Cheap College Degrees

What if you make too much money?

Humbly, I would like to admit something. My wife and I made a chunk more money in 2008 than we did in 2007. Normally, this should be a good thing. Here's my problem/concern: I have a child in 11th grade and child in 10th grade (and also one in 6th grade, but less of a concern right now). Both of them have some sense that they would like to go to college. Making more money, even for me, often means qualifying for less sorts of need-based financial aid.

David Rosen and Caryn Mladen, authors of Free $ for College for Dummies, offer some great advice for folks who make over $100,000 a year and still would like some help. Here are some of the factors that could work in your favor:

• You have other children in college. Yes, this makes a difference. The more children that you have in college, the more FAFSA and the federal government takes that into consideration. Yes, you should have decided fifteen years ago to space your children closer together.

• You are supporting other people (such as your parents). If you are also supporting your parents, your wife's parents, or children from a previous marriage, this all factors in. This support, of course, must be verifiable in some way. Saying that it is all cash support would be a bad bet.

• You have substantial debt. The government, truthfully, is less interested in how much money you made last year and is much more interested in your net worth. If you have significant debt, this should work in your favor. Of course, if you have significant debt, you should be concerned with the current economy.

• Your child is not a dependent. If your child is truly independent, then your income should not be factored in at all. Some ways for them to be considered independent include having been in the military, getting married, having a child, or a significant time living out of your house. How does this affect you? If they are independent, you can likely still give them cash gifts to help with college. However, I strongly encourage you not to try to scam the system. If you are found out, bad things can and will happen. Easiest way to be found out? Cash gift equals cost of tuition. Also and importantly, there are other IRS rules about cash gifts. Consult with your tax preparer.
  

Guest Column: Robert Proctor on Financial Aid

One of the many myths we hear is that parents believe their income is too high. Granted, a high level of income will not help you qualify for a large sum of free financial aid, but you need to understand that income is only part of the equation. The overall formula used by the Department of Education is complex and confusing. Do not let a high level of income deter you from attempting to qualify.

Another often heard excuse is "my student's grades are too low". Unless your child is failing, aid has nothing to do with grades. The intricate government formula simply does not include grades. If your child is failing, would college be a wise pursuit anyway?

Sixty-five percent of American families own their own home. One of the myths is that this eliminates families from aid consideration. Again, this is baloney. On the federal aid form (FAFSA) you will not find a space to insert information about your home.

"Aid is only for special groups" is another popular argument. Again, the formula for qualifying does not ask about where you are in relation to society - the criteria are strictly based on certain financial numbers the Department of Education requires.

Probably the biggest misconception we hear is that guidance counselors and financial aid officers (or your accountant) can do all of this for you because it is an easy process. First of all, it is not an easy process. Secondly, if you think doing your taxes every year is complex and time consuming let me introduce you to another phase of government you will love to hate. The colleges pray that you will go through this entire process unarmed and will take advantage of your ignorance. Going to them for help is analogous to going to the IRS to complete your taxes. Yes, they will do them - but in whose interest are they working?

Those who know and understand the process win the financial aid game. To master this game you'll have to maneuver the complex formulas, rules, and regulations the Department of Education has devised. This information is not readily accessible and provides no guidance as to the best way to ultimately pay for what is referred to as the "expected family contribution".

Professional college planners offer parents the opportunity to tap into their expertise at a nominal cost. You'll benefit by sending your student to college for a reasonable amount of money while fully complying with all forms and procedures. And, you can accomplish this without going broke. By employing professionals, you'll achieve peace of mind knowing that everything that could possibly be done for your child is covered.

Robert D. Proctor, CFP, CLU, ChFC Premier College Funding Solutions www.mypcfs.com Article Source: http://EzineArticles.com/?expert=Bob_Proctor

Grants are a better option

In my last post, I talked about how scholarships are not always your best friend. This is often true. And, yet, you know that there is a growth industry in finding scholarships for students. I am most definitely not saying that you should not apply for scholarships, but understand that the final math may look very different than you think it ought to look.

So where should you put your time?

Look for state and federal grants. These are often based on fairly simple things like GPA or income. Either you qualify or you don't. While often scholarships require additional paperwork, grants usually require the FAFSA and a minimum application.

An example are the Cal Grants. The State of California offers two types of Cal Grants. One type is offered based on some entitlement (i.e. need). However, what some people do not know is that there is a second type of Cal Grant that is competitive. So, even if you your family makes too much to qualify for the first kind, you can possibly earn one based on GPA or other qualifications.

While these grants are typically for traditional college-aged students, if you are in a California community college and under the age of 28, you may qualify as well.

So put in the time on the scholarships. However, make sure that you check with your state department of education and with the federal government about possible grants.

Are scholarships a good choice?

One of my more serious articles on how to earn a college degree as cheaply as possibly is the one that brings about one-fourth of you to this blog. The article, Cheap College Degrees: Save money on an accredited degree, has been up for some time over at the Adult Education part of About.com.

One of the things that I mention in the article is that getting scholarships does not always help you. When you complete your FAFSA, your intended school looks at it to determine how much scholarship money you might be get. It also looks at any scholarships you have earned from outside the school. However - and this is key - you are only going to get as much in scholarship money as the school believes you should.

Here's an example: When I was an undergrad, I received about $8000 in scholarship money. That seemed good to me. At the last minute, I qualified for an additional $1000 scholarship. Now, being rather good at math, I figured I should then get $9000.

Nope.

I got $8000. Why? Because most of that $8000 was university scholarships. My getting an outside scholarship for $1000 meant that they could and would give me $1000 less. The university gave me $7000.

There are three exceptions to this:

1. If you end up at a school that either has a small endowment fund or is student-loan happy (which can make things even worse); and/or

2. You qualify for a lot of grants and don't get scholarships; and/or

3. You get scholarships that equal 100% of the cost of tuition.

Otherwise, you get what you get.

College Financing 201

Good, solid advice (albeit a little over the top). Worth a look.