If you think your student's college financial aid paperworkreads like a Greek 101 exam, you are not alone. Sorting through theFree Application for Federal Student Aid (FAFSA) form can becumbersome, at best and an incomprehensible nightmare at worst.
If you haven't filed a FAFSA yet -- get on it. This form mustbe completed if you want your son or daughter to be eligible forfederal and state aid. A lot of aid is distributed on a first-come,first-serve basis, so the sooner you file, the better.
After filing you will receive a Student Aid Report (SAR).Your SAR is also available online at the FAFSAWeb site.
This report summarizes the information submitted on the FAFSAand lists your expected family contribution (EFC), which is the amountof money the government expects your family to pay in college educationcosts. The EFC is used to determine your student's eligibility forfederal student aid.
Be sure to be sitting down when you open that envelope.
"It's kind of a shock to their system," says Ronald Shunk,director of financial aid at Gettysburg College in Gettysburg, Pa.
Shunk, who has answered parents' questions on USA Today'sFinancial Aid Hotline for 10 years, quickly adds, "But one way oranother it seems to work out."
Check your numbersThe first thing to do is make sure the information on the SARis complete and correct. In case of an error, resubmit the form to thecentral processor as soon as possible. Corrections will go through in acouple of weeks, and each college that your student applied to willhave access to the updated information. Folks who estimated their earnings may need to re-submit theform if their guesses were too far off. A quick glance at your W-2 formshould tell you how close your estimate came. Most folks shouldn't havea problem. "For most people these days their last pay stub shows themhow much they've earned, so they're not going to be far off on anestimate," Shunk says. Colleges and universities start sending out admissionacceptance letters in March and financial aid award notices come closebehind. Expect a financial aid award letter to arrive within two weeksof an acceptance letter. Many schools send out acceptance and aidnotifications on the same day. In a financial aid package a college or university will tryto make up the difference between the cost of attending their schooland a family's expected contribution as spelled out in a SAR report.Some succeed more than others. Three schools with similar costs mayoffer very different financial aid packages.
Much depends on a student's academic credentials, a family'sfinancial need and how much aid is available from a school. Privateschools tend to have deeper pockets than state schools.Many middleclass families may find themselves in a tough spot. They have too muchmoney to qualify for need-based aid, but too little money to covercollege costs on their own. So parents or students -- or both -- takeout loans. "That's the group that ends up borrowing the most," saysCarolyn Shanley, senior writer and public relations manager for NellieMae, a maker of education loans. "More and more people are in thatsituation." Indeed, the College Board estimated 56 percent of the $122billion in financial aid distributed, in the 2003-2004 school year, wasfor loans. Don't dip into retirement savingsParents who feel barreled over by their expected familycontribution and the prospect of some heavy education loans forthemselves or their child may be tempted to dip into their retirementsavings. Experts advise against this. "You can't borrow for retirement. And your child can borrowfor school and have a long time to pay it back," Shanley says. "Ifthey're still saving for retirement and still have a long way to go,they need to make that their No. 1 priority."
A bit of a waiting game goes on during this whole process.First you wait a few weeks for that SAR to arrive. Then you wait a fewmore weeks for those acceptance letters and the financial aid awards totrickle in. All candidates should receive an admissions notification byaround April 1 and financial aid packages by mid-April. Most schoolsgive applicants until May 1 to select a school. Students should makeuse of all this down time to seek out and apply for scholarships. "There are deadlines for awards every single month," saysMark Kantrowitz, founder of FinAid, a Web-based guide to financial aid. Look for scholarshipsCheck out individual college Web sites, and search forscholarship sources on sites such as FastWeband the CollegeBoard. Avoid sites that charge you to search forscholarships. Don't overlook local sources of scholarships.Community-based awards may be smaller, but they're also easier to win.You can learn about local competitions at the public library and at theguidance office at your local high school. As gifted and talented as your teen may be, not every studentgets that much-sought-after free ride. Experts point out that while SARreports may make parents sweat a bit, it's the financial aid noticesthat throw some families into an all-out panic.
"The more climactic point is when financial aid packagesstart arriving," says Shawn Lindstrom, director of financial aid andscholarship services at eStudentLoan.com."That's when the sticker shock sets in and they start exploring otheravenues. They start calling the school and say, 'How do you expect meto pay for this?'" First off, you do have a little bit of leverage if your teenhas been accepted at a number of schools. You may be able to negotiatea better aid package by mentioning to School A all that School B iswilling to do for you. "Most aid packages can be negotiated and appealed if you justtake the effort," says Gary Goldberg, president of College, Financial& Tax Strategies in St. Louis. It's worth a shot. A calculatorfor comparing award letters can be found on the Nellie Mae site. Whilecost is certainly not the only factor that families look at whendeciding on colleges, it plays a key role. It may make the differencewhen a student is choosing between two schools. "For a few hundred dollars they're not going to turn down oneschool over another," Shunk says. "But for a few thousand a year theymay." Bankrate.comis the Web's leading aggregator of information on financial productsincluding mortgages, credit cards, new and used automobile loans, moneymarket accounts, certificates of deposit, checking and ATM fees, homeequity loans and online banking fees. Visit Bankrate.comto get the tools and information that can help you make the bestfinancial decisions.
Source: Money & Work
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