Funding college: Making it happen

Coleen Armstrong
Cincinnati Magazine

The parents were jubilant. Their daughter had just been awarded a full scholarship covering tuition, room and board at a renowned state university in Kentucky. But the girl was distraught. This was her second choice; her first had been a nearby school, which was offering only $3,800 per year in aid, leaving $15,000 for the family to absorb.

“Think about it,” college funding specialist Dan Bisig urged her. “This is a very big decision. You can either graduate debt-free and then immediately move on with your life, or you can place yourself in financial bondage to the tune of $60,000.”

The girl began to weep. Finally she admitted the real reason she’d pinned her hopes on that school—her boyfriend was going there.

Don’t laugh, Bisig warns; it happens a lot. Students often need to make long-term, adult choices at an age when they can only think short-term. And where selecting colleges and evaluating finances are concerned, the navigation process can be muddied by a maze of external variables.

Fortunately, most colleges and universities are doing a great deal during this economic crisis to help students (and their parents) figure things out. Visit any of their Web sites, and you’ll find entry-level guidance that’s simple and straightforward.

According to admissions counselors, several trends have emerged: First, student enrollments are increasing. Within a stagnant job market, everyone apparently recognizes the immense value of higher education. Plus, state schools are looking better to students who might have been headed to private universities during stronger economic times. At University of Cincinnati, for example, campus visits by parents with high schoolers in tow have increased over the past 10 months by 25 percent.

Second, students are taking longer to make final decisions regarding their college acceptances. Careful to survey all financial aid possibilities and to compare offerings before committing, they know they’re the ones in the drivers’ seats.

And third, college funding is definitely not drying up, as was predicted a year or two ago. “We’ve not had a single student who hasn’t realized a workable financial picture,” says Tom Canepa, UC’s associate vice-president for admissions. “We haven’t had anyone turned down for loans. For institutions dealing with budget cuts, [higher] enrollments offset some of that; we’re currently trying to ‘grow’ our way out of budgetary shortfalls.”

“We’ve not had any problems getting our students the funding they need,” agrees Chad Peters, assistant vice-president for enrollment management at Indiana Wesleyan University. The money is out there, he adds. Families just need to hunt for the very best options. Here’s how:

 

Step 1:

Talk to at least one guidance or aid counselor, and do it early. “My biggest frustration is parents of high school seniors who want to meet with me in January,” says Bisig, who works with College And Beyond LLC, affiliated with The Financial Design Group in Covington. “That’s too late! At that point, there’s not a lot that can still be done.”

 

“I received an email in April from a mom, indicating that her daughter might have some interest in attending UC in the fall,” Canepa says. “I tried to be diplomatic—but that ship has sailed.”

 

Most colleges and universities recommend starting the admissions and aid-search process a year in advance. Ask in particular about scholarship and grant application deadlines, and don’t be surprised if they’re as early as September of a child’s senior year. Mid-junior year is usually a good time to start attending campus open houses and financial aid seminars.

 

But some proactive parents begin meeting with guidance counselors as early as their child’s seventh or eighth grade year, and Matt McCormick, portfolio manager with Bahl & Gaynor Investment Counsel Inc., applauds them. “Start contacting schools that you may be targeting,” he advises. “Talk to friends, relatives, alumni. Form relationships with admissions counselors. The more interaction, the better. Parents should research colleges where they feel they can get the most bang for their buck as [thoroughly as] if they were exploring medical treatments.”

 

Step 2:

Fill out the Free Application for Federal Student Aid (FAFSA). Go to www.fafsa.ed.gov. Even if you don’t believe you’ll qualify for help, Peters says, do this anyway; you may be surprised. Both students and parents will need to provide financial information regarding income and assets to determine an Expected Family Contribution (EFC). Nearly all colleges and universities use the form to determine eligibility for federal, state and college-sponsored aid, which includes grants, work-study programs and student loans. Some institutions require additional forms—but the FAFSA is where it all begins.

 

A warning: Although more than 70 percent of college applicants will need some form of aid, many find the FAFSA too intimidating to complete. “There has been some concern about its complexity,” acknowledges Tom Canepa. All the more reason to enlist help early from a high school guidance counselor, a college admissions officer, a financial aid office staff member or a private funding specialist.

 

Step 3:

Understand the evaluation process. Except in rare cases of full scholarships, every family is expected to pay some portion of the expense. How much? That depends. Brace yourself, therefore, for a magnifying-glass scrutiny of parents’ incomes and assets, along with the student’s income and assets.

 

What’s not counted as assets when qualifying for federal student aid: primary residences, automobiles and pensions. What is: Wages and salaries, checking and savings accounts, mutual funds, property investments and rental income. If you’re selected for “verification,” and about 30 percent of applicants are, you’ll need to submit your prior year’s income tax return. And some specific colleges tend to delve deeper when deciding how to distribute their own aid, so they will ask about things like car ownership.

 

Here’s where it gets murky: Since the student’s bank balance is a consideration, any money accumulated through work and/or saving can result in a reduction in aid. Those annual birthday checks from grandparents might be better kept until college graduation to pay off loans, says Jason Andrews, field vice-president at Ameriprise Financial Services in Blue Ash. If the money is earmarked for a computer or a trip to Europe, you might want to spend it sooner, rather than later. And because the Uniform Gift To Minors Act (UGMA) and the Uniform Transfer To Minors Act (UTMA) designate the child as an account’s owner (but with an adult custodian), those accounts would be considered FAFSA assets, which would reduce a federal aid allotment.

 

Remember that the student plays a vital role in the process. He or she needs to keep grades up, participate in extra-curriculars and compete for awards and other resume-enhancing recognition in order to be considered for grants. For parents dealing with unmotivated teens, this can be a hard sell. “That’s often why families hire me,” Bisig says. “I get to be the bad cop and stress the importance of the entire family’s being involved.”

Step 4:

Don’t make assumptions. Private schools can wind up costing less in out-of-pocket terms than public ones. Endowments alone can result in remarkable generosity. “We draw about a half million dollars annually from our endowments for scholarships,” says Mark Denniston, vice-president for enrollment management at Wilmington College. “The best part of financial aid is that we get to give money to students to make a college education affordable. That’s a lot of fun!” Campus grants, Denniston adds, equal money offered through tuition discounts, which enable colleges to reach out to students whom they really want to attract—typically, the academically gifted, along with those with substantial financial need.

 

He tells the story of a nontraditional student, a middle-aged woman who was struggling financially. She was awarded an alumni-donated $400 scholarship from a person who had graduated from the same high school. Upon hearing the news, she literally wept with joy. “Now,” she said, “I can take some of the money I’ve saved and buy myself a new pair of glasses.”

 

Step 5:

Focus only on controllable factors. You may have little authority over rising tuition costs, Matt McCormick says. But you still get to decide how much you’ll save, how much you’ll spend, how much time and energy you’ll put into finding a school that meets your needs—and your budget. “Preparation and research are always the keys,” he says. “And persistence wins this game, as opposed to just looking for a lucky shot.”

 

Step 6:

Keep inquiring about alternatives. “Go after as many scholarship and grant dollars as you can,” Denniston advises. “Private institutions have their own offerings.” Google specific schools’ Web sites for scholarship possibilities—and also scholarships in general. “We recommend www.fastweb.com,” Canepa says.

Also, ask financial aid offices about private lenders whom they recognize as willing to work with students on long terms and low interest rates. Ask about work-study programs, where students are employed on campus in return for tuition credits. Keep checking back with admissions counselors about reapplying for aid. “Many schools,” says Chad Peters, “consider returning students as worthwhile investments. That’s why counselors are always willing to sit with them on an individual basis and keep trying to open more doors.”

A great example is that incoming freshman who wanted to attend school where her boyfriend was. Bisig walked the family through a compromise. He advised the girl to accept that full scholarship. Then he told her parents to give their daughter a cell phone with unlimited minutes and unlimited texting privileges, along with periodic gasoline gift cards for weekend visits. A little pricey? Sure—but nowhere near $15,000 per year.

The tears dried up. The girl nodded and smiled. The solution, though perhaps a little unconventional, worked ideally for this family.

“You start the process where everyone is confused and asking lots of questions,” Bisig notes. “But in the end, you get to see the student flap her wings and leave the nest—and not just survive, but thrive. That’s when all of us can celebrate together.”

Who Knew?

• There’s a hierarchy to aid: Applying for student loans should take place only after all other options, including scholarships, grants and work-study programs, have been thoroughly explored. One reason: Loans result in debt, which results in years of payments—whereas scholarships, grants and work-study programs do not. Another reason: Student loans are never dischargeable; they must be repaid, even in cases of bankruptcy.

• A student can save significant money by commuting from home and/or attending a branch campus for the first two or three years, then transferring to the main campus for his or her senior year. It’s ideal for getting those required general classes out of the way at a lower price. The diploma eventually earned will still designate graduation from that university. Because schools aren’t reporting any increase in commuting, this could be the most commonly overlooked way for students to economize.