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Paying for college and keeping your shirt is an art. Granted, anybody can find money for college but at what cost? Securing the right kind of college money like grants, scholarships and good student loans (yes, there are some not-so-good ones) is the key.
As the cost of college keeps skyrocketing for numerous reasons, the problem is only getting worse. So you need to plan exactly how to pay college costs now, before it’s too late. That’s a fact or you might have to put off retirement for the average of 7 years until your student’s college bill isn’t eating away at your income, or worse yet- you’re not be able to keep up with the debt and have to pull your child out. Either way, you and/or your child loses. When you have multiple children to educate the problem only compounds itself because there’s just not enough college money to go around.
If this sounds like your situation- you’ve come to the right place because I have the answers. You owe it ot yourself- once and for all- to disregard the myths and misconceptions on how to pay for college and do it the smart way. You need the absolute truth on which finances will disqualify your child for college financial aid and how you can eliminate these assets from the formulas so you maximize your eligibility and receive all the money you are entitled to receive and keep those assets for what they are supposed to be for.- your retirement.
For example: Without understanding the ENTIRE process, a Roth IRA conversion could ruin your child’s chances for grants and scholarships…”When someone converts a regular IRA into a Roth IRA by transferring funds, the amount converted has to be reported as taxable income on the tax return. So the income reported on the FAFSA will be higher than without the Roth conversion, even though the family doesn’t actually have additional income or assets available.” Source: FAFSA Application and Verification Guide 2010–11 AVG99
It’s answers to these kind of situations that need to be addressed BEORE you file the FAFSA. And I cover them ALL. Don’t ask your CPA or financial advisor; they haven’t studied the Federal Higher Education Authorization Act or the two methodologies that govern college financial aid. Understanding of these regulations is crucial to your success.
You see, I am a firm believer that paying for college is as much an art as it is a science. Sure you can borrow, what you need at consumer rates and/or spend down your life’s savings or use an inheritance that was left for you. That’s what your advisers will suggest…But it doesn’t have to be that way.
Even if you don’t qualify for need based aid, don’t walk off the cliff like the rest of the sheep. THERE IS A SMART WAY TO PAY FOR COLLEGE AND A NOT SO SMART WAY . If you choose the “not-so-smart way,” it could destroy your retirement plans even if they are well into the future.
It’s not a secret that as the cost skyrockets and budget slashing becomes the norm, it is becoming more and more difficult to pay for college. In my 20 years in the business, I can testify that almost each and every year the average cost for college goes up over 5.5%. That’s why I say that when a student graduates, the debt service either eats away at your income or it took a huge bite out of your savings – or both.
So, this is a WARNING: If you are not aware of the process along with the rules and regulations (especially the ones that are in your favor) you need help or you will pay!
Even when well meaning grandparents, for example, want to help out with college costs most times they are disqualifying their grandchild from receiving grants and scholarships. As money is transferred, gifted or even when it is held jointly in a child’s name, it will cause a rise in the EFC. You can eliminate these assets from the formulas and get your fair share of grants and scholarships if you take corrective action before you file the FAFSA.
Below is a short list of assets that cause your child to lose college scholarships and grants if held in either the student’s name, parents’ name or held jointly by the student or parent with another person (i.e.-the student’s parent and grandparent are on the same savings account together. Even though this might have been the grandparent’s savings, not for financial aid purposes) :
Cash
Money market funds
CD’s
Stocks, bonds, mutual funds or other securities or commodities
IRA’s
College savings plans
Real Estate
529 Plans
Trusts
Life Insurance Beneficiary
A gifting person might say, “Well, that’s what these assets are for- To pay for college-That’s why I gave the money to him/her- so she could pay her tuition”. That’s all well and good, however, that money can still be gifted to the student and NOT have it count against him/her for receiving those coveted grants and scholarships.
This is the free money you don’t have to pay back so that on graduation day the asset that the student received will still be in their accounts. That’s having your cake and eat it too! You just need to know the system AND know what you are doing.
The smart way to eliminate any savings from being used in the calculations- including gifts from friends and relatives or other assets you or your child might have- has entire chapter dedicated to it in my e-book, The Ultimate Guide To College Financial Aid.
Here, I explain step-by-step in layman’s terms what to do if you or your student has savings accounts, bonds, or other assets or perhaps has a grandparent or relative who is in a position and willing to help pay for college. You will learn that the people you trust most and who probably have good intentions, don’t really know the secrets of how to handle the situation.In fact, what happens most times is the asset ends up disqualifying the child for money he could have received for college.
What is at stake here is tens, and very possibly hundreds of thousands of dollars in some cases where there may be several children to send to college or where there is substantial savings accounts that you want to protect or well-to-do grandparents having good intentions. This shouldn’t be left to anything less than a knowledgeable, professional expert in the field of college financial aid and funding.
Let’s face it; anybody can fill out the FAFSA or other financial aid form and hope for the best. It’s knowing what to do beforehand that can save you tens of thousands of dollars. Imagine your college financial aid package increasing by $10,000 in grants and scholarships and you still get to keep your assets. Over a four year period, that’s $40,000 you would have spent- after taxes- not to mention you still have your savings in tact. That’s an $80,000 swing of events. What could be better?
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Yours, in College Funding and Graduating Success,
Terrence J. Garvey
College-Financial-Aid-Info.com
Complete College Services/Tuition Solutions Division
PS: I look forward to our private talk and your being another one of my success stories.
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