April 2023 Newsletter

Each month, we provide you with tips on your best ways to pay for college regardless of your financial situation.

This Month's Highlights:

• Financial Aid Awards Lacking?
• Avoiding Student Debt: Not Easy, But Doable
• Juniors: More States Require The FAFSA to Graduate High School
• Financial Aid Insider: The FAFSA Is A-Changin'

Dear Parent(s),

I don't think Mother Nature herself would play this kind of an April Fool's Prank like the Winter and Spring that we've had. Depending on where you live, Winter is either stubbornly refusing to yield to Spring, or the warmer temps are bringing too much rain and tornados to much of the country. The adage?March comes in like a lion and out like a lamb, no longer applies. The King of the Beasts is still very much in charge.

If The Financial Aid Awards Are Lacking

April is also the month that parents of high school seniors are looking at their financial aid letters. It's a stormy time for many families. Parents are trying to figure out how to bridge the gap between the school's sticker price, and the amount of aid their student receives. The award letters are inconsistent, and hard to decipher.

Over the past decade, there have been seismic shifts in the number of students applying to college. Demographically, there are fewer of them. Economically, fewer can afford going into the debt it would take to enroll. And there is also the fact that many students are choosing work over college than ever before.

This means that many colleges are very nervous that they may not get enough "heads in the beds" come May 1st. It also means that at many private colleges parents and students have the "power" of the consumer. Power to NEGOTIATE.

It's important not to be intimidated by what the college is telling you to pay.?The closer May 1st gets, the more fluid the college's position may become, making it likely your student can be awarded additional funding. It's almost there for the asking.?In fact, your student may already have received a note from a college with more scholarships or grants. If they didn't, then have your student contact the college and ask them for help.

The phrase, "if you don't ask you don't get" is real. But some colleges-- especially private colleges-- are waiting for your student to reach out and ask for help, which is code for more free money. As I just wrote, some will reach out to you first, but don't wait for them.

The Loss-Leader

Maybe this will give you more confidence: everyone knows what a loss-leader is.?Long ago colleges figured out that to get a student to attend, they may have to lose a little revenue to get it back, and then some in the student's sophomore, junior and senior years.

Don't feel badly or intimidated by asking for more funding. In reality, what you are asking for is a "tuition discount".?These tuition discounts are already part of the formula they use to attract students like yours. They are already baked into the cake, so to speak.

One last thing: you won't get another bite at the apple.?The first award package will be the best your student will ever get.?So, get as much as you can now or forever hold your peace.

If you have a high school junior, NOW is the time to start putting a list of colleges together that your student will be applying to next year. The schools that are on this list will determine outcome for your student and your finances! Putting the right schools in the mix is KEY to getting the best possible deal for your student. Your list must include schools that will offer your student generous discounts to attend. These schools' offers can be used as bargaining chips to induce favored schools to sweeten the pot. I can help you put the right list of schools together. This one college planning technique may save you tens of thousands of dollars on your college costs!

Contact me to schedule a college planning meeting and get started!

Avoiding Student Debt: Not Easy, But Doable

Student debt is like the weather-- everyone talks about it, but nobody does anything about it.?If you really want your student to graduate debt-free, here are some gutsy suggestions:

1. College coursework in high school: If your student is off to college in the Fall, then this ship has sailed. But for high school students, this is great way to earn college credits.
2. "Test out" of classes (general courses): Some colleges let students test out of general education courses, if they prove they know the material well.
3. The CLEP or College Level Examination Program: Some colleges are more willing to let students test out of all sorts of courses if they prove they know the material well. And the selection of courses are many and varied.
4. Take an extra class per semester: Years ago, students studied 2-3 hours per credit per week. According to one survey conducted by the National Survey of Student Engagement, most college students spend an average of 10-13 hours/week studying, or less than 2 hours/day-- less than half of what is expected. Only about 11% of students spend more than 25 hours/week on schoolwork. If they took one extra class per semester, they would spend 15 hours per week studying. That can take 2/3 of a year off the bill!
5. Take an online class during Intersessions: Online classes during breaks can be very inexpensive compared to the college your student attends. For example, a single course at UMass Boston Online costs between $200-1,700.
6. Summer classes: Summer school, while no picnic, is a great way to save money and avoid debt. And, studying while catching some rays doesn't sound so terrible.

None of these loan eliminating ideas are a horrible burden. Not compared to the burden of $350/month for 10 or 20 years. And there is still time for students to hang out with fellow students and discuss Kant, Camus, and Sartre-- we can always dream can't we?

High School Juniors: More States Require The FAFSA to Graduate High School

Eight states, including Alabama, California, Colorado, Illinois, Louisiana, New Hampshire, Texas, and now Indiana, make it mandatory for high school seniors to complete the Free Application for Federal Student Aid (FAFSA).

There are many good reasons to file the FAFSA,?even if you think you won't qualify for financial aid. If you want to receive federal student and parent loans, you have to file the FAFSA. Colleges use the FAFSA to determine which students qualify for both need-based aid AND merit scholarships.?Do not leave free money on the table!

Some schools consider filing the FAFSA as a strong sign of intent from the student.?In some cases, it increases the likelihood of college acceptance. You are showing the school that you are behind your student's decision to attend college.

Filing for student aid does not hurt your student's chance of acceptance. Future doctors, lawyers, engineers, etc. may become contributing alumni. Colleges are businesses. They think about these things.

Whether you make $25K a year or $250K a year, the only way to find out if you are eligible for financial aid is to apply.

Finally, if a tragic event occurred that caused a change in circumstance, having a FAFSA on file allows a school to respond quickly to that change.

The 2024-2025 FAFSA is going to change.

No longer will the Expected Family Contribution (EFC) determine the minimum amount of money parents will pay at any college. The EFC is being replaced by the Student Aid Index (SAI). Not only will the number of questions decrease, which is good,?the reduction of a parents' contribution for more than one student in college at the same time will go away, which is obviously bad.

Right now, small businesses are exempt from today's EFC. However, the SAI is going to include the value of all businesses.?Obviously, this is a very negative change for most parents of small businesses, especially if they run their business from a building that they own, like a convenience store.?The good news is that there is a way to avoid having your business be assessed.

If you own and live on a family farm, you are also going to be penalized. For some reason, home equity isn't assessed, but a family farm is. At the moment there is no way around this, but this is definitely grounds for appealing to exclude the family farm. It's a reasonable request.

Why all these changes? While expanding access to those who can least afford college,?these changes have always hurt the middle to upper middle class college family.

The good news is that you do have some time to figure this out. As of this writing, the 2024-2025 FAFSA will be delayed by at least two months. Now is the time to reach out for a discussion as to what can be done to avoid the financial negatives that are coming.

Contact me ASAP to learn more about these upcoming changes to college affordability and the proactive steps you can take to mitigate the impact on your finances!

Until next month...

Michael Korch

P.S.?If you find this newsletter helpful, please share it with other parents like yourself!

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