College prices are sky high! How much do you know about student aid? How about academic scholarship and others? Not knowing this information will cost you. Let’s take a look at Federal Financial Aid details with our recent first hand personal experiences .
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10 Student Aid Myths Not to fall!
Student Aid Myths are everywhere. Sometimes we don’t know what information to trust. Perhaps these are NOT myths? How do you know?
I felt the same when my oldest was starting to get ready for college a few years ago. My wife spent a lot of time researching through various resources and here it goes, it’s already for my oldest to apply to college.
Wow, the time just flies…
Anyhow, I thought it would be beneficial to go through these top 10 Student Aid Myths so that you know what you have to deal with when the college time comes for you.
When people talk about College Student Aid, the majority of the things they talk about includes Federal Financial Aid.
There are many college counseling web sites, and I found this one that shows these.
10 financial aid myths: What you don’t know can cost you
http://www.savingforcollege.com/articles-financial-aid/10-financial-aid-myths-what-you-don-t-know-can-cost-you-886?ref=college-bound
I would like to go through this one by one with our own personal experiences so that this information gives you a better idea on what really is a myth and what is not.
Ready??
COSTLY MYTH #1
Costly myth #1: We make too much money to qualify for financial aid, so there’s no reason to waste time with the FAFSA.
I also thought of the same thing in the beginning. I couldn’t possibly get a financial aid!
Why?!?
Because I have 3 kids so far and we live in a house. My kids don’t get any free lunches at school. Doesn’t this mean I make too much?
Am I wasting time with FAFSA??
All I can say is “Fear NOT! Just apply FAFSA and see how it goes. It takes a few minutes to complete FAFSA anyway.”
You probably need some data to believe me, so here it goes.
This is the case for Harvard. Just follow along here please. Don’t just think it wouldn’t apply to your situation as there are some very important info here in general.
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20% of our parents have total incomes less than $65,000 and are not expected to contribute.
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Families with incomes between $65,000 and $150,000 will contribute from 0-10% of their income, and those with incomes above $150,000 will be asked to pay proportionately more than 10%, based on their individual circumstances. Families at all income levels who have significant assets will continue to pay more than those in less fortunate circumstances.
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Home equity and retirement assets are not considered in our assessment of financial need. https://college.harvard.edu/node/426
Long story short, if you make less than $150K, you can get some sort of financial aid, and you can use the College Net Price Calculator I discussed to calculate exactly how much student aid you could get. See here for College Net Price Calculator details.
Reality: Many of readers may be able to get student aid!
COSTLY MYTH #2
Costly myth #2: Financial aid never has to be paid back.
When colleges provide you with the overall Financial Aid Package, this most likely includes some types of loan. This may be a federal loan with lower interest rate. In my oldest’s case, to cover our financial need, the school’s financial aid package included two types of loan that have to be paid back if we borrowed. Just remember the loan portion on the financial aid must be paid back.
Reality: Loan portion of the Financial Aid package must be paid back.
COSTLY MYTH #3
Costly myth #3 My child will be a sophomore next year, so we don’t have to worry about filling out the FAFSA again.
You have to fill out the FAFSA every year to get a similar (or better) financial aid package because your financial situation could potentially change from the previous year. We also had to fill out the FAFSA for the 2nd year for our oldest. The good news? The FAFSA has our previous information, so filling out takes even less time!
Reality: Do FAFSA every year!
COSTLY MYTH #4
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Costly myth #4: If I save for my child’s college with a 529 plan, they won’t get financial aid.
We have 529 plans for all of our kids, and we still have received federal financial aid.
So what does this tell you?!? A myth!
Reality: The 529 plan does NOT prevent you from getting a financial aid.
COSTLY MYTH #5
Costly myth #5: We’re better off having our child’s 529 plan in his grandparent’s name.
We haven’t tried this. Our kids’ grandparents don’t have any 529 plans, but this amount is supposedly considered as student income. So that’s NOT a great news. I would just stay off. The link provided above has a good explanation and it does make sense.
Reality: Use your (parents) name for your kids’ 529 plans instead of grandparents’.
COSTLY MYTH #6
Costly myth #6: A Roth IRA is a better college savings option for a student who will apply for financial aid.
We have done enough reading to know that this affects EFC (Estimated Family Contribution) formula more. So we don’t do this. Furthermore, the Roth IRA is for OUR retirement, not necessarily for kids’ education!!! 😜
Reality: 529 plans are better than Roth IRA for kids’ education spending.
COSTLY MYTH #7
Costly myth #7: There’s no rush when it comes to filling out the FASFA.
FAFSA becomes available on January 1st. The basic rule of any financial aid whether it is federal or state based is First Come First Served. In many cases, you can’t file a tax return until you get your employer’s W-2 forms which don’t become available until end of January time frame.
So what’s the workaround?
Submit the FAFSA quickly in the beginning of January with last year’s tax return info and amend it later once your tax information is available.
Starting this fall, you will be able to use your last year’s tax return info.=> This is a change from previous years.
“For students attending college in the 2017-18 school year, the FAFSA will be available in October 2016, and financial aid eligibility will be based on 2015 tax returns.”
Reality: Remember First Come First Served so act quick!!
COSTLY MYTH #8
Costly myth #8: Your child has to wait until you’ve filed your tax return to fill out the FAFSA.
See myth #7. I just told you exactly this.
Reality: Fill out FAFSA as soon as it becomes available starting January 1st.
COSTLY MYTH #9
Costly myth #9: There’s no way we can afford to send our child to a private college.
You have to read my previous post here. Take a close look at the top 20 private school section.
Reality: It would depend on your situation and net college prices may actually become cheaper or considerably similar to in-state school alternatives.
COSTLY MYTH #10
Costly myth #10: When I fill out the FAFSA for my child, I only have to report the balance of her 529 account, and I don’t have to report the balance of her siblings’ 529 accounts.
FAFSA will ask your other sibling kids’ 529 plan details. That’s just the fact.
Reality: Just report what’s asked.
What is Academic scholarship?
Academic scholarships are something kids get while entering a college or university that they do not have to pay back. Academic scholarships have various requirements to get as a freshman and to keep for the rest of college years. Usually, you have to be a pretty good student keeping high GPAs, etc. to keep qualifying for the academic scholarship.
One important thing to note is that any scholarship your kids get usually does NOT reduce the amount of EFC. The EFC is mainly determined by the FAFSA process which uses your tax return information. So any scholarship amount will just reduce the school’s portion of tuition or tuition grant (which many top 20 private schools provide that doesn’t have to be paid back).
Obviously, we are all hoping to get a full ride or full tuition scholarship and any other additional scholarships if all possible. There are schools that do provide the full ride scholarships. You just have to look for them.
Let’s take a look at a couple.
Full Ride scholarship (or near full ride)
University of Kentucky – http://www.uky.edu/financialaid/scholarship-incoming-freshmen
The Otis A. Singletary Scholarship
Four-year awards providing the cost of tuition and an allowance for room and board. Requires a minimum test score of 33 ACT or 1490 SAT* (M+EBRW) and a minimum unweighted GPA of 3.80 on a 4.0 scale.
=> Their wording on the room/board seems to have become more vague. In the previous years, I thought they stated to fully cover room/board. I am not sure what the allowance amount is for 2016.
Full Tuition scholarships
Vanderbilt University – http://www.vanderbilt.edu/scholarships/
The approximately 250 recipients of these scholarships—one of our three signature scholarship programs—are guaranteed full-tuition awards plus summer stipends for study abroad, research or service projects.
To look for these scholarships is not very hard. Each school has a financial aid office and scholarship information is there. You just have to google with “school name scholarship”, like “University of Kentucky scholarship”, and you should be directed to the school’s financial aid office.
You just have to LOOK FOR them.
What is Mckay scholarship?
The McKay Scholarship Program for Students with Disabilities provided over 31,000 Florida students with special needs the opportunity to attend a participating private school during the 2015-16 school year.
http://www.fldoe.org/schools/school-choice/k-12-scholarship-programs/mckay/
I did not know about this scholarship, but supposedly people in Florida are benefiting from it for their disabled students. It is great to see a U.S. state provides an opportunity for all students to be able to learn! I am sure other U.S. states provide similar scholarships.
Again, the point here is that there are scholarship opportunities for everybody, and everybody’s situation is different.
As Asians, we also found many Asian only scholarships available. There are ones for Hispanics and others!
You just have to LOOK FOR them.
10 Student Aid Myths Not to fall! Academic, Mckay scholarship? Summary
Thanks so much for reading “10 Student Aid Myths Not to fall! Academic, Mckay scholarship?“.
I hope this article gives you some ideas of what to look for in your children’s financial aid situation. Just remember the 10 Student Aid Myths I discussed above are all myths!
If you haven’t read my previous scholarship article, I strongly recommend you read it. Not knowing will cost you.
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