Last night I had a rehearsal with my improv group. We are working up to a public performance and as part of the process we are working on learning new games. One of the new games we learned last night was “He Said, She Said”.

It’s a game of direction. One actor says a line, and then their scene partner adds “…he said while [they make up an action or an emotion].” The person who originally spoke the line must then do whatever was said. Now it is the second actor’s turn to say a line, and after the line is delivered the first actor gets to add “…she said while [they make up something else]” and the second actor must do whatever is said. Sound confusing? Check out this video and you can learn a little more about the game.

and I mean the improv game only…

What’s fun about this game is that you get to take turns being an actor, and a director. At some points you are creating the dialogue (and moving the scene forward) and at other points you get to be the one deciding the blocking or emotional state of the other actor. It’s fun, but confusing. Switching back and forth between Direction and inDirection (see what I did there?) can tire your brain.

Of course if you’ve seen the blog before you should know that this kind of introduction leads to a somewhat connected topic about financial aid. Today is no different. In the world of college expenses, we often talk about Direct vs. Indirect costs, and today I want to spend some time explaining what this means.

Direct costs refer to those charges which will show up on your bill (or your student account statement). These charges will include tuition and fees and may (depending upon your situation) include room, board, books or other expenses that you are being charged by the institution directly. If you live on campus, you will see direct charges on your billing statement for housing and (likely) dining. You may not see charges from the bookstore on your bill if you paid for them yourself or got them from some other source.

Indirect charges are those costs that are part of your COA (or Cost of Attendance) but are not ones that are charged to you from the college or university itself. For example, you will have costs related to your transportation to campus (even if you live on campus, you’ll need to get there at the start of the year, and come home for breaks or at the end of the year). Your transportation cost (gas, wear and tear, airplane tickets, bus fare) isn’t a direct cost you pay the school, but it is a cost you will have to pay during the year, so it counts as part of your COA. If you live off campus, room and board costs (probably for you more like rent and groceries) are also an indirect cost. You aren’t paying the college for these expenses, but you do have to pay them somehow.

Many students get confused about how financial aid can be used to help you pay your indirect costs. If you receive enough financial aid so that your direct costs are covered by your financial aid, any extra financial aid you receive will be sent to you in the form of a refund which can then be used by you to cover any of your indirect costs. The issue here is timing.

Usually refunds aren’t available until a month or longer into a semester. This means you will need to be prepared to pay for your indirect expenses out of pocket until your refund is available. If you aren’t clear on the timing, check with the financial aid office at your school. We know you need the refund as quickly as possible, but there are processes on our side that do sometimes cause delays; working with your financial aid officer proactively can help eliminate those delays.

Also keep in mind that when you receive your refund, you need to carefully manage what can be a large amount of money. Don’t treat it like a lottery win and spend it all immediately. Keep in mind, this is your money for (usually) the semester. Make a budget (more on this later) and stick with your budget. This way you won’t run out of funds before the semester ends.

So, what kind of improv games have you played? What kinds of direction do you appreciate?

I could use some direction from you!!! Have these entries been helpful? What questions are on your mind. Leave a comment below!

It’s not really the ABCs, but…

Have you heard about the controversy sweeping the internet? Yes, that’s right. Someone rewrote the ABC song. You know, the one you sang as a child when you learned your alphabet? In order to make the letters more understandable, the new version changes the classic “lmnop” part to “lmn”. I know, mind blown!!! Check it out here and let me know what you think.

Is it really that bad?

I’m not sure that it is that bad, but it certainly isn’t the version I grew up with. But since we are talking alphabet, let me introduce you to some (perhaps) new letter combinations to you: COA – EFC = NEED.

What is that? And what does it have to do with financial aid? I’m so glad you asked.

COA stands for Cost of Attendance. The Cost of Attendance is an estimate of how much a year of education will cost for the average student at each college or university. Each school determines their own COA, and they may have several different versions of the COA depending on factors like living on- or off-campus, qualifying for in-state tuition, or going part-time vs. full-time.

The COA is not supposed to only represent the amount that you would pay the school directly if you were paying the whole cost of school. It is supposed to represent both direct costs (those you pay the school, like tuition and fees, on-campus housing and meal plans) and indirect costs (like transportation, books, off-campus housing and meals).

So, if you have your COA, the next important letters to know are the EFC (or Expected Family Contribution). In a previous section of the blog, I went through in great detail how we determine your EFC, but as a reminder here, keep in mind that the EFC represents an estimate of how much your family can absorb in college costs in a year. Again, no one expects you to be able to write a check for this amount, but rather this number represents your contributions from savings (if any) and current income based on the Federal formula.

The difference between these two figures, your COA minus your EFC, represents your NEED. This is the amount of need-based financial aid you can qualify for at the college. Each college will have a different COA, but you should have (approximately) the same EFC no matter which college you attend (*with a side note about private colleges who have money of their own to give away), so your NEED will be different college by college.

The way the financial aid system is supposed to work, though, your EFC should be the same school by school, so all that really changes in your COA and your NEED. This means that no matter which school you attend, your contribution (how much you and your family have to pay) should be the same.

Now there are many reasons this may not work in reality (maybe you applied late, maybe the college has limited resources, maybe your EFC is higher than the college’s COA so it appears that you are paying less), but generally this is the way the system works.

It’s a classic. No need to make a new version (unlike our new alphabet song).

We will be talking more about budgets and budgeting this month. Let me know if you have any questions about any of the topics, or suggestions for questions which are bothering you.

It’s Not a Meme, It’s a Trend…

Are you the trendy type? Do you wear the latest fashion, have a presence on the latest social media app (I see you, Tik Tok), listen to the number one songs on the radio, see the latest movie? Trends are like that; they are the original memes where something hits and hits hard. And then in 1 year, 3 years, 5 years, 10 years, no one remembers them.

Rest in Piece Rubik’s Cubes, Pet Rocks, Tamagotchies, Fidget Spinners, Pokemon Go… you can fill in the blank.

It’s all so trendy…

Now don’t misunderstand me. Trends aren’t all bad. When everyone is focused on one product or idea, then that idea or product gains nearly universal acceptance. For a moment, everyone agrees that it is “in” (or “hot” or “cool” or “ill”). As you can see, even language can have trends!

So what does any of this have to do with financial aid? Bear with me, I’m getting there…

Every year, the College Board (yes, that College Board) releases several publications about college pricing and financial aid. You know about the College Board because of their work with the SAT, AP examinations, and – yes – the College Board’s CSS Financial Aid Profile, but I bet you’ve never seen their Trends publications. (See what I did there?)

There is a lot of great information in the three annual Trends in Higher Education series, but today I am going to focus on the information specifically from Trends in Student Aid.

I want to look with you at one particular table because I think it is really important to understanding how financial aid works, and how I manage this blog. This table visible below is Total Student Aid and Nonfederal Loans for Undergraduate and Graduate Students in 2017-18 and is expressed in millions on dollars adjusted for inflation.

If you look at the 2017-18 line in the chart, you will see some interesting things. First, who offers more grant or scholarship financial aid every year, the Federal government, State governments, Private sources (like scholarship agencies), or colleges and universities? Well, looking at this chart we can answer this. Colleges and Universities offer far more in grant and scholarship aid (in 2017-18, over $60 billion) than any other source (the Federal government offered $41.6B in 2017-18 and all states in the US combined only offered $11B combined).

Another important lesson from this chart has to do with student and parent loans. While it is certainly true that students and parents borrow a lot to support their own investment in higher education, it is not the primary source of funding for college. Even including graduate borrowing (represented by the Graduate PLUS in the table above), the total borrowing of students and parents in 2017-18 was $105.5B ($93.9B from Federal Loans and $11.6B from nonfederal loans). This represents less than half of the total money available for financial aid. Now, I am not arguing that this number shouldn’t be reduced (I would love more grant assistance for students), but I often hear people complaining that financial aid is all loans, and this chart shows that isn’t true.

As you look at this chart, what questions do you have? What do you find surprising? What information fits with what you thought about the national financial aid picture? Post your thoughts below.

And what trend should be next on the list?

Try the grey stuff, it’s delicious…

Probably like many of you, I grew up watching Disney films. Perhaps, not like many of you, I remember that before the days of DVDs, streaming services and (dare I say it) VHS and Betamax tapes, the only way to see an older Disney movie was when the film was brought back into the theaters. Every couple of years, Disney would re-release a classic film so that a new generation could see it for themselves. There is nothing like seeing the original film on a large screen.

Well, luckily, Disney is doing it again with some of their princess movies in the run up to the Frozen 2 release. Right now, Beauty and the Beast is in theaters, and the film gives us today’s blog post title.

Don’t believe me? Ask the dishes!

The “grey stuff” has its place in the world of Financial Aid as well. Often there are situations in a family that just don’t fit within the “rules” established by the Federal government, and a financial aid administrator has to rely upon her Professional Judgment to make a decision about that particular case. In these cases, there is no easy decision, and each aid officer may make a different decision.

No place is this more true than in the case of Dependency Overrides. If you read my last blog entry, we discussed the differences between the standards for dependent and independent students. But sometimes situations fall into the grey.

Imagine a situation where a student lives with his grandparents, but has not legally been adopted by them and they do not have legal guardianship of him. Further imagine that the student is not in contact with his father, and his mother – who lives out of state in a residential substance abuse treatment program – has had a history of mental and/or physical abuse. In this situation while the “rules” would tell us that the student needs mother’s information, it is likely that a financial aid administrator would allow this student to be considered independent.

So how does something like this work if you are a student with an unusual circumstance? It all begins with filing your FAFSA. Even if you are unable to have your parent(s) complete their section of the form, you need to do your sections and when asked if your parents are able / willing to provide information, answer “no”. Your FAFSA will be processed (although it will be considered incomplete until you take the next steps).

You then need to send a letter requesting a dependency override to the college(s) you are considering attending. If you are applying to multiple colleges for admission, send the paperwork to each of them; only one of them will need to complete the override to allow your form to be processed, but the school you ultimately decide to attend will need to make this determination themselves.

What information should you send?

  1. If the college has a Dependency Override form, submit that. Note that many colleges do not have such a form, or do not have it featured on their web page. If you do see such a form (like this example from the University of Central Florida) then complete it and follow the instructions. If you don’t see a form on the college’s web page, then contact the financial aid office and ask if they have such a form. If not they will provide instructions on how to submit this.
  2. Write a letter of special circumstances. In almost every case, the financial aid office will want a letter from you providing information about your situation. This is not the time to withhold information, or be coy. You should provide as much information as possible in your own words as to why you are unable to rely upon parental support.
  3. Provide a letter documenting your circumstances from a third-party. Your case for appeal will be stronger if you can provide a letter from someone in a professional relationship with you. Examples include (but aren’t limited to): a member of the clergy, a therapist, a guidance officer, a lawyer, a faculty member. The letter should be on letterhead, signed and provide contact information for the submitter. It also needs to document the case you are presenting (for example, stating that this individual knows that there has been a history of abuse or neglect). Note that a letter from your relative, friend, roommate, or someone else in a personal relationship with you is usually not acceptable.
  4. Provide whatever additional back-up documentation you can, and the school requests. If the school asks for it, provide any other information you can supporting your request. This may include a copy of a lease, a letter from the person providing you housing, a copy of bill showing a different address from your parents, or any other documentation the school requires.

Note that Dependency Overrides are annual, so you will need to again establish your need for one in each year you are a student (or until you become independent for some other reason).

While this may sound complicated, every financial aid office provides a number of these overrides every year. Don’t let your relationship with your parents (or your lack of one) be a stumbling block to your qualifying for financial aid.

There is one condition, though, where a lack of parental “support” usually doesn’t qualify a student for a waiver, and that is a parent who is simply unwilling to complete the FAFSA. As I said in my earlier post, completing the FAFSA does not “obligate” a parent to pay for college; the FAFSA is simply a way to determine eligibility for financial aid. The Federal Government will not allow an override simply on the basis of unwillingness.

In the case where there is no mitigating situation, and a parent simply won’t cooperate, students do have one final option. If you are in this situation, you can submit your FAFSA without parental information but the only source of aid you will qualify for will be the Unsubsidized Direct Loan. This isn’t a terrible last option (it’s better than paying for college by credit card) but there are matters to consider when borrowing student loans (and we will get into that in a later blog entry).

So, now that you have tried some of the “grey stuff”, tell me — what questions do you have? What Disney movie is your favorite? And what memories do you have of seeing one in the theaters?

It all (in)depends…

There is a running joke in financial aid. When asked a complicated question, a well trained financial aid officer will answer “it depends”. That’s it; that’s the joke. Not that funny, huh? More of a truth. Often in financial aid, the complexity of each situation means that there is no easy answer and that each answer is context dependent.

It always depends…

The issue of dependency itself is one with complications. What I mean by this is defining who is (and is not) a dependent student. Dependent students have to have their parent(s) fill out their financial aid applications, and therefore have their financial aid eligibility impacted by their parent(s) income and assets.

For Federal Student Aid, there are a few “rules” that determine if the FAFSA requires parental information. Here is a graphic that shows these rules (but keep in mind, it depends; more about this later):

So, if you read the graphic above, you will see that the following groups of students are automatically independent (as long as you qualify for one of those, you are independent):

  1. Students 24 years of age or older.
  2. Students enrolled in graduate (post-undergraduate) programs.
  3. Students who are married or separated (but not divorced).
  4. Students who have children for whom they provide more than 1/2 of their support.
  5. Students who have dependents other than children who live with them and for whom they provide more than 1/2 of their support.
  6. Students who are orphans, in foster care, wards of the court, who have a legal guardian (other than their parent), OR who are unaccompanied youth or homeless (or at risk of homelessness).
  7. Students who are on active duty for the military.
  8. Students who are veterans of the US armed forces.

Note that nowhere above does it say anything about being self-sufficient. So, let’s say you are a 22 year old who never went to college and who has been living independently from your parents since you graduated high school — you would not qualify for independence; we would still need your parents’ information for the FAFSA.

Also you’ll notice that nowhere about does it say what to do if your parent(s) refuse to fill out the FAFSA. The assumption is that your parents will be willing to do so. Here is where a number of parents / students misunderstand a basic principle:

Filling out the FAFSA does NOT obligate a person to pay for college.

The wise author of this blog…

The FAFSA is not like a mortgage application where you have committed to repaying (or paying) for college; it is more like an application for benefits. With a FAFSA you are seeing what funds you might be able to qualify for, there is no “obligation” to then accept these funds, or in fact pay. That comes later.

So, let’s say your parents simply won’t fill out the FAFSA. Or you aren’t in a relationship with your parents, but you are under 24 and don’t otherwise qualify to be independent. What do you do then?

Check out my next entry on the blog to see what options you have!

It’s not apparent who is a parent…

So, in good faith, you’ve started the financial aid application process, you’ve gathered paperwork, gotten your pencils sharpened (or more probably, your fingers ready for some furious typing) and you come upon the first challenge to your logic. Who is your parent? Now of course, by “you” I am referring to you, the student. You may think it is fairly easy and straightforward to define who your parents are. Boy, would you be wrong.

In all cases, the main financial aid applications (namely the FAFSA and CSS Financial Aid Profile) should be completed by the custodial family. If your birth parents are married to each other, this is pretty easy: Parent 1 is mom and Parent 2 is dad. If your parents are of the same gender and married, same thing; Parents 1 and 2 are easy to define.

If your birth parents are divorced, separated, or were never married, then you only fill out information about the parent(s) with whom you live (and, here is a tricky part, his or her new spouse, your “stepparent”). When it asks for mom’s information, you will leave it blank if you live only with your dad, and conversely if it asks for dad’s information, you should leave it blank if you only live with your mom. If your parent is remarried, you should put the stepparent’s information under the appropriate heading).

Confused yet? No? Well, “lay on, MacDuff”…

Shakespeare’s custodial family

Well, what if your parents are divorced and you lived with both of them equally during the last twelve months (in other words, the custody arrangement is something like, stay at mom’s from Sunday – Tuesday and every other Saturday, and with dad the rest of the time)? Then you would complete the form based on the parent who provides most of your financial support during the last year.

Does this absolve your other parent from completing any information? NO, A SOLID AND RESOUNDING NO. Colleges may request (and many colleges who use the CSS Profile do request) a Non-custodial parent Profile for students who do not live with both of their birth parents. This form should be completed by the non-custodial parent online. Once you (the student) registers for the CSS Profile and indicate that your birth parents are not married, you will be sent an email with instructions, a temporary password, and a link which you should forward to your non-custodial parent for him or her to complete.

To be clear, most schools who use the FAFSA alone won’t care about the information from your non-custodial parent, but some of the private colleges will. If you are curious whether your college wants your non-custodial parent’s information or not you can take a look at their financial aid website or take a look at the list of colleges who use the CSS Profile (if they want information from your non-custodial parent, there will be a “Yes” under the column entitled “CSS Profile – Noncustodial Parents”).

Does it end yet? Well, sort of…

What about situations where you really don’t live with either parent, or if you are otherwise independent? Well looks like that is a topic for our next blog post!

All the math you need to know

Yeah, I admit it. I like math. I am one of those people who actually enjoyed math classes; something about the logical rules of math appealed to me. But I recognize math isn’t for everyone.

If you are one of the 42% of Americans who doesn’t love math, though, no worries. Because I am about to introduce you to the only math you really need to know when it comes to financial aid.

So the basic formula for financial aid is this: COA – EFC = Need. That’s it. That’s all you need to know. Just some simple subtraction. Oh, and an explanation of the variables. So let’s dive in!

The COA. COA stands for Cost of Attendance. This is an estimate of the costs to attend the college or university where you are planning on attending. It is a number which is calculated for you and based on your estimated expenses, including the obvious costs like tuition and fees as well as books and supplies. But it also includes the not-so-obvious ones like room and board, transportation, and personal / miscellaneous expenses. The COA is personalized based on your profile so it takes into account factors like whether you will live on campus in a dorm, at home, or independently in an apartment, or whether you are in in-state resident or out-of-state resident (for colleges that offer in-state tuition discounts).

The COA isn’t exactly what you are going to be charged because there are both direct and indirect costs included. For example, you might pay room and board directly to the school, or you might be buying groceries and paying rent to a landlord. In either case, your estimated costs are factored into your COA. Keep in mind that your college or university will determine an estimated COA, and the costs are supposed to be reflective of a reasonable (but not luxurious) estimate, so you might find that your costs and actually slightly more (or less) than their estimate. No worries. You can ask for an evaluation of your COA if you have unusual expenses (for example if you are paying for child care so you can go to school or if you need to buy a computer for your educational use) and the college may make an adjustment for you based on your documented expenses. We will talk more about these kinds of adjustments in another post later!

So what’s the EFC? Your Expected Family Contribution (or EFC) is a measure of how much you (and your family) can contribute towards your educational expenses. It is supposed to be an estimate of your ability to contribute but isn’t necessarily the amount you will need to write on a check. If you are a dependent student (and we will talk more about that soon too) this is based on you and your parents’ income and assets. If you are an independent student, then the EFC is only based on your income and assets. We will talk more about the calculation of the EFC (yes, more math) but for now know that the information you put on the FAFSA and the CSS Profile will help colleges and universities determine the amount of your EFC.

The difference between the COA and the EFC is your Financial Need. This is the amount of need-based financial aid for which you can qualify. This means that the college or university will try to put together a financial aid package to meet this need. It also means that colleges who say that they meet full-need will provide this amount in total aid, and that colleges who do not provide merit-based aid (and only give need-based aid) will not exceed this number with their total financial aid.

So now you know some basic financial aid math. Where should we go next? How about we explore why it’s not apparent who is a parent?