13 Deadliest Mistakes Parents Make That Limits College Funding & Increase Student Loan Debt

With the cost of college constantly on the rise, the need for knowledge and strategic actions are that much more critical for college-bound families. The biggest reason is because the long-term effect on families is greatly impacting mental, physical and familial capacity; along with their financial well being. This $1.5 Trillion beast (student loan debt crisis) is limiting families discretionary income, the ability to meet life’s basic needs, causing mental decline, anxiety and anguish, which leads to stress, which ultimately leads to a decline in ones health, the family, marriages and community.

We can mitigate the risk of these ailments increase by learning the common mistakes families make that costs tens of thousands of dollars in lost funding and and increase of tens of thousands of dollars in student loans. Because our mission is to crush college debt, we are sharing families how to avoid these common mistakes and maximize the college admissions process to yield higher funding.

So, let’s take a look these 13 Mistakes.

Mistake #1: Assume money will come just because your child is an “Honor Roll” student 

Truth: As we will disclose in another common mistake, all schools are not created equal in how they award money. Some schools fund based on "need", not "merit". If you target "need" based schools and don't meet the income threshold, the money your child could have earned from a school that funds high on the "merit" scale, would never come into existence and you would be prone to high excessive student loan debt unnecessarily. 

Mistake #2: Don't apply for scholarships. When you do, it's without a strategy

Truth: Scholarships are one of many pieces of the funding puzzle. They are available from institutions, states and private entities. When there is no comprehensive strategy, money is left on the table. Not only do you need a strategy to target all entities of funding, but to ensure your application package stands out in this extremely competitive landscape. You must do your research and comprise a strategy. Then you must start applying for scholarships early. Scholarships are available as early as 4th grade.

Mistake #3: Assume only minorities, athletes, and Valedictorian/Salutatorians students get financial aid and merit scholarships.

Truth: Nothing could be further from the truth! "Need based" financial aid is solely awarded on "financial need", which is set by the government via the FAFSA process. The premise of defining "Need" is determined by the following formula: Cost of Attendance for the school of choice Minus Expected Family Contribution (EFC) (The amount the government feels you can afford to pay based on your income, number of people in your family, assets and your child's income and assets) Equals "Financial Need". Your "Financial Need" value tells colleges/universities, how much aid you need to attend their institution. As you can see, this has nothing to do with a student's ethnic background, athletic ability, or grades. It's a simple, but yet, powerful formula families must understand.

Mistake #4: Pick colleges and universities based on emotions, not data

Truth: School fit encompasses many factors: size, graduation stats, employment stats, location, etc. It's all about setting them up in an environment they are most likely to succeed. Along with this, you want to see where your child stands academically in comparison to the incoming freshmen class. Ideally, you want them to rank at or above the average incoming GPA, SAT/ACT scores to increase their chance of admittance and funding. This is more critical for "Merit Based" schools, as they are more likely to fund based on strong academics (around the top 10%). This is a competitive market. So, institutions are looking to attract the best students to their school. Make this part of your strategy and apply to schools that your child would fit in the top 10% ranking.

Mistake #5: Assume all institutions are the same and pursue them as such

Truth: Colleges and universities are not the same nor do they approach admissions and financial aid the same. Some schools are more competitive to get in, have larger endowments funded by alumni and corporations, while others are more specialized in their focus. Schools with larger endowments have more money to award to qualified students, than schools with less financial strength. Then you have other institutions like state universities, who don't typically get private funds and rely solely on state and federal funds to help fill a student's need at their school. In many cases, these schools leave students short and give them less money than they are eligible to receive. The comparison of private and public schools are just the same. Although, private schools are more expensive, they sometimes award more money. Bottom line is this, it can actually cost you more to send your child to a "cheaper" school if they don't have the money to meet your need. So, it's critical for you to research the school's funding history see how they award financial aid prior to applying to the school.

Mistake #6: Not understanding the difference between "included assets" and " legally sheltered assets" to be completed on the FAFSA or CSS Profile.

Truth: Certain assets are counted much more heavily in the financial aid formula than others. For example, savings accounts, CD's, stocks and bonds are all included and asked about on the Federal Financial Aid form. However, it does NOT ask about the value of many alternative financial savings vehicles like life insurance, retirement accounts. But note, some assets not considered on the FAFSA, must be reported on the CSS Profile (like home equity, small business earnings, etc).

Mistake #7: Assume Technical & Community Colleges are not viable options.

Truth: Getting a trade, completing a certificate program or an Associate Degree is just as great as graduating from a four-year institution. There are countless careers that yield a livable wage, and/or a wage higher than some bachelors degrees, students can pursue via a Technical/Trade College at a much smaller price tag. Parents should encourage their kids to explore all options and possible paths they can pursue and select the one that aligns with their career interest and goals. It's also a great way to decrease the overall college tuition bill if a four-year degree is the ultimate goal.

Mistake #8: My CPA or Tax Preparer is familiar and qualified to complete our financial aid forms

Truth: First off, the FAFSA process is facilitated through a government website. That means, any mistakes or erroneous information provided can result in legal ramifications. Furthermore, the viewpoint of a CPA and Tax Preparer is from the perspective of legally minimizing your tax liability, not maximizing your financial aid potential. For example, a CPA or Tax Preparer may suggest putting some or all of your assert in your child's name to decrease your tax liability. This advice can serve you well from a tax perspective, but it will negate your chance of getting financial aid. Student's assets are weighed more heavily on the FAFSA (about 20%) and must be reported. Understanding the legal rules and regulations set forth by the Department of Education is very different from the tax laws set forth by the government. Mistakes in this area can cost your 10's of thousands of dollars in financial aid.

Mistake #9: Assume they have time to plan for college (Wait until Junior and Senior year)

Truth: Time is money and the amount of money you can earn is all about timing. The longer you wait to explore your options and plan your strategy, the more opportunities you could miss out on. First off, financial aid is based on your "prior-prior" year's report of income and assets from your taxes. This change make it imperative to start planning at least by the start of your child's 10th grade year. This will allow you time to legally position your income and assets in a way to maximize your eligibility for financial aid and decrease your EFC. But, you must start early! Then you must recognize, schools are evaluating your child's performance from 9th-11th grade years. If those years don't reflect strong college readiness in their coursework, they may not be considered a qualified candidate. This also means all ACT/SAT tests should be completed by the end of your child's Junior year.

Mistake #10: Not asking for help or "investing" in resources because it's "Cheaper"

Truth: Knowledge is power and again, time is money. There are many moving pieces in the college admissions process. Not knowing what to do, how to do it or when to do it, can cost you tens of thousands of dollars. So, families must see the college admissions process as an investment that can pay off with college being covered 100% if worked correctly. We hire lawyers for legal issues and seek out doctors for medical issues, this is no different. Most students need help with understanding standardized tests. Because higher scores translates into more money, the investment is worth it. College Coaches are adept at the college admissions and funding process, which saves you time, frustration, and money in the long run. So, stop looking at these "investments" as "costs". Being cheap and doing it on your own, is like the blind leading the blind. Don't be afraid to use an expert to help you navigate this process and walk away with a return on your investment.

Mistake #11: Don't apply for Financial Aid because they make assume they make “too much” money

Truth: Just because total household income is upwards of $75,000.00 per year, doesn’t mean you are not eligible for some form of financial aid. Financial aid is classified as either Need Based and Merit Based. Need Based may not be an option based on your income threshold, Merit is an open playing field. Merit Based funding is tied to strong academic performance, community service impact, a demonstration of leadership skills and extracurricular activity involvement. There’s billions of dollars available each year that’s not “need” based from various entities: colleges and universities, private foundations and organizations, etc. You must get positioned to go after them.

Mistake #12: Depend solely on the High School/Counselor to educate your child on college admissions and scholarships

Truth: The average ratio of students to counselors is 350 to 1. That means, your child's counselor don't have the luxury of time to walk every child assigned to them through the college admissions process and work with you to understand financial aid. That would be great, but it's unrealistic. They should be used as supplemental partners who accent the process. The effort of what need to be done must be led by you, the parent. You may want to consider hiring a college coach to help you map out a strategy and plan that maximize the use of the Counselor and navigate all the nuisances of the process. The bottom line is this: it's not the school's responsibility to get your child into the right college and get the right financial aid package. You must own this process!

Mistake #13: Equate “good grades” and "high" class rank with automatic acceptance and funding

Truth: There was a time where getting a 4.0 and ranking in the Top 10% of the class was something to be proud of and celebrate. As the state of our education system has changed, a 4.0 is not what it used to be. In many of our schools, students can pursue a regular high school path, while others can choose a path with a more rigorous course load. When it comes to gaging college readiness, colleges and universities are looking at the amount of rigor a student's transcript is comprised of that substantiates their GPA and Class Ranking. Strong rigor is demonstrated by a consistent presence of honor, AP, IB and dual enrollment courses.

Every decision has an outcome. Avoiding these 13 Deadly Mistakes can aid you in minimizing the need for student loan debt, getting your child into a college they can graduate from, and position your family to have more financial freedom post college. So, get informed and stay informed on the ins and outs of college admission to ensure your family is ready to take full advantage of all the opportunities present.

Tameka Williamson, LSSBB, PMP College Admissions Expert Best-selling and Award-winning Author www.crushcollegedebt.com www.tamekawilliamson.com

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