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

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

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

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/

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?

"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)!

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

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?

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.