5 Overlooked Financial Aid Tips for Incoming College Freshman
I know, it’s May. You’ve already picked your college and accepted your financial aid award. What more can there be to worry about except deciding whether to buy dorm furnishings and move them or wait and buy them once you arrive? Well, there are at least 5 financial aid related issues that if families don’t address now could hurt them financially come September.
1. Paying for college starts before the student ever sets foot on campus.
I’m not talking about setting up a 529 plan or submitting the FAFSA. I’m talking about the fact that payment plans start as early as June for the coming year.
If you want to spread your payments out so they are as small as possible, you need to enroll in the college’s payment plan before your student ever registers for her first class. This means you are probably guessing at the total amount you’ll end up paying. You can always adjust the amount once you get the actual bill. But this is a situation where if you wait for the information to come from the college, you may miss the longer payment plan. Instead of paying over ten months, you’ll have to do it over eight.
2. Start Looking for a Work Study Job
If your student is eligible for work-study, start looking into possible work-study jobs now. Work-study jobs are not guaranteed. The University of California Berkley explains it as follows:
Am I assigned a job by the Work-Study office?
Noooooo! Given your varying qualifications and schedules, that would be a logistical nightmare. It would probably upset you (“I’m worth more per hour than that!”), upset the employer (“You sent us a very shy individual to give campus tours?”), and cause misery all around. Students with Work-Study apply to Work-Study jobs just as they would any job, usually with a resume (to increase your chances of getting an interview, include a cover letter) and after an interview. The employer chooses how students apply and the employer does the hiring through the referral process.
Furthermore, many colleges do not have enough work-study jobs available for all those who qualify. It is extremely important students find out where work study jobs are posted and any possible application requirements. You should also find out how often work-studies are paid, once a month, twice a month, or somethingelse. This can make a big difference in budgeting.
It will also give you some idea of the chances of getting a work-study job. Because of a quirk of the funding of federal work study, some colleges have a lot more money available for work-study than others. If you come across a statement similar to the following at University of Texas San Antonio, you should expect to start looking as soon as possible:
A work-study award does not guarantee that you will find a job—it only means that you qualify to work as a work-study. There are more eligible students than there are open positions—just like a real job, you will be competing with other qualified applicants for those positions. The Career Center offers many workshops for improving your resume, special office skills, and how to dress appropriately. Take advantage of these free workshops as often as possible.
If you are unable to secure a position, you may choose to decline your work-study and pursue other forms of financial aid. It is important to contact our office if you decide you want to decline work-study.
3. Report Outside Scholarships
If your student received any outside scholarships, he needs to report them to the financial aid office. Hopefully, you’ve already researched the college’s policy on outside scholarships and there won’t be any surprises. What am I talking about? Well, in the eyes of the college, a scholarship is essentially just another form of income. So theoretically, winning an outside scholarship reduces your financial need. Therefore, the amount of need based aid may be reduced.
This often comes as a shock. Many assume that they will be able to use the outside scholarship to reduce their own contribution. And this is the case if the student is only receiving merit aid. However, that’s not necessarily the case for students who qualified for need-based aid. Each school has their own policy on how they handle outside scholarships. Some will apply the amount to reduce loans first. Others will have set limits that can be used to apply to their EFC. You’ll have to check with the school.
And while you may think about just “forgetting” to report the outside scholarship to the financial aid office, they’re going to find out eventually. After all, the organization that awarded the scholarship is going to report the information to the IRS which will eventually make its way back to the student’s tax information. So just report it as soon as possible and deal with the consequences.
4. Apply for Loans
For those who decided that you would take out loans to help pay for college, now is the time to do it. Any federal loans, including PLUS loans, requires completing loan counseling. Parents and students should take the time to understand the amount of money they’ll owe. Mapping Your Future has a Debt Wizard calculator that will show you how much salary you’ll need for the entered borrowed amount.
You also need to find out which fees the college will automatically deduct from the loan amount before dispersing the balance. Students need to be aware that they’ll have to pay any charges added to their bursar account after the disbursement. In other words, the lump sum isn’t a sign to go on a spending spree.
If after you use the loan calculators, you decide that you don’t want to take on that much debt, there are still options. Mid-summer is a good time to ask for more financial aid. At this point, colleges don’t want to risk losing any more students and may be willing to look a little harder for financial aid. Students can still request a gap year to decide the best way to deal with the situation.
And there are still colleges accepting students and offering financial aid. Visit the National Association for College Admission Counseling College Openings Update. It lists colleges still accepting students and indicates if there is financial aid and housing still available. You’re likely to be surprised at some of the colleges that show up on list.
5. Plan Your 529 Withdrawals.
That’s right, because nothing is ever simple. There are several issues to consider when making withdrawals. Since I’m not a financial planner, I’m not going to dive into the details but want to make sure you’re aware they exist. Obviously, the money has to be spent on qualified college costs. But you need to make sure you take the money the same year as the expenses occur for tax purposes.
Depending on the college’s financial aid policy, you may not want to have the disbursement go directly to the college. If you decide the money should be disbursed to the beneficiary, the student, you need to make sure the student understands the need to use it to pay for qualifying expenses. And finally, you also need to be aware that any costs covered by the 529 payment cannot be used to qualify for the American Opportunity Tax Credit
CONNECT WITH OTHER PARENTS FIGURING OUT HOW TO PAY FOR COLLEGE