and I just recorded a free video, "8 SAT Myths." It will be available on our website, www.CollegePlanningAdvice.com in the next day or so. Please visit our site if you're interested in this, or other college planning (like financial aid!) topics!

- Andy

Florida's official tuition hike...and what do do about it

2009-06-05T07:20:00.004-04:00

It's gonna cost how much?

From the "Insult to Injury Department," Florida's state universities are going to cost more. A lot more.

Governor Charlie Crist signed into law a 15% tuition increase for all state universities, to compensate for a budget shortfall faced by the state university system. The same shortfall that forced classes and faculty, administrative layoffs, larger student-faculty ratios, lower professor salaries and frozen enrollment.

The annual 15% increase will continue until Florida’s tuition, currently the lowest in the nation, is on par with the national average. This will take years to achieve, if it ever is, so we can expect a 15% yearly increase for the foreseeable future.

Great. what about Bright Futures?

To make matters worse, the Bright Futures scholarship program will not cover the increase. Parents with high achieving kids will now have to fork over the difference created by the tuition hike.

At the same time, Stanley Tate, acknowledged as the "father" of Florida Pre-Paid College program (it's named after him), warned that the tuition increase will kill the pre-paid program, making college unaffordable for Florida’s families. He's spent a reported $500K in full page newspaper ads urging consituents to oppose the tuition hikes, but to no avail.

So what's the best way to deal with these official college cost increases? Through the financial aid system.

Strangely, more than 53% of eligible families never even apply for financial aid! Yes, you read that right - more than half of families that deserve financial aid never even bother to apply!

Why? Here's a clue, directly from the lips of Secretary of Education Arne Duncan (Harvard grad and Obama pickup hoops buddy): "You basically need a Ph.D to figure that thing out."

What's "Jump Shot Arne" talking about? The FAFSA - the federal form used to apply for aid. A lot of parents are intimidated by that form. It's long and complicated and full of landmines, so we understand.

But "College Pete" and I think there's one more, big reason why most eligible families don't bother to apply. It's because they think they won't qualify, because they're middle class families. That's just flat out wrong, but this letter is long enough already so we won't get into it.

Here's the bottom line - your "College Bailout" has been right under your nose the whole time - the Financial Aid system. Everyone should apply for financial aid. Period.

Best,

"College Pete" and Andy

P.S. We host free community workshops for parents of college-bound teens. If you’re stressed about how you’re going to cope with rising college costs, you owe it yourself to come. We'll go over the "secret formula" used by the FAFSA to determine how much aid you'll receive, and whether you can improve your odds. Register at:

www.collegeplanningadvice.com/events

P.P.S. Bring a friend if you like! Just forward this blog onto them.

7.5 Tips for Your Summer College Visits!

2009-06-01T13:50:00.007-04:00

"College Pete" here:

Many families like to use the summer months to visit colleges. While we recommend that students visit colleges during the school year when regular classes are in session, this is not always viable, and the free time offered by summer vacation is a strong temptation. Below are some tips to consider when visiting schools, whether you are planning to visit colleges this summer, or you’re scheduling a trip in the fall.

1. Do your homework before you go. Use tools like DISCOVER (something I use in my practice when I work with students) to research the school, and visit the school’s website. Make sure the school offers the major of study that interests you, as well as any other programs that you desire in a college. These may include music, athletics, drama, political organizations, etc.

2. Make an appointment to take the tour. On certain days of the week the tour may not be offered, especially during the summer. The tour may take you to parts of the school that you may otherwise overlook, so you won’t want to miss it. You’ll also learn about the school’s history.

3. Be your own tour guide. Once the tour is over take some time to walk around yourself, perhaps without your parents (you’ll meet them later). If you can, drop into a class or two, especially in an area of academic interest.

4. Get a soda or coffee in one of the student lounges. Ask students questions about the school, what they like and dislike. Students love to talk about their school, and there is no better source of information than current students.

5. Check out the library, computer lab, gym, and laundry. Even though this isn’t directly related to what you’ll be studying and your major, you’ll be spending plenty of time at all of these areas, so be sure to take a look at them as well.

6. Visit the career counseling center. The tour probably will not take you here. You’ll want to know what resources are available to current students, as well as graduates, upon graduation. What kinds of employers recruit on campus? What sorts of internship opportunities are available to students?

7. Schedule appointments with “highly relevant” individuals. You’ll need to do this in advance. These individuals include the orchestra director if you play music, an engineering department chair if you are interested in engineering, a drama department chair if you are an aspiring thespian or an athletic coach if you are an athlete. These folks may assist you in the admissions process by influencing the committee on your behalf. Be sure to get their contact info and send a follow up letter thanking them for their time.

7.5 Enjoy your trip! Have fun -don't stress - chill!

P.S. Want more info on college-related stuff, like financial aid? Visit our site, www.CollegePlanningAdvice.com!

Requiem for the "forgotten" middle class

2009-05-12T06:22:00.004-04:00

Have you been paying attention to the debate over
the future of Bright Futures? (Bright Futures is the
Florida's state-funded, merit-based scholarship
program.)

State analysts have been warning us year after year
about how unaffordable the program has become;
now, with the economy in shambles, the debate has
reached a shrill crescendo.

How will it change? Probably by making the standards
higher to earn (a recent study shows that (95% of
all incoming UF freshman qualified). And almost
certainly by exempting some tuition costs - in other
words, some of the rising cost of attending college
here in Florida will not be covered by Bright Futures.

But check this out quote from former chancellor
Charlie Reed, "one of the dumbest policies I know,
to give rich people financial aid to go to the state
schools..."

What prompted this outburst? A survey showing
that the median annual income of students'
families was $100,000 and that almost 25% of
UF earned more than $150,000 per year.

I don't know about you, but most people I know
earning income in that range do not consider
themselves "rich." In fact, a lot of parents that
College Pete and I consult, whose earnings are in this
neighborhood, feel downright poor when
contemplating sending one or more children to
college with costs between $17,000-$55,000 per
year, per child!

Talk about the "forgotten" middle class!

Also, ex-chancellor Reed seems to be ignoring the
legislative intent, or purpose of Bright Futures- to
encourage the best students to stay in Florida and
thus contribute to our economy. Reed's looking
at Bright Futures as a social engineering tool, not
a merit-based one.

If you're a middle class, or even upper middle class
parent struggling with how you'll ever be able to
afford college education for your children, my
advice is to consider schools outside of the state
of Florida in addition to our state universities.

Why? Because many "high sticker price", private,
out of state schools offer extremely generous
financial aid packages to parents earning six-figure
incomes.

My other piece of advice is to do your research
early; i.e. second half of your student's sophomore
year or junior year at the latest. You don't want
to be blind-sided by learning how much college
really costs when it's too late to do anything about
it.

Knowledge is your best defense. One way to
arm yourself is to attend on of our upcoming
free community workshops,

"Financial Aid's Dirty Little Secrets Revealed!"

We cover:

* How even Millionaires can save $30,000 on
college costs;

* The single biggest mistake made by "Forgotten
Middle Class Parents" when applying for financial
aid;

* "Closely-guarded" college funding loopholes; and

* A heck of a lot more.

www.CollegePlanningAdvice.com/events

Register now while this is still fresh on your mind -
don't put it off any longer.

The Kids Aren't Alright

2009-04-27T13:50:00.004-04:00

According to a recent Sun-Sentinel article, college students are racking up credit card debt to pay for their education. 30% charge their tuition compared to 24% in 2004. 92% of undergrads charged textbooks, school supplies and other educational expenses compared to 85% in 2004.

Marie O'Malley, director of consumer research for Sallie Mae, thinks families are underestimating college costs and opting for more expensive credit card debt in lieu of applying for cheaper financial aid.

"Too many students are at risk of overpaying for college by pulling out credit cards...instead of using less-expensive financial aid..." said O'Malley.

Duh! Sound familiar?

"College Pete" and I have been warning about this, broken record-style, for years. Why don't parents apply for financial aid? Put another way, why do 53% of all eligible families not bother to apply?

One reason is intimidation. You "need a PhD" to figure out the FAFSA, according to Secretary of Education Arne Duncan. The forms are annoying and a pain the in the rump, with multiple land-mines to stumble on and blow up all chances of aid.

Another reason is that parents put off their college planning until it's too late. The best time to start the college planning process is the second half of sophomore year, junior year at the latest.

What are the consequences to your children if you don't take this seriously?

One FAU graduate who maxed out his credit cards to pay for college fretted, "I wonder if I'll ever be able to get a home...with the debt I have now and the marks against my credit."

On a personal level, I’m extremely sympathetic to this student as I racked up $100,000 in debts between undergraduate and law school. My wife and I have four children and have sworn a blood oath to never put them through what I had to endure. That’s why I’m in the college planning business.

So learn about the financial aid process while there is still time to do something about it!

Andrew Lockwood, J.D., and Peter “College Pete” Ratzan, M.B.A., co-authors of the book, Never Pay Retail for College, conduct free college funding workshops throughout South Florida. Topics include: How even millionaires can save 20% off the cost of college; Think you make too much money to qualify for financial aid? You're probably wrong, dead wrong! And, Can you legally "position" yourself to receive more financial aid? More information is available at: www.CollegePlanningAdvice.com/events.

Parents of College-Bound Children - Are you holding up your end of the bargain?

2009-04-13T12:20:00.002-04:00

If you have a high school senior, this can be a stressful time of year. By now, most seniors have heard from most of the colleges they've applied to about whether or not they got 'in.'

But now, more than ever, another letter is being eagerly anticipated - the award letter from the financial aid office.

If you didn't plan, these award letters can be crushing, when a student learns that she can't go to her top choice college – after working her tail off for years, loading up her schedule with AP's, club memberships and extra-curriculars.

She held up her end of the bargain, but mom and dad didn't - they didn't look into what college really costs and how they'd afford it.

Those that planned are being rewarded this year. Yes, the economy has caused some colleges to be a little stingy with aid, but overall, this has been a very strong year for financial aid packages.

If you've got a college-bound sophomore or junior, the time is NOW to get serious about how to pay for college.

You wouldn't buy a car without knowing the sticker price, why go "shopping" for college without understanding the costs and looking into how to cut those expenses.

Record numbers have applied for aid this year; next year it might be even worse – more families chasing fewer financial aid dollars.

Here are some questions to ask each college you are considering:

· What percentage of "Need" do you meet?

Most financial aid is based on "Need," calculated by the Federal Financial Aid formulas. The greater your Need, the more aid you should receive. However, the percentage of Need met by each university varies greatly. The schools with the biggest endowments typically are the most generous.

· How is Need met?

Financial Aid packages include free money – grants and scholarships - that does not have to be repaid, and loans, which require repayment.

Typically, the colleges with the largest endowments award a greater percentage of free money than loans. You’ll want this information before you apply.

· What are your deadlines?

Some colleges have early deadlines. You want to be among the first application, since money can be doled out first-come, first-served. Last month, we had a student who was offered a $1,000 "Early FAFSA" scholarship simply because we got his forms a few weeks early!

Of course, there are many other factors that go into your college plan - this is just the tip of the iceberg.

If you are the parent of a high school sophomore or junior, it’s time to make college planning a top priority. Before you know it, it will be April of your student’s senior year and you’ll be hoping for good news to arrive in your mailbox!

Andrew Lockwood and Peter "College Pete" Ratzan co-authored the book, Never Pay Retail for College. His firm sponsors free community workshops on college funding. Visit www.CollegePlanningAdvice.com for more information.

The Death of Bright Futures

2009-03-27T07:11:00.003-04:00

Big article on the front page of the Sun-Sentinel
yesterday - "Bright Futures May Grow Dimmer."

This is another in a spate of recent coverage
about proposed tuition hikes that are before
the State Legislature right now.

Scott Travis, the reporter, suggests that Bright Futures
scholarships, which cover 100% and 75%
of tuition and fees (depending on the grades
and test scores of the student), might cover
far less in the future if the bill passes.

For example, a student who qualifies for
the Academic Scholar, or 100% award, might
have to fork over $4,269, or 44%, of the anti-
pated fees in 2016, according to one expert's
analysis.

So what was once a 100% full ride could turn
into only 56%!

So what is a parent of a college-bound child
to do? Apply for financial aid!

But for some parents, that's easier said than
done. A recent College Board study estimated
that 53% of eligible families don't bother to
apply for aid.

Why?

Probably because they think they make too
much money to qualify. That's silly -
everyone should apply for aid - even families
making "nice," six-figure incomes.

Or maybe the forms themselves are too
intimidating for parents - Secretary of Education
Arne Duncan was quoted recently as saying
that "You basically need a PhD" figure out the
FAFSA.

More people are chasing financial aid dollars
this year - USA Today reported that 81% of
parents said financial aid would be "extremely"
or "very" necessary.

You need to arm yourself with the latest
tested and proven tactics to make sure you are
getting the maximum amount of financial aid
that you're entitled to.

An easy first step and overview - attend one of our
upcoming, free community workshops on college
funding.

www.CollegePlanningAdvice.com/events

Topics include:

* What your Florida Pre-paid and Bright Futures will
"really" pay for;

* How families who earn "nice," six-figure incomes
and even millionaires can save $30,000 off the
cost of college;

* What can you do qualify for more aid;

* Why the advice of your CPA, money manager or
other "advisor" may actually COST you thousands
of dollars in lost financial aid; and

* The "Double-Secret" formula used by college
financial aid offices to determine how much
aid you'll receive, to the dollar!

www.CollegePlanningAdvice.com/events

Best
- Andy

Andrew Lockwood, J.D.
College Planning Specialists of Florida, Inc.
1825 Main Street
Weston, Florida 33326

www.CollegePlanningAdvice.com

Dirty, deceptive and surprising student lending!

2008-12-09T12:39:00.002-05:00

I bet you'll be surprised about how studentloans REALLY work. Here's what I mean.
On Monday, NY Attorney General Andrew Cuomo announced a settlement with the College Board over its former loan practices.

That's right, that's the same College Board that tortures high schoolers with the SAT, the CSS/Profile financial aid form and other familiar items. Apparently the Board was making money from sources otherthan test registration fees, like lending to students.

Attorney General Cuomo had a problem with the way in which the College Board was conducting this business.

Mario's Number One Son found that the College Board gave discounts to certain colleges, breaks related to prices paid by the financialaid offices for software and other services.

How did these colleges earn this special pricing from the College Board? By placing College Board loansin their list of recommended, or "preferred" lenders.

In other words, the College Board was alleged to have"bribed" (my word, not Cuomo's) these colleges into advertising the student loans offered by the College Board.

"Loans are hard enough to come by these days; thelast thing we need are deceitful arrangements likethis one that stand squarely in the way of students and parents getting the facts," said Cuomo.

And I bet you thought the company that issues the SAT was a non-profit or educational institution, right?

Nope, they're in business like everyone else involved in higher education. They're out to make a buck.

Not that there is anything wrong with that, of course. College Pete and I make a nice living advising parents of college-bound kids how to slash their college expenses. Everyone is entitled to make a few dollars (no matter who is President)!

The real issue is the deceptive manner in which the College Board, and the colleges themselves, allegedly made their money (they admitted no wrongdoing, not surprisingly).

When you go to apply to college, understand the main point made by this blog - that college is a BUSINESS.

This knowledge should effect almost everything you do regarding your student's college education, including where you apply for admission, how you apply for financial aid, how you apply for other scholarships and how you negotiate a financial aid award letter, among others.

If you don't understand this, you're setting yourself up to over-pay needlessly for your student's college education. You could be forcing your son or daughterto attend a "cheaper," less-desireable college than if you paid attention to the business of college.

This is exactly what we talk about in our free community workshops, "How to Pay for College Without GoingBroke or Raiding (what's left of) Your Retirement Savings."

Tonight's is sold out but we have a few more in Miami,Weston, Boca Raton and Parkland in the next 7 days.After that, it's too late - we shut down for the year.

The workshop is for parents of college-bound students. If you have a college-bound Senior, you're on life support if you haven't done anything to prepare for college costs. If you have a Junior, know that this is the most critical year for college funding purposes. If you have a Sophomore, everything he or she does now leads up to Junior year, the most important year of high school.

If you have a friend who's struggling with howto pay for college, send them a link to this post and tell them about our workshops in Miami, Boca,Weston or Parkland, too! They'll like this email better than a lump of coal in their stocking, promise!

Registration info is at:
http://www.CollegePlanningAdvice.com/events

The Surprising Reason High Income Earners Receive Thousands in College Financial Aid!

2008-10-15T09:36:00.004-04:00

You will not believe this email, but bear with me.
"College Pete" and I constantly talk about howeven millionaires should apply for college financial aid, even if they think they won't qualify.

Before I get to the story I read today, let me give you a little background on college admissions. Background that you'll never hear anywhere else.

Are you familiar with US News and World Report? This magazine is at the top of the heap when it comes to ranking colleges and universities.

Many admissions heads obsess over their rankings, particularly the colleges in the fourth, third andeven second tiers, trying to figure out how to move up in rankings. Better rankings equals more applicants, more enrolled and the ability tocharge higher tuition and fees.

Like it or not, that's the way it is.

Many ambitious, upwardly-mobile colleges will do all sorts of things to improve their standing with US News. Some offer "bribes" to good students by way of merit scholarships to pry them away from Ivy League or other highly competive schools. This funding is doled out withoutregard to the family's financial picture. And it's heaped upon students with grades and scores that are not"Ivy-caliber", too!

Now check out what Baylor University did. Apparently,the SAT's of last year's incoming freshman classwas worse than that of the previous year. This would look bad in US News.
So Baylor did something creative to counter their impending drop in the rankings. They bribed their accepted, incomingfreshmen to re-take the SAT!

Yes, you read that right! Baylor offered a $300 book credit to any freshman who sat for the SAT again. And, if the student increased his or her score by 50 points, therewas another grand in it for them. About 177 qualified for even more scholarship funding.

Of course, Baylor denies that they created their SAT contest because of the US News rankings.

My point is the college financial aid game works in ways that non-insiders can't possibly understand. Even parents who make "deep" six figure, or higher, incomes can save thousands off college costs, if they know the rules ofthe game.

So take away two points from this post - do your research about what schools over this kind of aid (and what their standards are) and do NOT blow off applying for financial aid if you think you earn too much money, because you never know!

Best,

- Andy

P.S. Want more info on "How to Pay for College WithoutGoing Broke or Raiding What's Left of Your RetirementPortfolio?" We've got three more college funding workshops this month and they're than 77% booked up.

I ran last night's at Nova Southeastern and I counted only three available seats. Thank god we had 6 no-show families!"College Pete" is running one at the Posnack JCC in Davie, 6:15 and there are still 8 available slots. Then I'm doing workshops on Thursday night, 8:00 pm at the Weston Y and Saturday, 10:15 am at The Sagemont School, Upper Campus.

P.P.S. You can check availability and locations at:
http://www.CollegePlanningAdvice.com/events
or call 954.659.1234 ext. 201.

Andrew Lockwood, J.D.
College Planning Specialists of Florida, Inc.1825 Main SteetWeston, FL 33326
http://www.collegeplanningadvice.com/
954.659.1234
Co-author, "Never Pay Retail for College,"
Co-host, "The College Planning Power Hour"WFTL Sports, 1400 AM, ESPN Radio

10 College Funding Mistakes to Avoid

2008-10-09T10:27:00.002-04:00

Top 10 College Funding Mistakes Made By Parents of College-Bound Teens

By Andrew Lockwood, J.D., CollegePlanningAdvice.com

If you have a child applying to college, this is an exciting and stressful time for both of you. One of the most worrisome issues facing parents today is how to pay for a four year college or university. Fortunately, there is more than $137 Billion available from the Federal Government, the states, colleges and universities, private foundations and other organizations. Your challenge is to figure out how to access these funds.

Many families fail to take advantage of the numerous financial aid and other college cost cutting opportunities available. For the uninformed, ill-prepared family, the unfortunate results can range from being forced to take out high fee, high rate college loans, tapping equity built up in their homes or dipping into retirement savings. But with diligent research, you can significantly minimize or flat-out eliminate these undesirable outcomes.

To help navigate the overly complicated regulations of the Department of Education, I offer
“College Pete and Andy’s 10 College Funding Mistakes to Avoid.”

Mistake #1: Most middle and upper-middle class parents assume they won't be eligible for financial aid because they own a home and make more than $100,000, $150,000 or more per year.

Mistake #2: Focusing time and energy on a private scholarship search instead of spending time trying to qualify for “need-based” financial aid.

Mistake #3 - Assuming only minority students, athletes, and academically gifted students receive financial aid.

Mistake #4 – Applying to a college without regard to how their child’s high school record compares to the statistics of the existing student body of that college.

Mistake #5 – Blindly assuming that all colleges and universities have similar amounts of resources and will award the same scholarships, grants and other aid across the board.

Mistake #6 - Not understanding the difference between "included assets" and "exempt assets" for purposes of filling out financial aid forms.

Mistake #7 - Believing that it doesn't matter where they keep their money; it's all counted in the same way.

Mistake #8 – Believing their CPA or tax preparer is qualified to fill out financial aid forms.

Mistake #9 - Waiting until January, or worse, after January, of their child's senior year of high school to start working on your college financial aid planning.

Mistake #10 – Relying on their child’s college advisor, guidance counselor or BRACE Advisor for help with the financial aid process instead of consulting a specialist.

Andrew Lockwood is the co-founder of Weston-based College Planning Specialists of Florida. He and his partner, Peter “College Pete” Ratzan, co-authored the recently-released college funding book, Never Pay Retail for College. Lockwood and Ratzan conduct free college funding workshops, ”How to Pay for College Without Going Broke or Raiding Your Retirement Portfolio” throughout South Florida. For dates, times, locations and seating availability, visit www.CollegePlanningAdvice.com or call 954.659.1234 ext. 299.

What to do after you've submitted your financial aid application

2008-09-22T14:17:00.003-04:00

"College Pete" here -

I had a student call me the other day, wondering how we might be able to assist her in finding a student loan to pay for her current tuition bill. This student attends a local private university, and fortunately for her she’s in her last year in college. Her EFC is under $2,000, and her FAFSA was filed way back in March.

The school had asked for Verification of her financial aid application. All this means is that the Financial Aid Office wants to actually see your tax returns for the Base Income Year (the year prior to high school graduation), as well as confirm your family information. She delayed in providing this info to the school by at least several weeks, and now, with her first tuition payment due within 30 days, the school’s financial aid office is saying that they are still processing her application and will notify her “soon” of her final award. Meanwhile, if she doesn’t pay her bill on time she will face a late penalty.

A few lessons from this situation:

1. If your EFC is below $4,000 you should fully expect that the school will ask for Verification. According to Sallie Mae, 30% of all FAFSA applications are randomly verified, but the rate for submissions with EFCs below $4,000 is dramatically higher. If you wish to receive any federal financial aid (i.e. grants, free money and even federal loans), verification must first be completed. Ignore the financial aid office’s requests at your own peril. This student should be eligible for a Pell Grant of as much as $4,000 per year or more. That’s money left on the table because she delayed in providing the verification forms to the school. And Pell Grant money is First In, First Out, so any delay endangers her likelihood for an award.

2. Financial aid goes to the student/family who continues to follow up on the application. Once the application is submitted, the family must contact the financial aid office to make sure they have everything they need. Financial Aid Officers deal with a ton of paperwork; you don’t want your file buried at the bottom of the pile.

3. Private student lenders continue to ditch the market, making it harder to find a student loan from a bank. Loans are still available from companies like Chase and Wells Fargo, but even these banks require more stringent credit ratings to get the best rates (5%), along with a co-sign.

By ignoring the Verification request from the financial aid office, this student has taken the process down to the wire, and as a result she may forfeit her Pell Grant. Her eventual financial aid package will likely include a loan, but it may not be processed in time to avoid the late penalty.

So make sure you submit your financial aid application early (FAFSA for 2009-10 opens on January 2) to qualify for maximum aid, be prepared for Verification because it might happen, and be sure to Bird-Dog your application once it has been submitted.

- Peter "College Pete" Ratzan

www.CollegePlanningAdvice.com

When the so-called "experts" like Kiplingers steer you wrong

2008-06-02T20:35:00.002-04:00

I'm extremely irritated so I'll be quick with this post.

I see why so many parents never even bother
to apply for financial aid! 53% of all eligible families never even
bother to apply, according to the College Board.

Why? They're being told
that they make too much money by the so-called
experts - this is why I call 'em "schmexperts"!

Check out this clip. Some well-intentioned "friend"
of mine sent me a video from Kiplingers about
college financial aid.

This woman, Janet Bodnar, does a decent job
explaining why you may want to save in your
name, not your child's, but then she lets loose a
colossal, "gi-normous" 100% false statement:

If you make a lot of money, like more than a
hundred grand, you probably won't qualify for
aid!

Sweet mother of all things holy! How ridiculous is
she?

This video appeared in an article on MSN.com.
The article talks about how Harvard and Yale
are giving away money for parents making up
to 180K and 200K, respectively!!!

Hello?

This is what College Pete and I are talking about
when we tell you, don't listen to the
"schmexperts," listen to US. Our advice is
frequently 180 degrees opposite to your
typical trusted advisors, CPAs, guidance
counselors, BRACE Advisors, and now,
Kiplingers!

Our advice: EVERYONE should apply for
financial aid! Case in point - you can go to
Harvard (a $50,000 per year school,) for
$18,000!

OK, I'm done with my rant.

Later.

- Andy

P.S. If you want to watch this video, here's
the link to Weston's article:

http://articles.moneycentral.msn.com/CollegeAndFamily/CutCollegeCosts/GraduateFromHarvardDebtFree.aspx

(You may have to cut/paste all of the code intoyour browser - sometimes these links don't work.)

P.P.S. I don't want you to think that I have anything against Liz Pulliam Weston. I happen to think she's a solid journalist and find her columns to be on point, without exception.

College Pete on AP exam tips

2008-04-14T10:41:00.002-04:00

May is approaching, and that can mean only one thing.

Horse racing? NBA Playoffs? Mother’s Day? The answer is "yes" to each of those, but this piece will discuss something equally, if not more thrilling - AP Exams!

I’m not much of a horse guy although I do try and catch the Derby and Preakness each year. As for the NBA, the Heat’s playoff hopes departed long ago, around the same time Santa did, and besides the games begin way too late in the evening. As for Mother’s Day, it’s one of the most important calendar events, especially for Hallmark. Seriously, treat your Mom well (and your wife!), especially on Mother’s Day.

Why do I bring up all these distractions when our focus is on AP exams? Because it’s symbolic of the mentality that many students apply to the AP season and AP courses in general. An AP course is an opportunity for a student to not only boost his or her weighted GPA with a strong grade, but it’s also a way to earn college credit if (big IF) by scoring a 3, 4 or 5 on the AP exam in May.

Some students work hard all year long in an AP course and make all kinds of excuses to avoid taking the AP exam. Bad move! Admissions committees don’t like to see that. Other students don’t properly prepare for the exam because they’re distracted by other events like those mentioned above, not to mention Prom, end of school, spring football, cheerleader tryouts, senioritis, etc. If you’re a solid performer day-to-day in your AP class, you should be expected to earn a good grade on the exam. But this does not happen automatically. Instead it requires preparation.

Many AP teachers offer prep classes on weekends about one month prior to the exam date. Don’t miss these classes! If your teacher doesn’t do this, ask him to reconsider.

Andy and I always harp on families of college-bound kids to research how generous they are with their financial aid. You can save money through AP credits, too!

When selecting colleges and universities, be sure to research how they treat AP credits. Many schools will award actual credits toward graduation depending on your score, whereas others will allow the student to place out of entry-level courses. If it’s the former, then you can lower your total cost of attendance with a strong AP score. Some schools will only accept scores of 4 or 5, whereas others will accept a 3. This information is readily available on each school’s website.

Students should take advantage of the AP Program and its benefits. It pains me to see a student with excellent grades but no AP courses on his transcript. College admissions offices will view this student as an underachiever, one who does not rise to the challenge. On the flip side, some students overburden themselves with too many AP courses than they can handle, resulting in poor performance. Sometimes the school guidance offices encourage students to load up on APs, since AP enrollment looks good for the school. Earning a ‘C’ in an AP course is NOT like earning an ‘B’ in a regular course, even if the impact on your GPA is the same. If you cannot earn a ‘B’ or ‘A’ in an AP course, then you should not enroll in that class.

Final word: for those students taking AP exams in May, good luck! And just remember, no matter how well you do, your mother will still love you, so treat her well come Mother’s Day.

-Pete

P.S. We've got three workshops on "The Dirty Little Secrets About College Financial Aid" this week - Wednesday the 16th, Thursday the 17th and Saturday the 19th. The workshops are 100% free and teach you how to lower your out of pocket cost of college by thousands, if not tens of thousands of dollars per year! They are free but limited by room size, so register today online: http://www.CollegePlanningAdvice.com!

- Peter "College Pete" Ratzan

It's money time for incoming college frosh

2008-04-11T06:38:00.002-04:00

In financial aid, spring is "show me the money" season. College financial aid offices mail their award letters this time every year. If you're the parent of a college-bound student, try to fast forward two or three years to think about when you'll be in these shoes.

For incoming freshmen, the award letters can be the deciding factor in terms of where they end up in college. then, deposits are due by May 1. (For returning upperclassmen, this is the time to see how this year's award stacks up against last years, but I'm going to focus on incoming freshmen in this blog. )

So now is the time to analyze the offers. Be careful, particularly when it comes to "renewability." In other words, if you're awarded a grant or scholarship for your first year of college, understand what it takes (the minimum GPA) to receive that scholarship your sophomore, junior and senior years.

If you're offered loans, pay careful attention to the terms of each loan. Although reading these disclosures are not exactly riveting, it's important to understand exactly how the loan works - the rate, when can it adjust, how much it can adjust, is there any forgiveness or deferral option, etc.

Avoid unpleasant surprises by preparing years ahead of time. The best time to start your college planning is sophomore year of high school! Yes, sophomore year. This way, you'll be happy when you open your letters come spring of your senior year!

We offer free workshops that teach you "How to Pay for College Without Going Broke." Check out our dates/times/locations on our website:

www.CollegePlanningAdvice.com

Can you still get into a Florida public university?

2008-04-02T18:12:00.002-04:00

"College Pete" forwarded an alarming story to me a few hours ago. Even though both of us are out of town, the story was so important that I wanted to pass it onto you.

It appeared in today's Miami Herald. The header - "Budget cuts lock more out of state universities."

The story profiles some outstanding South Florida's college-bound students who cannot beg, borrow or steal their way into a state college, thanks to budget cuts and enrollment freezes! Kids with excellent grades (top 5% in the class) and leadership positions (class president, yearbook editor) cannot get into to "safety" schools anymore! Another student (3.4 GPA, varsity baseball captain, newspaper editor-in-chief) cannot get into University of South Florida.

The article is posted below.

So if your child is a high school junior or even a 10th grader, don’t wait another second and register for one of our workshops at http://www.collegeplanningadvice.com/wkshpsched.htm.

* The Five Greatest Myths About How the Financial Aid Process REALLY Works;

* Three Critical Questions You Must Ask Each College Before You Even Think About Applying;

* How much money your neighbors ACTUALLY have saved up for college and where you stand; and

* The "dirty little secret" about Florida Pre-paid and Bright futures.

Here's the article.

Top Florida high school students once considered Florida International University a ''safe'' fallback for those rejected by more-elite colleges like the University of Florida. Now that a budget crisis has forced drastic cuts at all 11 state universities, that's no longer the case.
Freshman enrollment is capped at the previous year's level for the first time in recent memory. Admission standards are rising, and many students find themselves squeezed out of a system they had long taken for granted.

Consider high school senior Ashley Casal, 18: class president at Miami Beach Senior High; yearbook editor; community volunteer; likely top 5 percent of her graduating class. Not enough to get her into FIU.

''I was really disappointed,'' Casal said. ``It's been really hard this year. Everybody has been feeling it.''

University-bound high school students like Casal know the routine: Take college-level classes, do your service hours, round out the package with an interesting hobby and a compelling essay. Not long ago, a Florida kid with all of the above and decent test scores could count on getting into a state school.

Not anymore.

''They're doing everything they're being told they need to do,'' said Cindy Woodring, continuing education advisor at Coral Springs High. ``They're either deferred or denied college acceptance.''
Carolyn Roberts, chairwoman of the Florida Board of Governors, said today's high school juniors and seniors will be most affected by the cutbacks.

''Students not only are prevented from attending the universities from which they are qualified to attend, it also means that if they are accepted, they are sitting in classes that are very crowded and dealing with advisors who are overworked,'' Roberts said.
FIU President Modesto ''Mitch'' Maidique said making it harder for Florida students to get into state colleges will hurt the state's ability to compete globally.

''We're taking a step backward,'' Maidique said, ``because if you reduce the number of folks who go into the pipeline, you reduce the number of students exiting the pipeline.''
For today's high school juniors and seniors -- and the school advisors who help them plan their path into higher education -- there are fewer certainties when it comes to getting into a Florida university.

''It's their party,'' said Pam Kirtman, the continuing education advisor at Nova High in Davie. ``They can invite who they want.''

The only sure bet, Kirtman said, is a community college.

For a student who dreamed of growing up to be a Gator or a Seminole, community college can be a tough sell. Still, it's an option advisors more often pitch lately because students who earn an associate's degree from a community college are guaranteed admission to a state university -- though not necessarily the university of their choice -- to finish their four-year degree.
That's a strategy Vanessa Jaramillo, a senior at Beach High, is considering. Denied acceptance at FIU, she is hoping to spend some time at Miami Dade College and then transfer to either FIU or the University of Miami.

''It's definitely been stressful,'' said Jaramillo, an honors student who also serves as class secretary. ``I felt really bad for some kids. They were really having a rough time.''
Enrollment continues to rise at both Miami Dade College and Broward Community College. Both expect capped university enrollments to send even more recent high school graduates their way in the fall.

While community colleges will keep their doors open, they, too, are in a budget crunch. Students are encouraged to register as early as possible to get the classes they need.
BCC spokeswoman Jillian Printz said the college is ``looking very carefully at how we expand sections, how we use space, how we use our facilities to serve enrollment growth.''
Victoria Hernandez, MDC's director of governmental affairs, said the college may not be able to offer enough classes to meet demand.

''At some point, we have to ask: What is the breaking point for Miami Dade College?'' she said. ``As it is, our classes are full.''

Sonja Miller, the College Assistance Program advisor at Miami Norland Senior High, said besides urging students to consider community college, she also is encouraging them to explore colleges and universities in other states. In some instances, the out-of-state alternatives are cheaper than their Florida counterparts, she said.

''There are students who want to stay in Florida but can't,'' she said. ``Our children are literally being forced out of the state.''

Miami Norland scholar-athlete Michael Allen applied to three colleges last semester -- two in-state and one in Washington, D.C.

Allen, who has a 3.4 GPA, is taking three advanced placement classes this year. He's is captain of the varsity baseball team and editor-in-chief of the student newspaper.

But Allen did not get into the University of South Florida. He hadn't heard back from Florida Atlantic University and Howard University, and he plans to apply to Florida A&M University.
''We hear it all the time: The number of applicants is going up, especially in the major schools,'' Allen said.

Although high school seniors are the ones dealing with last-minute decisions and rejection letters, juniors are worrying too.

''It's really hard,'' said Anais Alfonso, 17, of Hollywood. The Nova High junior, who is considering a career in nursing, said she has stopped thinking in terms of where she wants to go. Now, she's looking for schools that will admit her with at least a half scholarship.
Nova High school senior Zachary Rosen, who lives in Miramar and will attend Florida Gulf Coast University in Fort Myers, advised juniors to start their application process as early as possible.

''It could be too late for them,'' said Zachary, 18, pointing out that students need to work on their academics well before junior year. ``I would be talking to the freshmen.''
Kirtman, the Nova High advisor, said she urges parents not to attach their egos to where their kids go to college, and assures kids that there are many places where they can flourish.

''I make it really, really clear to them that their success in life and their happiness as a person isn't hinged on where they go to college,'' she said.

College Pete and I talk about this stuff 4-5 times per month...see, we weren't making it up!!!! Wake up and smell the coffee - stop blowing off your college planning!

http://www.collegeplanningadvice.com/wkshpsched.htm

The Surprising Way an Acceptance to a Top College Can Shatter Your Student’s Dreams

2008-03-26T08:11:00.003-04:00

Here’s an all-too-common scenario for parents of college-bound students this time of year, both here in Broward County, Florida and across the country.

Q: I'm a senior and accepted to Columbia University. I just received my financial aid award but we were offered only a high fee, high rate loan that we can’t afford. Why?

A: Each spring, we receive distress calls from parents, heartbroken by their child’s acceptance into her dream school! The student has performed admirably: achieved high grades in challenging classes; extra-curricular activities; mastered the SAT and submitted college applications well before deadlines.

The good news is acceptance into a top choice college. But elation turns to depression when the financial aid award arrives – five weeks before the school requires a commitment and a scant five months before college starts. In this case, the entire award was a Parent Loan for Undergraduate Students (PLUS) loan.

The family in this example did not understand the Department of Education’s eligibility rules for financial aid. More importantly, they failed to position their finances to maximize their eligibility.

I could tell from the award letter that this family’s Expected Family Contribution (EFC) was too high. The EFC is generated when you fill out your financial aid forms (the FAFSA and the CSS Profile, typically.) This unfortunate “award" is typical for families whose EFC's are higher than the cost of attendance for a highly-selective school. The most frustrating thing was that this situation could have been easily avoided.

How? By planning ahead so that you’re not blind-sided like the family in this example. Calculate your EFC by sophomore or junior year at the latest. This way you can implement a financial plan to pay for every college on your student's list before the applications are even submitted. Although your initial EFC will often be an impossibly high number, do not despair – your EFC is controllable. The lower your EFC, the more aid you’ll receive. Schools like Columbia will fall within your reach.

The other half of the equation is understanding that some schools, particularly private, selective schools, have more money to offer than others. They award differently – some give more grants than loans. Finally, you should be aware that almost all schools reward grants and scholarships on “need,” not based on academic achievement (merit). This is critical information you must have before submitting your applications.

Understand that college financial planning is equally critical as admissions counseling and SAT preparation. After all, what good is it to bust your behind to get into the best college you can, only to learn that you go because you can’t afford it?

Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. His firm offers free workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “The Dirty Little Secret (More Dirty Than Eliot Spitzer’s!) About Florida Pre-Paid Plans and Bright Futures” He hosts the “College Planning Power Hour” radio show Sundays, 10:00-11:00 AM on WFTL Sports, ESPN Radio, 1400 AM (online at http://www.collegeplanningradio.com/). More information is available at http://www.collegeplanningadvice.com/.

The True Cost of College According to Two New Yorkers

2008-03-15T19:28:00.004-04:00

Here's an article from two writers with the NY Daily News. Pay attention to the numbers they cite for "other," miscelleneous costs. For Florida costs, these numbers are essentially the same.

After you read the piece and you're still looking for answers about how to pay for college without going broke, I suggest you attend our next free workshop on college planning. Call our office or check our website for information.

***********************************
Saturday, March 15, 2008
What does college really cost?
By George Chin and Alice Murphey
Monday, March 10th 2008, 4:00 AM

You've read the eye-popping numbers about the cost of college: up to $50,000 a year for tuition, students graduating with six-figure debts.

What does college really cost?
The short answer is it depends on three key factors: where you go, how careful you budget and how much financial aid you receive.

The latest annual survey from the College Board, which tracks higher education trends, puts the average cost of a year of private college at $32,307 for 2007-08. But that's the national average for a particular type of college.

These are the more expensive, high-reputation private schools and out-of-state public universities, where you'll have to pay to live in a dorm or off-campus.
There are far less expensive choices, such as the City University of New York's four-year and community colleges, where you'll likely live at home while studying. CUNY's Peter F. Vallone Academic Scholarships can defray the costs further, awarding up to $1,250 to students with at least a B average enrolling from any New York City high school. Students accepted into CUNY's William E. Macaulay Honors College on the Upper West Side get free tuition, a $7,500 academic stipend and a laptop.

Whatever school you choose, remember: When you are figuring out what college will cost, look beyond admissions materials, which may only list tuition, fees, and room and board.
College students do not live by tuition alone. There are textbooks to pay for, not to mention transportation, coffee, phone calls, laundry, etc. It adds up. How much? We estimate a minimum of $4,000 a year. Generally, to calculate your yearly tab if you live at home, add $5,500 to $6,000 to tuition and fees. If you live away at school, tack at least $11,000.

Be sure to read the colleges' financial aid materials or Web sites when breaking down the cost of attendance. Colleges figure those costs when deciding whether to award you financial aid, including not only tuition, fees, and room and board, but allowances for books, supplies, transportation to classes, extracurricular activities and personal costs.

According to the College Board, expect to pay, on average, $921 to $988 for books and supplies; $6,875 to $8,595 for room and board (in a dorm or off campus); $768 to $1,284 for transportation, and $1,311 to $2,138 for miscellaneous expenses - depending on the type of institution.

It's hardly chump change, but you will still need to budget carefully. If you don't want maxed-out credit card bills slapping you during finals, spend smartly.
By now you've probably filed your Free Application for Federal Student Aid and have your estimated family contribution. You have an idea of college costs. Family contribution and cost are the key factors in a college's calculation of aid. The mathematical formula is simple: Cost - estimated family contribution = need.

The college financial aid office's role is to tap into the many forms, programs and sources to help you meet that need. We refer to that process as packaging. It results in a financial aid award letter outlining what you can expect.

In the coming weeks, we'll explain how to evaluate these aid packages to see which realistically match your family's ability to pay for your higher education.

Your Money columnists George Chin and Alice Murphey are the former and current directors of financial aid for the City University of New York. They've each advised students about managing college costs for more than 30 years.In figuring costs, look far beyond tuition and room and board.

*****************************************
Check out our free workshops that give you ideas you can use right away to maximize the financial aid you'll receive - there's more than 130 Billion of Federal Aid available for your college-bound student...learn how to get your fair share! Call our office at 954.659.1234 or visit our website, www.CollegePlanningAdvice.com.

Avoiding Unpleasant Surprises During College Financial Aid Award Season

2008-03-13T08:40:00.002-04:00

This time of year, college-bound students start receiving financial aid award letters from the schools they have applied to. Here’s a typical question asked of us during our free workshops in “financial aid award season:”

Q. We're confused about our son's financial aid award from (Extremely Competitive) University . Our Expected Family Contribution (EFC) is $15,000, but the cost of college around $44,000. The financial aid office offered us only loans. What happened?

A. Here's how the system works: Most financial aid is based on “Need,” calculated as follows: COA-EFC = Need. (COA stands for cost of attendance: tuition, room, board and other incidentals). So the lower your EFC, the higher your Need. The higher your Need, the more aid you receive. But hang on – there are plently of nuances behind this simple formula.

Less than 3 percent of colleges meet 100 percent of Need. Here in Florida, the range is from 30% to approximately 85% of need. The elite, private schools tend to be the most generous, since they have the largest endowments.

But it’s not just the raw percentage of Need that is important; it’s critical to understand how Need is met – what percentage is “free” aid – grants vs. how much is“self-help” - loans and work-study. This mixture varies tremendously among the schools. Some offer 100% grants - Harvard and other Ivy’s,notably; others 85% free, 15% loans. A good ratio here in Florida is 60% free; 40% loans.

So it’s confusing when considering a private school that meets less than 100% of Need: If the COA is $50,000 and EFC is $20,000 - Need is $30,000 (COA-EFC). Many families mistakenly expect an award of $30,000. But if school meets, on average, only 80% of the Need ($24,000), the remaining 20% or $6,000 is additional money the family must cough up. So this family's "adjusted" EFC becomes $24,000.

I realize that this stuff is hard to understand at first blush. Most likely, you’ve never had this explained to you. That’s why we run free college planning workshops several times per month.

But here’s an important point to take away from this post: it’s critical where you apply to college. Some schools have more attractive financial aid packages than others. That’s why we recommend that you start the planning process in Sophomore year of high school; Junior year at the latest. Start by calculating your EFC, and understand that there are legal, ethical and moral ways to lower that number so you maximize your financial aid award letter. Start your planning early so you’re pleased, not depressed, when you receive your award letters.

Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. He co-hosts “The College Planning Power Hour” each Sunday morning, 10:00-10:00 am, WFTL Sports 1400 AM, ESPN Radio. His firm offers free workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “3 Critical Questions You Must Ask The Financial Aid Office Before You Apply:” More information is available at www.CollegePlanningAdvice.com.

College Pete and Andy Debut College Planning Radio Show!

2008-03-08T07:02:00.002-05:00

This just in -

College Pete and I have launched our radio show, "The College Planning Power Hour." We cover all sorts of 'insider' information about college financial aid, student loans and how to find grants, scholarships and other free money for college. We also cover the greatest myths about college financial aid, including the false belief that families with high, six figure incomes cannot qualify for financial aid!

We'll also feature the "S.A.T. Word of the Day" with our resident "S.A.T Godfather," Michael El-Deiry. Each week the Godfather will enlighten our vocabulary with a fresh S.A.T. vocabulary word and try to stump us.

Since we're on ESPN Radio, we'll also come up with college sports related trivia and other stuff. For example, next week is "Selection Sunday" for the NCAA men's basketball tournament. We'll be joined by Andy Katz, ESPN college basketball reporter who will go over his picks for "March Madness." Then, we'll share OUR picks for the schools invited to the "big dance" (based on how generous each college is with financial aid.) Fun!!!

We air each Sunday, 10-11:00 am on WFTL, 1400AM - ESPN Radio. You can listen online at: www.CollegePlanningRadio.com.

There is $130 Billion Available For Financial Aid, But...

2008-03-01T15:45:00.002-05:00

Here's an article that appeared recently the school paper of Palo Alto. It details that, although there is a huuuuuuuge amount of financial aid out there ($130 Billion), receiving it is more competitive than ever.

When you're done with the article, mosey on over to www.CollegePlanningAdvice, which has important information you can use to see how you can get the inside track on qualifying for your share.

Here's the piece:

College tuition prices out of controlIncreasing college tuition places more stress on college bound students

Posted Mon Jan. 28, 12:42:16 PST 2008By Kevin Harvey of The Campanile
As most Palo Alto High School students know by now, the competition involved with college admissions is enormous and steadily increasing. Of the 2008 national graduating class of 3.2 million students, about 30 percent will attend a college or university, the largest number in United States history.

Many students resort to the help of private college counselors for guidance, reassurance and such preparation as aid in essay and application writing.

Last year, over 120,000 high school seniors applied to colleges and universities with the help of a private counselor. This increasing competition allows colleges and universities to raise their tuition and application prices.

As the competition and tuition prices continue to increase, the number of students who are able to attend colleges and universities will decrease. However, according to The College Board, there is more than $130 billion available for financial aid this coming year.

Despite this, financial aid will continue to be increasingly difficult to receive because of the increasing number of eligible applicants.

Private colleges and universities are being run like corporations, striving to gain profit and forgetting about providing their services for a reasonable fee. Universities are raising their tuition prices because they can, due to demand.

The price of tuition among private universities increased by 6.3 percent this year, while public colleges increased tuition by a drastic 6.6 percent, according to The College Board.
Moreover, The College Board recently announced that it will no longer support the Federal Family Education Loan Program, one of the largest student loan providers in the nation. After Oct. 15, the College Board refused applications.

According to The College Board, students should expect to pay between $95 and $1,404 more
for tuition this year than last year, depending on the type of college or university.

In 1990, the tuition price for an undergraduate student living on the campus of Stanford University was $14,280 per year. The tuition price increased about 300 percent to an astonishing $44,267 for the 2008 academic year.

Many people assume that this is because Stanford is expanding their facilities and needs to increase tuition prices to compensate.

These assumptions are incorrect. Almost all universities in the United States pay their expenses, including their staff members' salaries, with the fees they charge for application papers. The fee that they charge attending students for tuition is almost entirely for profit.

However, many universities, such as the University of Michigan at Ann Arbor, are trying to prevent undergraduate tuition prices from increasing. But graduate school tuition prices have heavily increased to compensate for the profit lost through keeping the undergraduate tuition relatively low.

As tuition prices increase rapidly, many students apply for financial aid, but most students who apply for aid do not end up receiving it. This problem is most common among middle class families because their income is not low enough to make them completely dependent on financial aid, but not high enough to prevent them from struggling with payments and tuition costs.

If colleges and universities lowered their tuition costs, they would allow more students that were

previously dependent on financial aid to attend.
This would raise profit margins because universities would have more students attending who pay lower tuition costs.

This story originally appeared in The Campanile on January 28, 2008.

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Want inside information on financial aid and "How to Pay for College Without Going Broke?" Visit www.CollegePlanningAdvice.com.

College Planning Interns BANNED at State-Sponsored Financial Aid Event

2008-02-26T13:58:00.001-05:00

College Planning Interns BANNED at State-Sponsored Financial Aid Event – Event Officials Threaten, Intimidate Interns, Rip Literature, Call Police

Here's a press release we just issued about the outrageous events this weekend.

For Immediate Release
Weston, Florida, February 23, 2008 – Officials at “Countdown to College,” a state-sponsored financial aid event, muzzled a local college planning firm that attempted to shed light on the sponsors behind the event.This weekend, the state of Florida featured the “Countdown," a series of financial aid form assistance workshops ostensibly designed to help parents of college-bound teens fill out the Free Application for Financial Aid (FAFSA). Unbeknownst to the attendees, however, the events were underwritten by student loan companies. When student interns hired by CollegePlanningAdvice.com, a Weston-based college planning firm, showed up at the event to distribute information urging families to consider other sources of college funding – including free, need-based grants and scholarships - they were met by angry, outraged organizers. Event officials moved swiftly to intimidate the teenaged interns with threats of calling the police, tearing up their flyers and banning them from the parking lot.

“This event was held in a public forum. These cowardly officials shamelessly violated the interns’ rights to free speech under the 1st amendment!” said Andrew Lockwood, J.D., co-owner of CollegePlanningAdvice.com. ”But the true victims were the families who were coerced into applying for high fee, high debt student loans when unknown alternatives were available.”
Lockwood and Peter Ratzan, M.B.A. co-owners of CollegePlanningAdvice.com, were shocked once they learned that event which was sponsored by USA Funds -- a student loan guarantor—and Citicorp - a student lender - would steer cash-strapped and uninformed families to risky, high cost and unsubsidized private student loans without offering an alternative solution to their college funding crisis.

"There are better, even free ways to pay for college, if you know the "rules of the game" about how federal grants are given, and to whom. There's more than 80 Billion dollars of need-based aid available through the financial aid system,” said Razan. “Andy and I were shocked to learn that we would not be allowed to present that information to the families at the Countdown. Wouldn’t you think that this would be information that they’d want to know?”“We just wanted to make sure that parents found out that there was a legitimate alternative to burdening their children with deceptive, low "teaser" rate payments that, after they adjust, create late payments, non-payments, defaults and ruin your student's credit rating for the indeterminate future" said Lockwood.

“Unfortunately, here’s what happened instead,” said Ratzan: "The parents filled out their FAFSA. Then, they pushed a button and learned what their Expected Family Contribution (EFC) is. This is a critical number - it’s the dollar amount that parents are expected to pay according to the FAFSA."

"For most parents, the EFC is not pretty,” said Lockwood. “The EFC is usually several thousand dollars per year, per child. Parents freak out. Then, at the ‘Countdown,’ vulnerable parents rushed to apply for high fee, high rate student loans, solely because they did not see any alternative to incurring this debt! For these student lenders, signing borrowers was like shooting fish in a barrel, but with a machine gun!” said Lockwood.“The key to avoiding being pigeon-holed like this is to start the college planning process by sophomore or junior year. This is one area where procrastination can cost you literally thousands of dollars of lost aid and high interest payments,” said Ratzan.

Lockwood and Ratzan offer free college planning workshops that encourage parents to reduce or flat-out eliminate high fee, high interest rate debt. Details are available at: http://collegeplanningadvice.comLockwood and Ratzan co-host “The College Planning Power Hour” radio show, Sundays, 10:00-11:00 AM on ESPN Radio AM 1400, starting March 2, 2008. Their firm, CollegePlanningAdvice.com is located in Weston, Florida and helps parents “Pay for College Without Going Broke.”

For more information and/or an entertaining interview, please contact Andrew Lockwood, J.D. at 954.659.1234 or info@collegeplanningadvice.com

Warning About Florida's "College Countdown"

2008-02-19T15:50:00.002-05:00

Weston, Florida, February 19, 2008 -

We're very uptight about the State of Florida-sponsored "Countdown to College," a series of college financial aid form assistance workshops throughout Florida. The promotion is designed to help parents of college-bound teens fill out the Free Application for Financial Aid (FAFSA).

Although the event seems helpful on its face, we at CollegePlanningAdvice.com advise attendees to scratch below the surface to learn the true incentive of the event sponsors.

Check out who's sponsoring these events. USA Funds - a lender! Citicorp - another lender!!!.

Correct me if I'm out of line - wouldn't it be nice for your student to go to college without borrowing money from high fee, high rate lenders? Wouldn't it be great if you didn't burden your student with deceptive, low "teaser" rate payments that, after they adjust, create late payments, non-payments, defaults and ruin your student's credit rating for the indeterminate future?

I can predict exactly what will happen at these events. Parents will fill out their FAFSA. Then, they'll push a button and learn what their Expected Family Contribution is - in other words, the dollar amount that they will be expected to pay according to the FAFSA.

It won't be pretty. This number will be several thousand dollars per year, per child.
Parents will freak out. Then, I bet you dollars to donuts that these parents will rush to apply for high fee, high rate student loans, because they will not see any alternative to borrowing for college.

And with the friendly student lenders lurking nearby, these parents are fish in a barrel.

If you are the parent of a sophomore, junior, or, in some cases, a senior, you still have time to prevent yourself from being coerced like the attendees of the "Countdown." There are better, even free ways to pay for college, if you know the "rules of the game" about how federal grants are given, and to whom.

For more information, attend one of our three, free workshops this month:

* Tuesday, February 26th, 6:15 pm - Southwest Regional Library, Pembroke Pines;
* Wednesday, February 27th, 6:15 pm: West Regional Libary, Plantation; and
* Thursday, February 28th, 8:00 pm: West Broward Family YMCA, Weston.

Details are available at:

http://collegeplanningadvice.com

The workshops are free and nothing will be sold or "pitched." (There will be no loan applications to fill out, either.)

The secret to avoiding high fee, high rate and high payment student loans is to position yourself to qualify for maximum aid by Sophomore or Junior Year. But even if your child is a Senior, there are still alternatives to student loans.

Lockwood and Ratzan co-host "The College Planning Power Hour" radio show, Sundays, 10:00-11:00 AM on ESPN Radio AM 1400, starting March 2, 2008. Their firm, CollegePlanningAdvice.com is located in Weston, Florida and helps parents "Pay for College Without Going Broke."

For more information call 954.659.1234 or "info@collegeplanningadvice.com"

The Latest Crisis Affecting Florida College Students

2008-02-11T15:46:00.000-05:00

Today's Sun-Sentinel front page headline screamed about the latest crisis. No, I'm not talking about Beyonce's "Thunder-Thigh" Grammy outfit - it's amazing that Tina Turner's 69 year old legs looked better - I'm giving you the 411 on how the dream of an affordable college education is vanishing for as many as 60,000 Florida students!

The headline: "Enrolling in College Gets Harder. Good grades, high scores no match for budget cuts."

So in the spirit of the Grammys, I'd thought I'd offer my own performance, even if it does exploit a family member whom I love.
http://videopostcard-004.com/X.asp?5674054X1920

P.S. If you or someone you know is worried about affording college in Florida or anywhere else, may I humbly suggest you attend our free workshop, "How to Pay for College Without Going Broke."

We're running them twice this week - Tuesday in Coconut Creek; Wednesday in Tamarac. See our website for details:

www.CollegePlanningAdvice.com

Good News for a Change!

2008-02-09T03:56:00.000-05:00

Here's a story by Insider Higher Ed about the House bill on Financial Aid. It's a good bill that calls for some important changes to the financial aid process.

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House, Focusing on Cost, Approves Higher Education Act

The House of Representatives on Thursday overwhelmingly approved legislation to renew the Higher Education Act that would toughen regulation of the student loan industry and simplify the process of applying for federal financial aid, among many other things. But while the legislation touches on an enormously broad range of issues and programs, the debate and discussion surrounding the measure focused heavily on the rising prices of college and the increasing difficulty students and families have paying for a higher education.

The House bill (H.R. 4137), known as the College Opportunity and Affordability Act, represents Congress’s most aggressive efforts yet to pressure colleges to contain both their own internal costs and what they charge to students. In drafting the bill, Democratic leaders cast their lot with Republicans who have been pressing the issue for a decade, greatly increasing what colleges would have to report on their finances and agreeing to create lists designed to embarrass colleges that increase their tuitions significantly.

Under the legislation, the 5 percent of institutions in each sector (public, private, for-profit, two-year, four-year, etc.) that raise their tuitions by the highest percentage over a three-year period would have to create “quality efficiency task forces” to analyze why the colleges are raising prices more than their peers. Institutions on the list would also be required to report to the education secretary on the factors contributing to the price increases.

On top of those provisions, Thursday’s debate over the Higher Education Act legislation was dominated by the bipartisan embrace of several amendments — opposed by college leaders — designed to intensify the scrutiny of college spending and prices. Lawmakers, for example, approved amendments Thursday that would require colleges to (1) give prospective students information about what their tuitions are likely to be over multiple years and (2) report to the Education Department annually about how much of their endowments they spend on “reducing the costs of instruction offered by such institution, including the specific amounts expended for grants and other aid to reduce the amounts charged for tuition, fees, textbooks, meals, room and board.” An amendment that would have gone further — requiring a minimum payout from all college endowments — was withdrawn by its author, Rep. Peter Welch (D-Vt.), on Wednesday.
“Last year, by enacting a $20 billion increase in federal student aid – the largest increase since the G.I. Bill of 1944 – this Congress took an historic step to help American families pay for college,” said Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee. “Now we are redoubling our commitment to college students and parents by reining in skyrocketing tuition prices and making our whole system of higher education far more consumer-friendly.”

“Despite the considerable federal investment — or perhaps, in part, because of it — colleges and universities have increased tuition and fees year in and year out,” said Rep. Howard P. (Buck) McKeon of California, senior Republican and Miller’s counterpart on the House education panel. “The increases have come in good economic times and in bad, with steady enrollments and surging enrollments. It seems the only thing consistent about college costs is that they’re going up, and fast. With this bill, we hope to change that.”

The overarching agreement between leaders of the two parties over the centrality of the cost issue reflected the general consensus with which the key piece of legislation, which governs most federal higher education programs, was both drafted in recent weeks and discussed on Thursday. The day’s debate was largely devoid of drama — the final margin of the vote was 354-58 — and the only real moments of contention came at the very start, when Republicans balked that the Democratic-controlled Rules Committee had declared most of the potentially controversial amendments (most of which came from Republicans) to be “out of order” Wednesday night.

Only 4 of the 27 amendments cleared for consideration on the House floor Thursday came from Republicans, with the Rules Committee blocking votes on such core GOP issues as restricting aid for undocumented/illegal immigrants and endorsing David Horowitz’s Academic Bill of Rights, as well as McKeon’s plea to have the Education Department explore the damage being done to the student loan industry by last fall’s Congressionally mandated subsidy cuts and the current credit
crunch.

Those moves prompted Republicans to bemoan what they characterized as a disruption of the bipartisan approach the committee’s leaders had used in crafting the underlying bill. “Why are Republicans being shut out of a bipartisan bill” by a “heavy-handed majority?” McKeon asked on the House floor, as he complained about the Democratic majority’s rejection of one of his amendments and those from several of his colleagues. McKeon said that the strict limits on amendments “taints the bipartisanship of the underlying bill.”

Once that unpleasantness was done, very little else disturbed the general geniality and accord of Thursday’s discussion. Even the few contested votes on amendments generated little in the way of discord from lawmakers across the aisle that separates the two parties. The only major disagreement came on an amendment that would have allowed borrowers to discharge private student loans after five years in bankruptcy.

Advocates for students supported the provision, which was proposed by Rep. Danny Davis (D-Ill.), because they say expensive and private student loans have become a major source of financial turmoil for borrowers and should be treated like many other forms of consumer loans, which can be discharged in bankruptcy.

But opponents said such a change could serve to drive up the cost of private loans for all borrowers because such loans would become riskier for lenders and therefore made at higher interest rates. “This would help a small number of people, but hurt a larger number,” said Rep. Ric Keller (R-Fla.), who heads the House’s postsecondary education committee. Although the bankruptcy provision appeared to win approval in an early-afternoon voice vote, it failed by a margin of 236 to 179 when lawmakers had to put their votes on the record.

“We are disappointed that the House chose to stand with big banks instead of students who fall victim to predatory private student loans,” said Luke Swarthout, higher education advocate for the U.S. Public Interest Research Group.

Other amendments approved on the House floor Thursday would direct the Education Department to study the pros and cons of allowing federal aid to flow to students who attend college less than half time, and urge the U.S. Education Department and the Internal Revenue to collaborate so that information that citizens submit on their tax returns can be used when they apply for federal financial aid. “I hope that both of the bureaucracies involved will really heed this,” Rep. John Doggett (D-Tex.) said of the latter amendment, which he sponsored.
The Underlying Bill

The Higher Education Act bill, which gives most federal college programs the authority to operate for five years and was last renewed (because of repeated false starts since then) in 1998, touches on an enormously wide range of issues. Among many other things, the legislation would:

Give the Education Department significantly more authority to regulate private student loans, as part of a broad set of provisions — prompted by last year’s investigations into illegal inducements given to colleges by lenders — aimed at cracking down on the behavior of lenders
and college officials in making loans to students.

Dictate that colleges craft plans for giving their students legal ways to download movies and music, and that institutions explore technologies to stop illegal peer to peer file sharing. This provision had been strongly opposed by several college groups, especially since those promoting it based their arguments largely on data about campus downloading that have since been shown to be seriously flawed.

Bar the U.S. Education Department from issuing regulations governing higher education accreditation, designed to ensure that colleges are measuring student learning outcomes. Education Secretary Margaret Spellings vehemently opposes the provision (leading the White House to “strongly oppose” the bill) and will try to alter it when House and Senate negotiators meet to craft a compromise version of the Higher Ed Act legislation in coming weeks. The legislation would also create a new federal position, an “ombudsman,” to intervene in disputes related to accreditation.

Extend to three years from two the period the federal government uses to calculate the rate at which student loan borrowers default, but delay implementation of the change until 2012 and raise some of the rates at which penalties against institutions with high rates kick in.
Set a ceiling on the maximum Pell Grant of $9,000, and allow for students to receive Pell Grant funds year-round, instead of just during the traditional academic year.
Require states to maintain their financial support of higher education and allow the Education Department to withhold some funds to states that cut their college appropriations — an idea endorsed by some college officials but strongly opposed by many state legislators.
Make some much-sought changes in the Academic Competitiveness Grant Program, including making the much-maligned grants for low-income students available to part-time students and those seeking certificates as well as degrees, and taking the education secretary out of the business of deciding whether high school programs are of sufficient academic rigor to quality students for the grants, leaving that decision instead up to state officials.

Mandate that textbook publishers expand the information they provide to faculty members about pricing and changes from past editions, and that colleges put information about required boooks in their course schedules to help students shop for books more cost effectively, among other provisions aimed at easing textbook prices.

Crack down on diploma mills by directing the Education Department to publish lists of accredited institutions and accreditation agencies, among other things.

Make several changes designed to make it easier for students to get information about their financial aid awards and to generally simplify the process by which students — particularly those from low-income families — can qualify for federal financial aid.

Establish a loan fund to help colleges and universities damaged or otherwise impaired by natural disasters such as the 2005 hurricanes in the Gulf Coast.

Toughen standards for teacher education programs.

Leaders in the Senate and the House both said they hoped lawmakers from the two chambers could meet soon to work out differences between their respective versions of the Higher Education Act legislation and get a compromise version to President Bush, who has expressed concerns about both versions but not threatened to veto either one.

Why Surprising Amounts of Free College Aid Are Available For You

2008-02-07T07:31:00.000-05:00

Here's a piece that I came across today, from Inside Higher Ed. It picks up on a theme College Pete and I have been talking about forever - that it actually may cost you less out of pocket at an elite, private, "high ticket" private school than if you were to enroll at a cheaper, Florida (or other state) college.

This article examines why from the angle of a trend in Congress to demand a certain percentage of endowment be allocated to lower-income students. Enjoy!

(For a schedule of our upcoming free workshops, "How to Pay for College Without Going Broke," go to our website: http://www.collegeplanningadvice.com/ or call the office directly, 954.659.1234.)

Degrees of Wealth and Generosity

If there’s a fun (or depressing) game for college presidents these days, it might be imagining: What could I do with Harvard University’s endowment — or just the earnings on its endowment? With members of Congress and other critics raising questions about why the wealthy institutions need so much, more attention than before is focused on the funds in Cambridge, New Haven, Palo Alto and a few other select locations.

MaryAnn Baenninger, president of the College of St. Benedict, in Minnesota, looked at it this way: With just the $6 billion in last year’s earnings on the endowment (not touching a penny of the original), she could pay for tuition, room and board for every one of her 2,000 students — for the next 85 years. Unlike some in Congress, Baenninger isn’t advocating an endowment raid and has no expectation that Drew Gilpin Faust, Harvard’s new president, is about to send her a check.

But the fact that earnings alone could cover all costs for enrolling at a small college for so long (admittedly at today’s rates) drives home why the endowments look so obscenely large at some institutions. But is the relationship between endowment spending rates and generous financial aid policies as clear as some say it is?

The link is talked about with increasing frequency. When powerful senators asked colleges with large endowments for information about their policies, they suggested that higher spending rates would lead to more generous aid. Sen. Max Baucus, a Montana Democrat who is chairman of the Senate Finance Committee, praised the colleges that have recently made aid more generous and said that he wanted to understand how colleges could “use their endowments to make certain that talented young folks in Montana and across the country aren’t left out of the classroom.”
And in her higher education platform, Hillary Clinton raised the issue. “Hillary is challenging some of the most selective schools in the U.S. to further expand access for low-income and minority students by spending a greater percentage of their endowment annually on recruiting more low-income students and students of color, supporting them so that they graduate and growing the pipeline of students that are prepared to compete for admission to the most selective schools,” the position paper says. “The endowments of the 12 wealthiest universities total $155 billion and in recent years and have gotten tax-free returns of almost 20 percent.

These elite institutions benefit tremendously from their tax-exempt status as well as from federal student financial aid and research grants.

A closer look at three colleges — all of them with endowments large enough to be receiving Congressional scrutiny — suggests, however, that the relationship between endowment spending rates and access for low income students is limited, if it exists at all.
Arguably one of the most generous financial aid packages in American history’s (Harvard University’s latest offering) came with a spending rate that is significantly below the level being kicked around as an acceptable minimum (5 percent). An institution that is less wealthy than Harvard (Cornell University) increased its spending rate significantly — to 5 percent — in part to offer more generous aid, but will not come close to Harvard’s level. And an institution with much less money, less generous aid packages and lower spending rates — Smith College — actually enrolls far more low-income students than do wealthier institutions that (as in Harvard’s case) adopt policies Congress likes to praise or (in Cornell’s case) increases the spending rate on its endowment.

Consider Harvard, whose aid policies have been praised by the same members of Congress who are saying that colleges need to explain why they don’t have a 5 percent endowment spending rate. In December, Harvard announced an aid policy under which students from families with incomes of up to $60,000 will pay nothing, while those with incomes of up to $180,000 would be assured of paying no more than 10 percent of family income — and without loans in aid packages. Harvard’s announcement set off a wave of policy shifts from colleges — but with just a few exceptions, the policies didn’t come close to Harvard’s level of aid.
So how did Harvard afford that level? With a high spending rate? Actually, the spending rate that produced that largesse was 4.6 percent — the kind of rate seen as inadequate by the same lawmakers who praise Harvard’s aid plan.

Last week, Cornell University became one of the institutions trying to play catch-up with Harvard’s aid bonanza. It took Cornell a while, in part because it is much less wealthy than Harvard (their respective endowments are $5.4 billion and $34.6 billion). But Cornell also tends to enroll a greater share of low-income students (not to mention twice the total number of undergrads) and thus any increase in aid promises has greater ramifications. So when Cornell announced its plan, it featured loan caps (but not loan elimination) at the $75,000 and up family income level. But Cornell and Harvard will end up spending about the same on financial aid under their new plans (about $120 million annually).

For Cornell, with its smaller endowment, to spend that amount, it is increasing its spend rate to 5 percent from 4.7 percent — reaching the level senators want. But is spend rate the relevant factor? Compare the $120 million financial aid cost to the endowment earnings of the two universities in the last year. If the two universities were to finance all of their aid budgets from endowment earnings, that $120 million would make up 2 percent of Harvard’s earnings but 11 percent of Cornell’s earnings. That suggests that the relevant factor isn’t spend rates but wealth to start with.

But the Smith example suggests that equally important may be the question of who gets admitted. More than 13 percent of Cornell undergraduates receive Pell Grants. But at Smith, more than 23 percent of students receive Pell Grants, and the formula used by the college for endowment payout is based on an average of 4.75 percent, with some modest adjustments based on the market. Both Smith’s endowment and student body are a fraction of those at Cornell and Harvard.

From an aid policy perspective, not only is Smith not in a position to compete with Harvard, but it isn’t able to be need blind in admissions. Each year a small share of the Smith class is admitted on a need-aware basis — meaning that the final slots go to those who can pay.
So if Smith’s spending rate isn’t what Congress is demanding and its aid policy doesn’t come close to Harvard’s or even the places pushing to keep close to Harvard, what is the key to enrolling low-income students in larger numbers? The answer, according to Smith, has nothing to do with endowment spending rates or even aid policies. To enroll more low-income students, you need (this will sound obvious) to recruit and enroll them.
Audrey Smith, dean of enrollment at Smith, said that the success there comes from an institutional commitment and also the idea that “women’s colleges have sought talent broadly for a long time.”

Ultimately, she said, the key is “thinking more about the potential” of students in admissions decisions and not just going after those with “perfect preparation at the secondary level.” In admitting such students — who may have lower test scores or have never attended prestigious high schools, the college looks for “the ability to take full advantage of an environment like this one,” but not at numerical measures.

Smith is able to provide aid that it gives to students based on the “intergenerational equity” of not spending too much of its endowment in any one year, Smith said.
But the key issue is who gets admitted, she said, not the endowment payout rate — and especially not the endowment payout rate at the places with mega-billions that attract the attention of Congress. Of the public discussion of late linking endowment payout rates to access issues, Smith said: “In all honesty, it just adds to the longstanding frustration that I have that a place like Smith and so many others can do a wonderful job and make a difference in the lives of students, but the spheres of influence in Congress are focused on a small number of institutions and on other issues.”

#End#

College Pete and I will be keeping close track of this trend! For a schedule of our upcoming free workshops, "How to Pay for College Without Going Broke," go to our website: http://www.collegeplanningadvice.com/ or call the office directly, 954.659.1234.

The Dirty Little Secret About Student Loans

2008-01-29T17:02:00.000-05:00

If you pay attention to this kind of thing, the airways are flooded with student loan solicitations this time of year from student lenders such as Astrive and Monticello (a/k/a First Marblehead, written about previously). “$40,000 in Two Days!” “Better Rates if Your Parents Co-Sign!”

Before you sign your life away, take a deep breath and consider what you might be getting yourself into.Most parents and college-bound students do not realize that student borrowers are not-so-distant cousins to headline-making borrowers with subprime mortgages.
Many experts, present company included, believe that the student loan market is poised to experience the devastation currently affecting the subprime mortgage.

Granted, I don’t know too many folks up at night thinking about the commonalities shared by college students and subprime mortgage holders. I am and, let me tell you, the similarities are alarming. For starters, student borrowers and subprime mortgage holders are ill-advised on financial matters (present company excluded, of course) - specifically, the consequences of their borrowing decisions.It is not exactly news that that adjustable-rate mortgages (ARMs) resetting to high interest rates are the main culprit behind late payments, defaults, foreclosures and ruined credit.

Here’s how it works - mortgage companies offer low teaser rates to get homeowners in the door, but frequently, the initial required payments are not even enough to pay the interest on the loans. It gets worse.Next, when the ARM adjusts upward, homeowners are forced to refinance to try and make their monthly payments. This worked for years, because it was relatively easy to qualify for new mortgages, but this rosy scenario screeched to a halt simultaneously with the collapse of the secondary mortgage market, slumping real estate values and a slowing economy.

The result: subprime borrowers were denied credit, were forced to stay in their unpayable loans and pushed into default or, unfortunately, foreclosure.Right here in Florida and across the country, college graduates burdened by student loans face similar problems. Just like the mortgage companies, student lenders offer a low teaser rate which adjusts upward (it’s almost always up, not down, unfortunately!) after the introductory period.

Next comes the inevitable late payments, non-payments, defaults and ensuing credit problems. It’s a slippery slope!The result - payments get jacked up a few years after the loan originated. And the new spiked payment almost always catches the borrower by surprise. Just like their subprime borrower counterparts, student loan holders are unable to make payments once the loan adjusts upward.

In most cases borrowers of both student loans and subprime mortgages claim that they were misled about the terms of their loans. They cry that the lenders withheld vital information, or glossed over important information. To their credit, and in response to these claims, lawmakers are starting to call for increased disclosures and information from the student lending industry.

Don’t hold your breath, however. This could take years. Your best bet to protect yourself is using your own brain – asking the right questions, listening to the answers. “What is the interest rate?” “When can the loan adjust, if at all?” “What happens if I can’t make a payment?” To be fair, many student lenders offer this information voluntarily, which helps borrowers make better choices. But this is the exception, not the rule.

Another favorable trend is that many colleges and universities have become more proactive and supportive in educating students about all the details surrounding student loans. Many schools have made available a “borrowing consultation” offered by their financial aid advisor. And in some instances, particularly among the elite higher education institutions, the financial aid packages feature little or even no loans, opting instead for “free” money awards – scholarships and grants.

Harvard is one such institution leading the way.It’s clear that there is no easy solution for this problem. However, it’s imperative to be mindful of the example set by the subprime mortgage meltdown, and avoid the consequences that accompany irresponsible and borrowing and lending.
College Pete and I are extremely debt-adverse and strongly urge you to do anything possible to minimize, or flat-out eliminate, borrowing for college. Needless to say, working with us is the best way you can battle this monster, if we do say so ourselves!

Don't Make This Mistake Re: Your College Financial Aid Forms

2007-12-26T13:45:00.000-05:00

December 26th, 2007, Weston, Florida:

Each month when we conduct our free workshops, Pete and I hear this question in some form or another:

"We were told we make too much money to qualify for financial aid. Why should we bother applying?"

Here's the answer, for once and for all:

YES!!

Got it?

Many families assume they make too much money to qualify for financial aid, but there are many factors that determine eligibility - not just income.

EVERY family with a high school senior bound for college should complete the FAFSA (Free Application for Federal Student Aid) form in January 2008. Go to www.fafsa.ed.gov. Regardless of family income and assets, there are federal entitlement programs for every student.

Additionally, some colleges may require the FAFSA form in order for the student to qualify for merit awards and scholarships. These can be offered as a result of academic, athletic, artistic or even leadership excellence.

Of course, you need to be careful filling out this sucker, since the opportunity for mistakes and pitfalls are numerous. Overstating your assets and including assets that do not need to be included are some of the more common gaffes that could severely limit or eliminate the aid you would otherwise receive. Be careful!

Many private colleges require you to submit an additional form, the CSS/PROFILE, and many private schools require their own institutional aid forms. These forms are more onerous than the FAFSA (which is no walk in the park itself!). Be even more careful when filling out these forms, paying particular attention to the sections to be completed by the student. If the forms are even slightly inconsistent, your financial aid application could be delayed or flat out rejected. Ouch!

Final word: The best way to learn about how you can qualify for financial aid is to attend one of our upcoming free workshops. Check out www.CollegePlanningAdvice.com for our January schedule.

This is my last post for 2007. Have a great New Year!

- Andy

P.S. Our workshop, How to Pay for College Without Going Broke, is free but seating is limited due to room size. They're taught by me personally and by my partner, Peter "College Pete" Ratzan, M.B.A. We cover topics such as:

"The Five Greatest Financial Aid Myths" and
"The Three Questions You Must Ask Every College Before You Apply!"

You can find out more and learn a lot more on our website, www.CollegePlanningAdvice.com.

Andrew Lockwood, J.D.
College Planning Specialists
1825 Main Street
Weston, FL 33326

954.659.1234

www.CollegePlanningAdvice.com

More Proof that an Expensive College Can Cost You Less Out of Pocket - Without Student Loans or Other "Bad" Financial Aid

2007-12-18T14:46:00.000-05:00

Pete and I constantly preach how it can cost you less out of pocket at a "more expensive", high-end, elite private school. Recently, the Universtity of Pennsylvania proved us right again, following the lead of Harvard Universtity. Both universities have recently made tremendous improvements in their overall financial aid packages, reducing or even eliminating student loans and replacing them with grants and scholarships.

Here's the press release from Penn:

Penn Expands Financial Aid Program to Eliminate Loans
December 17, 2007

PHILADELPHIA -- The University of Pennsylvania today announced a far-reaching new financial aid initiative that will eliminate loans for financially eligible undergraduate students regardless of family income, making it possible for students from a broad range of economic backgrounds to graduate debt-free.

The new program is the latest step in Penn’s effort to widen access for students from all economic backgrounds, expanding its no loan program beyond low and lower-middle income families to include middle and upper-middle income families. Currently, one-half of the approximately 4,000 Penn undergraduates who receive aid have a loan as part of their need-based financial aid package. The new initiative will substitute grants for loans for all Penn undergraduate students who are eligible for financial aid.

“This is a transformative moment for higher education and for Penn,” said Penn President Amy Gutmann. “Making a Penn education accessible to exceptionally talented students from the broadest array of economic backgrounds possible is fundamental to our mission. No longer will students need to think twice about applying to Penn for fear that they will emerge with overwhelming debt. This represents a tremendous commitment—and enormous investment—on Penn’s part to increasing access for thousands of students. Talented, hardworking young people should not be deterred from pursuing their dreams for fear of being a financial burden to their families.”

The new Penn program will be phased in beginning September 2008, and will include all eligible undergraduates, not just entering freshmen. Effective that year, students with calculated family incomes under $100,000 will receive loan-free aid packages, while families above that level will receive a 10 percent reduction in need-based loans.

By fall 2009, all undergraduate students eligible for financial aid will receive loan-free aid packages, regardless of family income level.

“We have previously addressed the needs of low income and lower middle income families, but now must respond to the needs of our middle and upper middle income families, who are facing the highest levels of debt,” Gutmann said. “We want to send a clear message to them that Penn is committed to supporting them as they seek to provide the best educational opportunities for their children.”

Gutmann said the new initiative will be financed in large part from funds raised by Making History, The Campaign for Penn, the University’s five-year, $3.5 billion fundraising campaign, which includes a $350 million goal for undergraduate financial aid endowment.

Penn currently spends more than $90 million per year of its resources for grant aid to undergraduate students. When the new initiative is fully implemented, that figure will increase more than 20 percent, to more than $110 million.

“For many years, the Trustees have made the affordability of a Penn education a high institutional priority. The total elimination of student loans as part of our aid package is a critical next step in that process. We are pleased to join President Gutmann in supporting this important new program,” said James Riepe, chairman of Penn’s Board of Trustees. “The Trustees are committed to the funding of this initiative and are excited about the impact it will have on thousands of our students. This is a proud moment in our institution’s 267-year history.”

Of the handful of other colleges and universities that have adopted no-loan policies in their financial aid packages, Penn has the largest undergraduate enrollment (10,160).
Since 2003, Penn’s undergraduate financial aid endowment has more than doubled. Endowment income, however, can fund only 17 percent of the cost of the current aid program. The balance of financial aid funding comes from the University’s unrestricted operating budget. Both undergraduate and graduate financial aid are priorities for the University’s Making History capital campaign.

The new initiative expands Penn’s long-standing commitment to its need-blind admissions policy, which means students are accepted based on academic achievement, regardless of their ability to pay. Penn guarantees that any accepted student who matriculates with demonstrated financial need will receive a financial-aid package that meets the full extent of the student’s need for a full four years. Fewer than 50 private institutions across the nation have need-blind admissions policies and even fewer have financial aid based exclusively on need. Penn does not offer athletic or merit scholarships. Forty percent of Penn’s undergraduate students receive need-based financial aid from the University.

Penn also has recently launched a new outreach program targeting hundreds of schools and thousands of students from low and middle-income families -- who might never have considered applying to Penn -- to let them know that if they are accepted to Penn, they will receive a financial aid package with no loans. Penn is already seeing success in its efforts to improve access for lower income families, with a doubling of admitted high-need students with loan-free aid packages in the last year.

Penn and Harvard are just some of the "expensive" schools that can cost you less out of pocket. For more information, including other ways to maximize grants, scholarships and other financial aid, please attend one of our free workshops. Visit our website for schedules and locations and a bunch of other "inside" info on How to Pay for College Without Going Broke: www.CollegePlanningAdvice.com.

- Andy

Student Loan Woes and What it Means for Your Financial Aid

2007-12-16T21:42:00.000-05:00

Here's some more information on the woes of the student lender market that I posted about last week. The bottom line with all these pieces is that you should be wary of, and try to flat-out avoid, any type of student loan.

There are two types of college financial aid: "good" - grants, scholarships - the free stuff; and "bad" - student loans, both public and private, and work-study. This latter category is called "self-help."

There are litereally billions of dollars in free financial aid out there - you just need to know where to find it. Check out our website for a schedule free college planning workshops and other cool stuff:

http://www.collegeplanningadvice.com/

Now, here's the piece by the Associated Press reported last week.

Credit-market tremors _ like the ones linked to the housing crisis _ are beginning to show up in the $85 billion student-loan market.

While there's no apparent shortgage of loans available to college-bound Americans, analysts say rising defaults, coupled with a new law that cuts federal subsidies to student lenders, are beginning to strain the industry.

The rising defaults have surfaced amid falling home prices and rising foreclosures, trends that last summer touched off a crisis in global credit markets as investors faced the prospect of not being repaid on mortgage-backed securities.

In some cases, families whose home loans are resetting at dramatically higher rates may have difficulty keeping current on payments on student loans or auto loans _ which recently have been posting their highest default rates in several years. A general tightening of credit is also likely making it more difficult to borrow from other sources to meet these payments, analysts said, and soaring oil prices are eating into budgets.

Student lenders are under increasing pressure, too. Following a crackdown by New York Attorney General Andrew Cuomo, they have been forced to alter the way they do business. For example, they are no longer allowed to offer gifts or share revenue with college financial-aid officers.

It is against this backdrop that on Friday First Marblehead Corp's CEO cited "challenging times" as the company slashed its quarterly dividend to 12 cents a share from 27.5 cents a share, and said it would not bundle any more student loans for investors during the fourth quarter. As this activity shrinks, less money will be pumped into the private student-loan market, which makes up 20 percent of the overall student loan market.

Meantime, reduced federal subsidies and anticipated lower profits have led a number of banks and other student lenders to scale back discounts to borrowers, such as reduced interest rates for having payments automatically debited from bank accounts.

The company most affected by the reduced subsidies is Sallie Mae, the nation's biggest student lender. The company, formally called SLM Corp., saw its $25 billion acquisition by a private-equity firm and two banks _ Bank of America Corp. and JPMorgan Chase & Co. _ scuttled and thrown into court. The investors argued the change would cut deeply into the lender's profits.
Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, said he sees "no evidence of any kind of looming crisis of access to capital" for students.

But some critics of the student-loan industry have said the sort of meltdown that racked the mortgage market could happen with student loans, especially the more expensive private loans. And many experts have predicted sharp increases in student-loan defaults in years to come.
Reston, Va.-based Sallie Mae reported that it wrote off $142.6 million for borrowers missing payments on student loans in the July-September quarter, more than doubling the $67.2 million writedown of a year earlier.

Demand for securitized student loans has helped fuel the boom in lending to students. The market for securitized private student loans alone jumped 76 percent in 2006, to $16.6 billion, from $9.4 billion in 2005, according to Wall Street rating agency Moody's Investors Service.
The rising student loan delinquencies aren't surprising, said Ken Mayland, president of ClearView Economics LLC in Cleveland. "In an economic slowdown that's what you expect," he said.

First Marblehead's announcement of its pullback came three days after Moody's said it might downgrade 16 securities issues put together by the company because of rising default rates on the underlying student loans.

That hammered First Marblehead's stock price, which finished trading Monday at $17.75, down around 40 percent from the start of last week.

In a sign that the troubles could spread beyond Sallie Mae and First Marblehead, Moody's said last week it was considering a ratings downgrade for Education Resources Institute Inc., known as TERI, which guarantees nearly all the student loans bundled into securities by First Marblehead.

Shares of Sallie Mae ended trading Monday at $34.90, down $1.22; they've declined by 9.5 percent over the last four weeks. Another student lender, Nelnet Inc. shares finished at $14.11, up 27 cents; they've lost 10.7 percent over the four weeks. Student Loan Corp. shares gained $4.42 to close $145.71; they're down 4.5 percent over the same period.

**************************************************************

So avoid loans and go for the free stuff! Call us at 954.659.1234 or visit our website,

http://www.collegeplanningadvice.com/

2007-12-14T12:53:00.000-05:00

In my last post, I ran through six tips on finding college money. A brief review:
If you’d like a reprint of that blog, send an email to: info@collegeplanningadvice.com.

Now, let’s look at the rest of the tips.

7. Make sure you get your application in on time. Missing a deadline just means you wasted your time, since most often, you will automatically be disqualified.

8. Don’t assume you don’t qualify just because you don’t have a perfect GPA or perfect SAT scores. During the research process, you can learn what they are looking for and many sponsors are looking for something other than grades, like community service or a religious affiliation.

9. Read the directions. Don’t leave sections blank. I know this sounds obvious, but we see a lot of students make simple mistakes because they didn’t take the time to read everything first.

10. Write a good essay about something you’re enthusiastic about. Put some time into it, then let it sit a couple of days before you come back and proofread it. Make sure it goes in without any blatant spelling or grammatical errors.

11. If required, get letters of recommendation from people who will do a good job for you, not just whoever is handy and can get it done quickly.

12. Start NOW. As in RIGHT NOW. Don’t wait until you’re a senior or already in college.
Lastly, don’t forget to apply for financial aid, even if you think that you don’t qualify or your family makes too much money. This is where over $100 billion each year is available, versus less than three billion for scholarship money. Many parents miss this altogether.

With these tips in hand, I can’t guarantee you that you’ll get anything. However, I can assure you that you will be taking steps that will ‘stack the deck’ in your favor and dramatically improve your odds. Good luck and happy hunting!

Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. He and his partner, Peter Ratzan, M.B.A., offer free, live workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “3 Critical Questions You Must Ask The Financial Aid Office Before You Apply.” For more information visit http://www.collegeplanningadvice.com/

Is a College Degree from Harvard Cheaper than Tuition from a Florida Public Universtity?

2007-12-12T08:12:00.000-05:00

"College Pete" and I have been saying this to disbelieving parents of college-bound teens for a looooong time - your out-of-pocket costs at an elite, private university can actually be cheaper than tuition, room and board, etc. at a Florida public universtity, even if you have the Florida Prepaid Tuition Plan, The Prepaid Room and Board Plan or Bright Futures.

Recently, Harvard announced a radical move to make college tuition and other costs significantly cheaper, even for students from upper and middle-class families. (Harvard had its own financial reasons for doing so, but that's not the point of this story. You can find out more information, including a schedule of free college planning workshops - "How to Pay for College Without Going Broke" on our website, http://www.collegeplanningadvice.com/) Check out this press release.

Harvard announces sweeping middle-income initiative

Cambridge, Mass. – Harvard President Drew Faust and Dean of the Faculty of Arts and Sciences Michael D. Smith today (Dec. 10) announced a sweeping overhaul of financial aid policies designed to make Harvard College more affordable for families across the income spectrum. The new initiative focuses on ensuring greater affordability for middle- and upper-middle-income families through major enhancements to grant aid, the elimination of student loans, and the removal of home equity from financial aid calculations.
This initiative builds on Harvard’s recent pathbreaking policies to ensure that families with incomes below $60,000 are not asked to contribute to the cost of sending their children to Harvard.
The new policy has three major components:
• The “Zero to 10 Percent Standard”: Harvard’s new financial aid policy dramatically reduces the amount families with incomes below $180,000 will be expected to pay. Families with incomes above $120,000 and below $180,000 and with assets typical for these income levels will be asked to pay 10 percent of their incomes. For those with incomes below $120,000, the family contribution percentage will decline steadily from 10 percent, reaching zero for those with incomes at $60,000 and below. For example, a typical family making $120,000 will be asked to pay approximately $12,000 for a child to attend Harvard College, compared with more than $19,000 under existing student aid policies. For a typical family with $180,000 of income, the payment would be approximately $18,000, compared with more than $30,000 today. The new standard reduces the cost to families by one-third to one-half, making the price of a Harvard education for students on financial aid comparable to the cost of in-state tuition and fees at the nation’s leading public universities. The new initiative also establishes a standard that students and their families can easily understand.
• No Loans: In calculating the financial aid packages offered to undergraduates, Harvard will not expect students to take out loans. Loan funds will be replaced by increased grants from the University. Of course, students will be permitted to cover their reduced cost of attendance through loans if they wish.
• Eliminate Home Equity from Consideration: Under the new policy, Harvard will no longer consider home equity in determining a family’s ability to pay for college. This will reduce the price by an average of $4,000 per year for affected families as compared with current practice.
“We want all students who might dream of a Harvard education to know that it is a realistic and affordable option,” said Faust. “Education is fundamental to the future of individuals and the nation, and we are determined to do our part to restore its place as an engine of opportunity, rather than a source of financial stress. With no loans, no consideration of home equity, and a dramatic increase in grant aid, we are not tinkering at the margins, we are rebuilding the engine.
“This is a huge investment for Harvard,” Faust continued, “but there is no more important commitment we could make. Excellence and opportunity must go hand in hand.”
The new initiative amplifies Harvard’s long-standing commitment to need-based financial aid — Harvard College awards neither merit aid nor athletic scholarships. Under the new initiative, the College will continue to consider individual circumstances in assessing a family’s financial need. Families with unusually high medical or sibling educational expenses, for example, may be expected to contribute less than the expected percentage income, while those with substantial wealth that does not show up as income may find that they are expected to contribute a higher percentage.
Factors such as family size, health care costs, sibling educational expenses, and other nondiscretionary expenses that place a drain on family finances are considered carefully in assessing a family’s need, and there is no income cut-off for need-based scholarship eligibility. Currently there are more than 100 families with incomes greater than $200,000 who, because of extenuating circumstances, receive need-based financial aid.
“I am very pleased that Harvard is in a position to make these dramatic changes, and I applaud President Faust and Dean Smith for their careful thought and decisive action in this area of central importance to the University and to higher education,” said James R. Houghton, senior fellow of the Harvard Corporation. “Any investment of this magnitude requires trade-offs, even at a university with substantial endowment resources. But investments in the quality of our students — like investments in the excellence of our faculty and research enterprise — occupy a special place.”
“Harvard College has had a very generous financial aid program for decades, and we have made significant enhancements in recent years, especially for families in the lower-income ranges,” said Smith, who as dean of the Faculty of Arts and Sciences oversees Harvard College. “We are concerned, however, that families in the middle are feeling increasingly squeezed as they work more hours, pay more for housing and health care, and face greater uncertainty in retirement.
“We want to ease these burdens,” Smith continued. “We want to make Harvard affordable for talented students from all financial backgrounds, and once they are here, we want to make sure they are able to take full advantage of the opportunities we provide to build their skills and knowledge and to engage their deepest interests. This experience is not possible if families are consumed with financial worry and students are consumed with debt.”
The new initiative is the latest chapter in Harvard’s systematic effort to increase affordability and widen access for qualified students from across the economic spectrum. In the winter of 2004, under the leadership of President Lawrence H. Summers, Harvard transformed the financial aid landscape with its announcement that families with annual incomes below $40,000 would not be expected to pay for their sons or daughters to go to Harvard. The zero-contribution threshold was raised to $60,000 in 2006, with further reductions in parental contributions for families with incomes up to $80,000. Over the past three years, the number of students in these income ranges has increased by 33 percent, representing a quarter of the entering Class of 2011.
“For the past several years, we in the Office of Admissions and Financial Aid have been talking with families about their needs and working with Clayton Spencer, vice president for policy, and researchers at the University to understand internal realities and external trends,” said William R. Fitzsimmons, Harvard College’s dean of Admissions and Financial Aid. “All of these inquiries have led us to the same conclusion — despite our best efforts to help families deal with rising college costs, our methods for measuring financial need are not as sensitive as they should be to the real circumstances faced by American families. Many parents won’t even allow their sons and daughters to apply to private colleges, while others allow their children to attend but experience real pain in paying the share we ask of them. I am deeply grateful to Dean Smith, President Faust, and the Harvard Corporation for their willingness to take such powerful action to remedy this situation.”
In a related move, Harvard in 2006 announced the elimination of its early action program — a form of nonbinding early admissions — and moved to a single admissions deadline of Jan. 1, beginning in the 2007-08 academic year. In explaining the decision, then-interim President Derek C. Bok stated that the change was designed to make the admissions process simpler and fairer. In his words, “early admissions programs tend to advantage the advantaged,” as students from more sophisticated backgrounds often use the system to increase their chances of admission, while first-generation college students and those from high schools with fewer guidance counselors and other resources may miss out.
Harvard is using the time and capacity freed up by the move to a single admissions cycle to intensify its outreach and recruiting efforts. The admissions staff is now able to travel more widely to make presentations in key cities and other areas to educate students, families, and college counselors about Harvard and the college admissions process in general and is also working with secondary schools in a renewed effort to make applying to college less complicated and less stressful than it is today.

Currently, two-thirds of Harvard College students receive some form of financial aid, and half receive need-based scholarship aid from Harvard, totaling more than $98 million. Major enhancements to financial aid began under the leadership of Harvard President Neil L. Rudenstine. In the past decade, Harvard’s grant budget has increased 143 percent while inflation increased by only 28 percent. With the new initiative fully in place this coming year, more than 90 percent of American families will be eligible to benefit from Harvard’s exceptionally generous financial aid.

Check out out our schedule of free workshops, "How to Pay for College Without Going Broke," at http://www.collegeplanningadvice.com/.

Show Me the College Money (scholarships and grants)!

2007-12-10T12:38:00.000-05:00

Welcome to the blog for College Planning Specialists in Weston, Florida. Today's post reveals the exact steps you should take if you are looking for money (private scholarships and grants) for school.

First, realize you have long odds to beat: a scant 6.9%, or 14.5-to-one of the undergraduate students that apply for scholarships to college each year actually receive anything at all. The most competitive scholarships receive 400 applications for every one scholarship they give out. A well-known example: each year more than 100,000 students apply for the Coca-Cola scholarship, but only 250 total awards are given. 50 for $20,000 and 200 for $4,000.

But this is not the norm. On average, each recipient is awarded $2,051 in total scholarships over four years; or roughly enough to pay for books at your typical college for ONE of those years. In fact, private college scholarship money represents less than 2% of the total money that’s available for financial aid. (That’s why we advise our clients to focus on the other 98%!)

Here are the tips:

1. Start with a FREE, reputable online scholarship search, like http://www.fastweb.org/ or http://www.srnexpress.com/. Buy a scholarship book that is less than one year old. Library and colleges are good sources. You should NEVER have to pay for this information. There are simply too many good free sources to choose from.

2. Check your and your parents’ employers. Many have scholarships that nobody knows about because they’ve never asked, so that not many other students are competing for them. Each time I teach a class on this subject, we get a call or two the next day from parents thanking me for this, and telling me they found some obscure scholarship through their work worth thousands of dollars.

3. If you are at least 1/16th Native American, check with the Bureau of Indian Affairs. They often have substantial scholarships available depending on what tribe you are from.

4. Since you don’t have unlimited time, increase your odds and apply wisely. Look for criteria that matches you and your interests as closely as possible; weed out all others. Do NOT apply for scholarships that ‘everyone’ can apply for, or that aren’t worth that much money to begin with.

5. Try to find things that are more unique to you. For example: Loyola-Chicago has a scholarship for people who meet two criteria: They’re Catholic and they have the last name Zolp!

6. Do NOT waste time applying for scholarships that you do not qualify for. For example: don’t apply for a scholarship that has a 3.75 GPA requirement if you have a 3.6. Your grades may be off by only a fraction, but close does not count in scholarships!

In my next dispatch, I’ll cover six more tips that can show YOU the college money, even if you’re not the world’s greatest student!

Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. He and his partner, Peter Ratzan, M.B.A., offer free, live workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “3 Critical Questions You Must Ask The Financial Aid Office Before You Apply.” For more information and for a free copy of our E-book, visit www.CollegePlanningAdvice.com.

Avoid This Student Loan Problem When You Apply for Financial Aid

2007-12-06T16:20:00.000-05:00

From the Houston Chronicle: First Marblehead Corp.’s (ticker: FMD) stock sank Monday after a Friedman Billings Ramsey analyst downgraded the student finance company, saying there may not be as much cash committed to covering unpaid student loans as previously thought.

First Marblehead consults to lenders such as Bank of America Corp. and JPMorgan Chase & Co., who package their student loans into pools and sell them to investors as bonds. (Quick finance lesson - let's say you borrow $100,000 in loans, paying 8.5%. You're paying, so someone's receiving the interest, right? Bank of America will take the $8,500 it earns in interest from you and sell the right to collect that interest to investors who want that rate of return. First Marblehead (pronounced "Mahhblehead" up in their neck of the woods - Boston) assists Bank of America find investors who have the appetite for these investments.

The prices the bonds command -- and in turn the commissions First Mahhhblehead charges -- are boosted by a nonprofit organization called The Education Resources Institute, or TERI, also a Boston-based firm.

(Deeply trivial personal disclosure from Andy: In between college and law school, I bartended in Boston. One job was at the Grill 23, a steak house located in the same building as TERI. Their management used to come down for happy hour quite frequently. Even non-profits run up large bar tabs!)

TERI is a guarantor – it promises to buy student loans that are in default, which, in turn gives the investors buying the bonds warm and fuzzies about their investments. First Marblehead benefits from TERI because the bonds safer and more appealing to investors - therefore, an easier sale for them to make!

So here's what happened. After TERI’s credit rating dropped last month, Friedman Billings concluded TERI does not have enough cash to stand behind all the loans that are likely to be in default. Bummer!

Much of TERI’s $612 million in cash is restricted. It can commit only $127 million, or less than 1%, of the 13.2 billion of loans it guarantees, to cover student loan losses, according to the analyst. If you were an investor, this change would be a major problem, don't you think?

If student loan defaults overwhelm TERI’s cash, First Marblehead would have to pledge more of its collateral, which would reduce its profits. Then fewer student loans would be securitized.

What does this mean for you? (You were wondering, weren't you? Hey, you're still awake, right?) It will be harder to qualify for private loans, since credit requirements of borrowers are probably going to get a lot tighter. If you do qualify, your terms are likely to be less favorable, as the investors who buy loan pools will demand higher coupons, or interest rates, because of the increased risk.

So in the short term, if the market believes that private student loans are a risky investment, credit available to First Marblehead will be more restricted.

Remember, private student loans are NOT your first loan of resort for paying for college. There is literally billions of dollars of free aid out there. After exhausting this type of aid, you should turn to federal student loans. They're not exactly a walk in the park either, but are still light years ahead of private loans!

Questions? Call either Pete or Andy at 954-659-1234 or stop by our college planning website, www.CollegePlanningAdvice.com for tips and tricks on how to maximize eligibility for financial aid, including scholarships and grants.

Are you an Ant or a Cricket?

2007-12-05T06:07:00.000-05:00

Some year-end advice for parents of high school juniors and seniors

By Peter "College Pete" Ratzan

With 2007 winding down and Holiday shopping bargains tempting our wallets, it’s important to stay focused on what January will bring in terms of college financial planning. A new year will bring with it resolutions, college bowl games, a possible hangover, higher than usual credit card bills and a wake-up call to parents of high school seniors that college is just around the corner.

Once the ball drops in Times Square on December 31, the ability of senior parents to improve their eligibility for financial aid drops along with it. But not all is lost for senior parents, and for junior parents who have put college planning off for 16 years, the New Year should be your wake up call.

Andy and I use the term “emergency mode” to describe the situation of parents with senior or junior high school students. January 1 of the senior year marks the beginning of life support unless you have made the right preparations beforehand to take on the FAFSA.

This reminds me of the story about the ant and the cricket. To summarize, during the summer months, the cricket is playing and singing, telling the ant to relax, while the ant is working and storing food for the winter months. The cricket wonders aloud why the ant is working so hard during such wonderful weather. But when the winter months approach the cricket is cold, has nothing to eat and nothing stored. He cries out to the ants, who are all inside the warm colony enjoying themselves. The cricket collapses of fatigue and starvation, whereupon the ants take pity on him and invite him to stay under one condition: he must feed them all winter long.

By being unprepared with your FAFSA you become the cricket, giving sustenance to other families by sending your tax dollars into their pockets.

If your child is a senior and you are a client of ours, it is absolutely critical that you remain in close communication with our office so that we can ensure that you approach FAFSA season with the right strategy. While your first base income year has just ended and with it any opportunity to address your adjusted gross income, there are some last minute strategies that parents of seniors can implement before filing the FAFSA after January 1.

While it is important that your FAFSA be prepared and filed as early as possible, it is more important that your assets be properly organized and arranged so that you maximize your eligibility for financial aid. There are still actions you can take after January 1 to minimize your college cost burden, but it is more limited than if you tackled prior to the end of the year.

For parents of juniors, you remain in emergency mode and your objective should be to avoid life support. Your first base income year is about to begin, so the time to act is NOW if you want to maximize your financial aid eligibility.

Call our office at 954-659-1234 to make sure you are doing the right things to maximize your financial aid eligibility. A year goes by very quickly…don’t procrastinate any longer on this problem that may cost you somewhere between $60,000 and $200,000 over the next 4-5 years.

Note - if you are not a client of ours but want to learn more about "How to Pay for College Without Going Broke, check out our free workshops. You can view a schedule by clicking here or visiting www.CollegePlanningAdvice.com.