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College Planning

The Landscape Looks a Lot Different Today (Even Compared to a Few Years Ago)

Our colleague and college specialist Donna Cournoyer contributed the following update for college planning, as a follow-up to her April article, Shifting the “Dream School” Mindset

There are many factors that shape the philosophies, policies, and practices of colleges throughout the US. However, the overarching key factor is this: colleges are businesses that need revenue to exist.

Most of this revenue comes in the form of tuition and housing fees that families pay each year. And of course, fundraising and building upon existing endowments are significant contributors, too.

Endowments are permanent funds, used as a self-sustaining funding source for the school’s mission, including funding for scholarships and grants for students.

However, endowments are invested funds and only a small portion is consumed each year. In many cases most universities spend only the interest that accrues annually from the investments.

The need for colleges and universities to enroll a certain number of students each year, in order to stay within their operating budgets, drives institutional goals and determines how the schools market to students they want to attract.

The Enrollment Cliff

Another factor driving the enrollment policies of universities is the significant decline in the number of college-bound students expected in the years ahead.

This drop in predicted enrollment is a function of a declining birth rate; fewer high school graduates choosing to go to college (related to price and value perception, among other reasons); and predicted lower high school graduation rates.

This puts a lot of pressure on colleges and universities to meet their enrollment goals each year, in an environment where it’s getting harder and harder to do.

How Colleges Entice Students

Marketing is a large expense at many colleges and universities. Schools want to entice students by creating beautiful grounds, building new dorms, providing the latest technology in classrooms, and guiding families on tours where they aim to make an emotional connection with the student.

Schools market to all students and families on the tours – even the ones who cannot afford to attend.

Think about this: as has been a common practice for decades, many families create a list of schools based on perceived elite status, reputation, location, aesthetics, amenities, and, of course, academic programs. Sometimes, price is considered before visiting. But often it isn’t.

Then families visit their chosen schools, where tour guides aim to make that highly charged emotional connection with the student (and the student’s family). They are often very successful. When you come down to it, this is the process of the sale, and tour guides are selling the school to the student.

What happens next?

The student makes a snap decision to attend one of the visited schools based on feeling and emotion (I have seen this many times in my experience working at a university) and ultimately the family agrees.

Cost might not even have factored into the decision, and this can have far-reaching financial implications for the student and parents.

Consider this: the four-year sticker price for many schools now totals nearly $400,000which is very close to the current median price for existing-home sales in the US, according to the National Association of Realtors.

In a Bloomberg article from September 26, columnist Charlie Wells said something that resonates with me as a college planner and financial advisor:

Financial advisers say having a budget and setting expectations is crucial to avoiding disappointment — or mountains of debt — later. (Just think: Would you let your 16-year-old decide which house you were going to buy after one walk-through? School choice is not so different.)”

Looking at a family’s plan to pay for college is intertwined with many factors including the ways in which colleges aim to attract and solidify commitments from students to attend their school.

When planning your strategy for choosing and paying for college, remember these key points:

  • Rankings: Some of the factors that have been touted for years about U.S. News and World rankings, for example, are starting to take a back seat as many people no longer believe they are relevant to deciding on a college.
  • Elite Status: Studies have shown that WHERE a student goes to college is not a significant factor in their success.
  • Apply to Competing Schools: This may give you a chance to leverage offers from one school to gain additional funds from another, as many schools will “match offers” to get a student to commit.
  • Set Financial Expectations: Have a Financial Plan and start early. Discuss together as a family what are the realistic and agreed upon financial strategies: How much are parent(s) willing and able to contribute? Will anyone need to borrow? What is the student’s responsibility? Do this BEFORE visiting and applying to schools.
  • Merit Scholarships and Financial Aid: Research the financial health of the school, along with their policy and average amounts of aid and merit scholarships. This is not always transparent so call the Admissions staff to ask for average, if necessary.
  • Appeals: While not everyone’s favorite process, often students may benefit from appealing their offer. Remember, schools need to make their enrollment, so offering additional incentives is a way in which they aim to do so.

One of my goals as a college financial planner is to help shift how parents perceive “what is the best school for my student”.

I’ve observed that families with well-planned strategies that consider the current landscape of college admissions are more likely to conclude their college search confidently, and are more successful in ensuring that, in the end, their college dollars are well-spent.

-DC

The Path to Independence

Many clients wonder how their own finances will change as their children become independent young adults.

Where do parents draw the financial line with their children? What steps can parents take now, and in the future, to help keep themselves on track for personal and financial success as their children become independent young adults?

Our friends at fpPathfinder, a financial planning research organization, have put together a checklist (lick on the picture to enlarge and download) to ensure that you’re addressing critical planning concerns during your child’s transition into adulthood.

Topics on the ‘Path to Independence’ checklist include:

  • Do you have access to your child’s important records?
  • Is your child still able to be on your health insurance?
  • Are you planning to help your child with large upcoming expenses?
  • Do you need to review your taxes might change once your child becomes independent?
  • Are you concerned that your child is (or will be) fiscally irresponsible?
  • Are you concerned about your child’s actions or behaviors causing future liability issues for you?
  • Do you need to review your budget and expenses once your child leaves the house?

You can click on this link or on the image below to download the two-page checklist.

-RK

Seniors: A Financial Aid & Admissions Checklist + Tips for College Applicants

Our colleague and college specialist Donna Cournoyer contributed the following update for college planning

Senior year for a high school student and their family is usually quite busy. Settling into the new school year schedule and activities begins in earnest as Labor Day brings summer to a close.

Organization can keep a college-bound senior and their family on top of the to-do’s and deadlines, ensuring this last leg of college preparation and the application phase goes smoothly.

To help in this effort, I’ve provided need-to-know information in the following five sections:

  1. Key Considerations for High School Seniors
  2. FAFSA Application Form Availability & Deadlines
  3. FAFSA Formula & Net Price Calculator
  4. Merit Scholarships
  5. The Fall Checklist

Key Considerations for High School Seniors

Eligibility for financial need-based Federal financial aid from the US Government and need-based grants and aid from US colleges is based on the Federal FAFSA application (Free Application for Federal Student Aid) and its formula.

This includes free grant money from the government such as the Pell Grant, the colleges’ free grants, Federal Subsidized student loans and the Federal Work Study program.

The following link to studentaid.gov website runs through the Types of Federal Student Aid.

Eligibility for the student is determined by the financial aid office at the college or university to which the student is applying.

Even if you are likely not eligible for financial aid and need-based funds, I strongly recommend that everyone complete the FAFSA form.

Schools often award some free grant money to students for completing the FAFSA form regardless of eligibility and some schools require it for the student to be considered for a merit scholarship, even though those are not based on financial need.

FAFSA Application Form Availability & Deadlines

The traditional opening date of the FAFSA form is October 1 for the following academic year. (October 1, 2024, for the 2025-2026 year).

However, last fall due to major changes in the form for the first time in many years, there were many hiccups and delays from the Department of Education and the 2024-2025 application did not open until January 1, 2024. From there, issues continued for months.

In August, The Department of Education announced that the FAFSA is expected to open for testing with a limited set of students and institutions on October 1. The DoE also stated they will make the application available to all students on or before December 1.

Be sure to check the financial aid pages on the websites of your college list to keep up with the opening date of the FAFSA and each school’s required forms, and check online on the Federal Student Aid website- look for “2025-26 FAFSA form” here: FAFSA.

For schools on your list check to see if any also require the CSS Profile

FAFSA Formula & Net Price Calculator

The FAFSA formula uses some key figures to determine a student’s eligibility for financial aid, some key elements in that formula are:

  • Parents’ Adjusted Gross Income (AGI)
  • Parents’ Taxes paid
  • Parents’ investments OTHER than personal retirement accounts. (not including accounts such as your IRA, 401(k), etc.)
  • Number of family members

Another way to estimate financial aid ahead of access to the FAFSA and college financial aid letters is to use each college’s Net Price Calculator.

  • The simplest way to find a school’s Net Price Calculator is to search the name of the college followed by “npc”, such as: yourschoolnpc.
  • Keep in mind that they do not all include merit scholarship estimates, which will help your net cost if the student is awarded one with admission to the school.

Merit Scholarships

Merit Scholarships are school-awarded scholarships NOT based on the FAFSA form and financial need.

Merit Scholarships (also called Academic Scholarships) are based on the student’s overall admissions application which includes GPA, essays, possibly SAT or ACT scores and interviews, and any other requirements from the admissions office.

Schools usually have a range of amounts they may offer students, and Merit Scholarships are usually awarded for four years and may have a GPA requirement for continued eligibility. Each school will have different criteria and amounts available according to their own policies. Eligibility is determined by the admissions office.

Be sure to get your admissions applications and the Common App done early, to help put yourself in the best position to be awarded a merit scholarship. And make a list of the application deadlines for each school you are applying to.

The Fall Checklist

  • Deadlines: Make a list of deadlines for admissions and financial aid for your college list
  • FAFSA: Watch for the opening of the FAFSA and complete as soon as possible
  • Net Price Calculator: Estimate Your Net Cost for schools on your list (use NPCs for now, and merit and financial aid offers later)
  • Your Budget: Estimate how much you are able and willing to spend and / or borrow for your student’s education
  • Complete the Common App/Admissions Applications Early: Be sure to get applications done early. Early applicants are likely to receive decisions the earliest.
  • SAT/ACT: Decide if your student will submit scores and/or retake any tests.
  • Engage with your Admission Representatives: For your top schools reach out to your admissions counselors and let them get to know you so they can advocate for your admission and merit scholarship.
  • Make Another School Visit: If you are having trouble narrowing your list, or deciding which school is at the top, try to visit the school again. It is also good to tour when students are there.
  • Make a List of Pros and Cons for Each School: Look at programs, school size, student resources and activities, location, cost estimate and of your important decision factors for your college choice. This is helpful as you start applications, and the process gets closer to decision making time.

If you are interested in some guidance, we offer hourly college planning services, and a complimentary 30-minute consultation to discuss your personal situation. You can schedule an appointment here on our website: Schedule an Introductory Meeting.

Good luck and have a great year, seniors! 

College Planning in the Summer: A Focus for High School Seniors

Our colleague and college planning specialist Donna Cournoyer contributed the following article.

Summer before senior year for a high school student is often filled with good times, maybe a summer job, and also great anticipation of the final stretch of the college planning process with fall college applications looming in the coming weeks.

For families of college bound students entering their final year in high school, the end of summer is a great time to ensure most of the preparation is done, and that you’re organized and ready for application season this Fall.

Focus Items for Being Well-Prepared

  • Narrow your school list and decide on a final list for applications (for all criteria including costs)
  • Have accurate estimates for out-of-pocket costs for each school; either by working with a college planner, and/or using the Net Price Calculators on each school’s website for financial aid and merit scholarship estimates
  • Make a list of deadlines and choose your application timeline (early action, regular decision, etc.) for each school and list any materials needed for your applications
  • Finalize essay or essays for your applications
  • Have your list of extracurriculars, achievements, and awards up to date and ready
  • Have any personal statements and teacher recommendations ready
  • Start the Common App soon after it opens on August 1 to be sure you stay on schedule

For high school students heading into senior year, here are a few things which are important to keep in mind:

High School Courses and Activities

Keep up focus on grades and activities. Admissions will require final transcripts and may question if your student’s grades suddenly dip after the application has been submitted.

Do not make significant changes to your curriculum, or switch from AP and honors to all regular courses. Again, keeping up with your plan is important so that you will maintain your status as a highly focused student.

Admissions Process

If the schools on your college list heavily consider demonstrated interest in applicants, be sure to reply to requests for communications and attend events in the fall during the admissions process. Interact with your admissions counselors when they reach out.

Some schools weigh a student’s engagement and interest when reviewing applications. However, if you contact the school, be sure to have specific questions and make it a productive call for both you and the admissions staff.

You should be assigned an admissions counselor at each school. Be sure to reach out to them if you have important questions, especially if it affects your decision about where you will be attending, such as costs, or any other key factors in decision making.

Finally, get organized for your senior year and create a plan for applications so you can balance completing applications with your senior year coursework and activities. This will also help to keep the stress to a minimum. Reach out for help from parents and school counselors when needed.

Remember: most of the hard work is done!

Head into fall organized and prepared with enthusiasm to complete college applications. Before you know it, the holidays will be here, and your students may soon know where they’ll be headed off to college next year.

-DC

The Price You Pay for College

Summer Reading Series: Non-Fiction, Personal Finance

The Price You Pay for College – An Entirely New Road Map for the Biggest Financial Decision Your Family Will Ever Make by Ron Lieber

Having a lengthy and detailed background in Higher Education and helping families navigate college, when I find a resource that truly gives helpful advice about how to approach costs realistically, I love to share it.

Lieber’s book helps demystify a lot of the college application and admissions process and identify truths, which are not all transparent for parents and college bound students, to say the least.

Some of this knowledge you would be hard-pressed to learn if you are not an “insider” or someone like Lieber, who makes it his job to understand the complexity and nuances of paying for college and shares his knowledge with the world.

He brings practical advice with a sense of compassion and understanding. In a system where costs are rising to unfathomable amounts, it makes sense to use resources to help provide a calm, prepared approach to paying for college, and Lieber helps in a realistic way with the details he shares in his book.

His last chapter is even about hope. And I share his sentiments – the hope that more (and better) resources for families trying to navigate college costs and decisions will lead to the best outcome for every student and parent.

-Donna

2024: Unraveling the Tumultuous Year of the College Admissions Process

Our colleague and college specialist Donna Cournoyer contributed the following update for college planning

Applying to college can be a complex and multifaceted process, including several steps and requiring careful planning and attention to detail.

The most recent yearly cycle of the college admissions process has just finished, as high school seniors and their parents have completed the years-long college preparation and detailed application process by making a financial commitment to the school they will attend for the next four years this beginning this coming fall.

The current level of complexity of this process sent some families into procrastination mode, pushing off the inevitable facing of facts. For others, it means assuming an uncomfortable level of debt.

For those who started early and bravely committed to fully engaging and digging into the process- navigating all the steps and intricacies along the way- many found themselves completely exhausted emotionally, and unfortunately for some, financially.

How did we get here? Has the craziness finally peaked with the FAFSA debacle of 2024-2025? Not likely. Although we will learn more when the process starts up again this fall with the next application season.

The college application process in 2024 has been particularly tumultuous due to several key trends and changes that have intensified its complexity and competitiveness.

Key Trends and Challenges

  1. Surge in Applications: The number of college applications has increased dramatically. This surge is partly due to the widespread adoption of test-optional policies, which has encouraged more students to apply to a broader range of schools. Applications to public institutions have seen an 82% increase since 2019-20, while private institutions saw a 47% increase​ (IvyWise)​​ (Crimson Education US)​.
  2. Early Decision and Early Action: Early application options have become more popular, but acceptance rates for these rounds have decreased. Many top universities still admit a significant portion of their incoming class through these early rounds, which makes the competition fierce.​
  3. Impact of Affirmative Action: The Supreme Court’s ruling on affirmative action has removed race and ethnicity as factors in admissions decisions. Colleges are now exploring new ways to maintain diverse student bodies, such as through supplemental essays and other holistic review strategies.​
  4. Financial Aid Delays: The rollout of a new FAFSA form resulted in a large decline in applications, and caused delays, which means students received financial aid offers much later than usual. This had a huge impact for some students and families and their ability to make informed decisions about which college to attend​.
  5. AI in Admissions: AI technology is increasingly used by colleges to streamline the application review process, including evaluating transcripts and letters of recommendation. This has raised concerns about the authenticity of student submissions, especially with some students using AI tools to assist with their essays​ (CollegeData)​​ (College MatchPoint)​.

Overall, the college application process is a significant undertaking that requires organization, time management, and support from various sources.

Strategies for Applicants

  • Broaden Your Application List: Consider adding a mix of public and private institutions, including those that might not be traditionally prestigious but offer strong programs in your areas of interest.
  • Early Applications: Apply early if you are confident about your top-choice schools but be aware of the competitive nature of these rounds.
  • Holistic Applications: Focus on creating a well-rounded application that highlights personal experiences, extracurricular activities, and leadership roles.
  • Stay Informed: Keep up with the latest testing policies of your target schools and prepare accordingly.
  • Use AI Responsibly: AI can be a helpful tool, however, be sure your application essays contain your work and authenticity.

The 2024 college application process has indeed been chaotic, driven by increased application volumes, evolving admission policies, and the integration of new technologies.

Preparing for the upcoming college admissions season: Staying informed and strategically planning your application approach can help navigate these challenges effectively.

DC

 

 

College Planning: 529 Update

529 Plans Provide a Smart Savings Vehicle to Fund Your Child’s College Education, and New Options and Features Make 529s Even More Beneficial

Even if you do not have children old enough to be thinking about college just yet, it would be hard to escape the news on what is happening at colleges and universities right now, along with the fact that a college education has been rising exponentially for decades to almost incomprehensible figures.

Planning and financing a college education for a child is one of the biggest expenses you will face over your lifetime as parents, so planning ahead and finding smart ways to maximize what your child will receive for assistance at application time is critical.

One of the best ways to grow education savings is with a 529 college savings plan.

Investing your college savings for a child in a 529 plan allows that savings to grow tax-free. And withdrawals, if used for qualified college-related expenses, are free of tax.

Also, contributors to 529s can benefit from tax savings in some states.

Massachusetts residents contributing to a qualified 529 plan can claim a state income tax deduction of up to $1,000 for single filers and up to $2,000 for married persons filing jointly. In Rhode Island, single filers can deduct up to $500, and married people up to $1,000.

Since its inception in 1996, the main drawback of the 529 education-savings plan has been its relative inflexibility.

If the beneficiary did not go to college, or they did not use all the funds, the owner (usually parent) of the plan had few options for the account savings and faced tax penalties for withdrawing funds for other uses if they did not have another beneficiary to transfer the funds to for college costs.

Some recent changes to the rules make the 529 plan a more flexible option for parents. The SECURE Act 2.0 was signed into law in December 2022. One provision of the act, effective this year, allows for owners of a 529 plan to move unused funds in the account into a Roth IRA for the beneficiary.

New Rollover Rules

As of January 2024, 529-plan account owners can now make tax- and penalty-free rollovers of unused funds to Roth individual retirement accounts if the beneficiary is the original beneficiary or a family member.

Here are some limits and restrictions on the rollovers:

  • A provision in the Secure 2.0 retirement-savings act allows up to a lifetime limit of $35,000 in unused 529 funds to be rolled over into a Roth IRA.
  • 529 contributions and earnings in the last 5 years cannot be rolled over.
  • The 529 account must have been open for at least 15 years.
  • Rollovers are considered contributions to the Roth IRA and are subject to the Internal Revenue Service’s yearly contribution rules. This year the limit for those under age 50 is $7,000. The beneficiary must have earned income, and the rollover amount is whatever is less, the earned income or the contribution limit.

529 Contribution Limits

There are options when considering how much to contribute to a 529 plan. It may also depend on your overall financial plan and when you start (how old your child is). It is best to think of college funding as part of your overall financial picture.

Here are some limits for funding a 529 Plan:

  • In 2024, you can contribute up to $18,000 per beneficiarya year before needing to file a gift-tax return with the IRS.
  • Married couples filing jointly can contribute up to $36,000 per child.
  • There is also a “superfund” option. The IRS allows a per-child contribution of $90,000 in 2024 without gift-tax implications. Married couples can each contribute up to $90,000 for a total of $180,000.
  • A caveat with “superfunding”: You cannot make any additional contributions to the same beneficiary for the next five years.
  • Total 529 balance limitsare determined by the state you live in and fall somewhere between $235,000 and $500,000. (Massachusetts is $500,000 and Rhode Island is $520,000.)

Types of 529 Plans

  • College Savings Plans: These work like a 401(k) or IRA by investing your contributions in mutual funds or similar investments. The account will go up or down in value based on the performance of the chosen investments.
  • Prepaid Tuition Plans: These allow for the pre-purchase of tuition based on today’s rates, primarily at a public institution. (Be sure to check with your state for options and all requirements and restrictions.)

529 Plans Owned by Grandparents and Relatives – and Federal Financial Aid

In many families, grandparents (or other relatives) like the idea of creating a 529 college savings plan for their grandchildren or family members.

In the past, this affected a student’s eligibility for financial aid.

Under the new rules, the grandparent or relative accounts no longer factor in and no longer count against the beneficiary’s calculations for federal financial aid. (Some schools that use the CSS Profile form in addition to the Federal Application for Student Aid may factor this in.)

Considering the 529 Plan Option for College Funding

The features of the 529 plans make a compelling option for parents and families to save for college in a tax-efficient way. And the new Roth IRA rollover option can help your college graduate or college-aged child start to build their retirement savings.

If you are considering a 529 plan, be sure to compare plans and understand all your options thoroughly and ask for advice from your trusted financial advisor to be sure you make a decision that is best for your situation.

 -DC

 

 

Shifting the “Dream School” Mindset

I grew up in a New England household where weekends were spent in ice rinks. I loved it! My brother was an ice hockey player, and I was a figure skater who joined my sisters in the sport each weekend (at the time, hockey for young women wasn’t an option).

I have a favorite quote from one of hockey’s greats, Wayne Gretzky, who said: “Skate to where the puck is going, not where it has been.”

I was reminded of this quote recently during a conversation I had with a gentleman at a networking event while waiting in line for a “free headshot,” a perk of being a participant in the event.

My new acquaintance had grown children, and when I told him I was a college planning advisor, he perked up and said, “Good for you!” He then began to reflect upon his experience in helping his children with their college applications.

He said he was obsessed with one outcome: the bumper stickers he would be able to affix to the family car. Not the college cost; not where his kids would be happy and thrive academically; just the school with the best “elite” reputation.

He was from an affluent suburb in Boston. He said all the cars in his neighborhood had elite college bumper stickers: Harvard, Yale, Brown, etc. His primary thought, and self-admitted anxiety thinking about college for his children, was about those bumper stickers. He said literally “nothing else mattered.”

While this gentleman had every right to his approach and opinion (every family has their own list of criteria for choosing a college) I was taken aback. But I was also intrigued because he was so animated and emphatic while telling me his story.

While bumper stickers might have a limited audience, consider the scope of merchandise a typical family will buy at the bookstore during a college tour or event. Don’t many students and parents want to wear that sweatshirt to manifest attaining admission? It’s almost like a dream board (and maybe not so different from the bumper sticker after all).

That conversation at the networking event reinforced my belief in the importance of helping parents and students move beyond the emotional part of college search.

If families think deeply about their priorities and goals and how school choice will impact their personal financial situations, the decision framework might shift.

One critical outcome may be that “dream school” may no longer be synonymous with “elite school.”

Consider a recent Bloomberg article entitled If You Didn’t Get Into an Ivy, a Public School Is the Better Investment, which claims that many elite private colleges underperform when it comes to the average student’s return on investment.

The Bloomberg News analysis of more than 1,500 nonprofit four-year colleges shows the return on investment at many elite private institutions outside the eight Ivies is no better than far-less selective public universities.

The analysis shows that a typical 10-year return on investment of the so-called “Hidden Ivies” – a list of 63 top private colleges – is about 49% less than the official Ivies and 9% less than states’ most prominent universities, known as public flagships.

These statistics are meaningful because of the high cost of attendance. For instance, a recent New York Times article commented on a situation where a newly admitted Vanderbilt University engineering student was shown an all-in price of attendance for their first year of $98,462.

As a financial advisor providing college planning, I encourage a holistic approach to the planning and decision-making process, with the goal of finding the most affordable choice that also is a great fit for the student to accomplish their academic goals, in a community and location where they will be happy and flourish.

There are so many excellent schools with significantly lower total cost of attendance and lower out-of-pocket costs compared to the often-elusive elite institutions.

Many of the alternatives will give students a four-year merit scholarship along with a great education and a wonderful experience. These institutions are p aces where students can build a tremendous foundation, lifetime friendships and mentor relationships, and gain experience to build on.

Which brings me back to Wayne Gretzky’s quote.

I recommend families move away from where college admissions goals have been: attaining admission to a brand-name, elite school.

Instead, consider where holistic college admissions planning is going:

  • acknowledging emotions
  • thinking deeply about priorities and goals
  • discovering which institutions align best with those priorities and goals
  • considering how school selection will affect student’s and parents’ long-term financial situation

Shifting the Dream School mindset and using a holistic planning approach to college search will help parents and students make the best all-around “smart choice” from their college list.

-DC

 

 

2024-2025 FAFSA FORM – Continuing Issues and Delays

This 2024-2025 college application year is one for the books…

We (schools, parents and especially students) have endured delay after delay for the newly overhauled FAFSA- the Federal form for applying for financial aid, which the government uses to determine student eligibility for financial aid and schools also use to determine how they will award their own funds.

The most recent delay coming this week when the Department of Education announced, the day before the ISIRS (Institutional Student Information Records) were supposed to start arriving at schools, that they were in fact, not going to start arriving at schools until “the first half of March”. This means that for anyone who completed a FAFSA, schools are not going to have those records to start reviewing until at least mid-March. This cuts the time even more and SIGNICANTLY for financial aid offices, who will need to scramble to review the FAFSA forms and try to get their financial aid offer letters out to freshman applicants in time to decide on where to go to college by May 1. A decision which for many families, depends in large part on how much it will cost the family out of their pocket after any merit scholarships and financial aid. Families will be receiving these letters months later than usual this year.

Some of the issues are also that some students and parents are having difficulty accessing and signing the form. Due to the processing delays, there is also the issue of not being able to correct the form until the records are processed and are sent to the schools. So, if you know you have made a mistake, you cannot correct it for another few weeks at least.

First, for freshmen applying to college for fall of 2024, this creates an extra layer of uncertainty and stress, estimating that they will not know how much aid they will receive and how much they will need to pay to attend the schools on their list until likely past April 1. For their parents, even greater stress.

Second, for students returning to college, they need to know if their aid package will change, based on the overhaul in the Department of Education’s formula on the brand new FAFSA this year. For example, the loss of the “sibling discount” for families having more than one child in college at the same time.

Ways You Can Take Advantage of the Extra Time:

  • Apply for private scholarships. This is the time they are open. Search locally, with your high school guidance office and qualified search sites. See my links
  • Consider appealing for more merit scholarship money. If you have offers from competing schools, or if you know your school offers higher merit scholarships, you may have a good chance at an appeal. Schools still need to secure enrollment for their fall class of students during these delays, and if there is a chance for an applicant to deposit early, they may have incentive to increase the offer.
  • If you have extenuating circumstances, don’t wait to reach out to the financial aid offices. If you have had situation over the past year that may have affected your finances, such as a job loss, you will want to reach out the financial aid offices to ask about their process for appeals if it is not clear on their website, so that you can be prepared to send documentation when they are ready to receive it.
  • Do some assessment of your financial plan to pay for college. Although you may not have the net cost confirmed for any of your schools. Start planning for what resources you will be using to cover out of pocket costs for college over the next 4 years and make a list. Will you be using a 529? Savings? Making payments monthly to the school? Borrowing? Or a combination of the above? Start planning out what you have for resources so that when you begin getting final offers from the schools, you will know how your finances match up.

Check the websites for your school list:

Decision Dates: Some schools have or are considering changing their decision date of May 1 this year due to the FAFSA delays.

Be sure to check all the websites for the schools on your list to see if they have extended their May 1 decision to commit date.

Financial Aid process: Some schools may have created their own preliminary financial aid form due to the Department of Education delay of the FAFSA. Also, schools that use the CSS Profile (between 250-300 schools) may be sending out offers ahead of receiving the FAFSA records for applicants, due to the fact that the CSS Profile form has not changed and opened in October.

Be sure to check the financial aid pages of your school websites to see if your schools have created and require new forms or are using the CSS Profile due to the FAFSA delays.

The bottom line is that the 2020 Congressional laws passed that required significant changes to the FAFSA form with the intention of making more students eligible for aid and the form completion easier has created a lot of anxiety and uncertainty for college students and families for the 2024-2025 year as the rollout has been anything but smooth.

In light of these delays of information – essentially knowing the cost you will pay out of pocket for each school on your list – which is crucial for most families in order to decide on college, some families may decide not to apply for financial aid, thus leaving money on the table and spending more out of their pockets next year. Some schools require the FAFSA form to award their merit scholarships and/or some free grant money that is sometimes even offered to those applicants who are not eligible for need-based financial aid by the FAFSA form, in order to entice students to commit.

Of course, as in my previous articles, my advice is to weather the storm, and do the form and be more vigilant than ever staying on top of deadlines and information gathering in this last sprint in your college decision. It will be worth it in the end.

 

New Year, New FAFSA

After Congress approved some major changes to the Free Application for Federal Student Aid (FAFSA) a few years ago, the US Department of Education has taken years to fully implement the changes and overhaul the FAFSA form.

The target date for release of the new form, October 1, 2023, was missed.

The Department of Education then announced a “soft launch” by December 31, meaning that the form would be open by December 31 at the latest (it opened that day for two hours), but also be intermittently closed from time to time for review and maintenance.

These fits and starts have caused students, families, and financial aid offices to play the waiting game and adjust their financial aid timelines.

New York Times columnist Ron Lieber’s article I Spent New Year’s Eve Trying to Do the FAFSA. It Didn’t Go Well, published on January 1, summed up some of the frustrations experienced by families trying to complete the FAFSA form when it opened at the end of December.

Many of the kinks, as of mid-January, now seem to have been worked out.

While families should complete the form as soon as they can, they should not worry about getting it done immediately.

The US Department of Education has indicated that it will not be sending the information to schools until the end of January at the earliest. So, it may be best to wait a week or so more to ensure a clear path to completion.

Noted Changes to the New 2024-2025 FAFSA Form:

  • Form length. The new FAFSA form is considerable shorter. The form has been reduced from 108 questions to about 46, or less, depending on your situation.
  • The custodial parent is now who contributed the most financially for the student. For divorced families, the parent required to complete the FAFSA used to be whomever the student lived with the most in the previous year. It is now whomever contributes the most financially.
  • Pretax Contributions to a retirement account (from W-2 box 12) is no longer required for untaxed income. See form for exceptions such as SEP.
  • If a parent owns a business, it must be disclosed on the form. Previously, if a parent owned a business but there were under 100 employees, they were not required to list the business value on the form. Now ALL parent-owned businesses must be listed. You should list the value after any debt.
  • 529 Accounts. Previously all parent-owned 529 accounts for any children had to be included in the investments section. Now only a 529 for the student on the application must be listed. 529s in grandparent’s or relative’s names are NOT included.
  • Students and parents are now required to give “Consent” which must be given for the Direct Data Exchange (previously called the IRS Data Retrieval). For the FAFSA to be processed, the student and parent must give “consent” which will automatically populate income information, except for a few situations.
  • Students and parents are now called “Contributors”. This does NOT mean they are required to contribute financially. The student must “invite” the parent to be a contributor.
  • EFC (Estimated Family Contribution) is now called the SAI (Student Aid Index). This is the number created by the formula to determine a student’s eligibility, based on the information on their FAFSA application which the government and schools use to award need-based aid.
  • The number of students in college is still listed on the form but is no longer considered in the eligibility calculation. If the student will have one or more siblings in college at the same time for the coming year, or has in past years, this will no longer lower the student’s SAI. The result for parents is that having more than one dependent in college at the same time does not necessarily translate to more need-based financial aid. For current students in this situation, talk to your financial aid counselor for information on how this may affect your aid.
  • Maximum number of schools you can list on the form. The previous FAFSA limited applicants to 10 schools. You may now list up to 20 schools to receive your FAFSA form.

My recommendation is for every student to complete the FAFSA form, especially in year one.

Some schools award non-need-based grants and merit scholarships only to students who complete the form. Also, this is the only way to take advantage of using the Federal Student Loans if you intend to do any borrowing for college.

To complete the 2024-2025 FAFSA form, go to https://studentaid.gov/h/apply-for-aid/fafsa and click on the link “Start New Form.”

After completing the FAFSA form, watch for an email from the US Department of Education with the “FAFSA Submission Summary” (previously called the Student Aid Report) which has information about your FAFSA application.

Also, watch for school communications from colleges your student has been admitted to and to whom they have sent the FAFSA. Schools will begin sending out financial aid offer letters once they start receiving and processing the FAFSA forms from the Department of Education. If you have any questions regarding these offers, contact the financial aid office at the school. Timelines at each school will vary, especially with this year’s delays.

If you would like information on how we can help your personal situation with our college planning service, please sign up for a free 30-minute consultation on our website.

For additional FAFSA and college planning please see our College Planning articles on our website Blog.