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Community College may be one of the most expensive options for your child:
A recent rise in enrollment at two year colleges is more a reflection of costs than quality. The decision to attend two year schools if planning on a four year education may not be in your child's best interest. We're seeing a rather large increase in two year post-secondary school enrollment locally as well as on a national level. Unfortunately the graduation rates are concerning at many of these two year schools. Locally our two year schools have seen a steady decline in both the two year and three year graduation rates. In the last decade the two year graduation rate at our local community college peaked in 2004 at 14.3% and declined to the lowest rate of 8.4% in 2011, the most recent published rate by the school. The three year rates follow a similar trend. The graduation rates are alarming especially when you compare them to local four year public and private universities.
The costs for many families is the driving factor in choosing a two year school. However financial aid can be significantly reduced for transfer students. One of the concerns we talk to our clients about is the reduction in financial aid for transfer students and why it is important to take this into account when your son or daughter first starts applying to colleges. In addition, transferring from a two year program can be difficult and can result in prolonging one's education. If you take into account the low graduation rates, a high probability of spending six years in school (three years at a two year school and another three years at a four year college), and a significantly diminished financial aid package for transfer students, it starts to become a decision that could be more costly for families. There are a number of factors that come into play in this decision and understanding your expected family contribution and the percentage of need met the schools offer are crucial.
We recently received a letter from one of our clients that had gone through our process and was thanking us for helping her understand the details of this exact scenario. I wanted to share with you some of the letter she wrote so you can see the difference in one family's situation.
I am not passing along this information to brag (ok, maybe a little to brag!) but to let you know how grateful we are to you for really helping us overcome our fear of reaching high when deciding where to let her apply. As I said, no parent wants to have a child accepted to a school only to have to tell them it is financially impossible. When we heard you presentation it made so much sense that we decided to follow your advice and ignore "sticker prices" and obviously this worked out great for us since we would be paying almost twice as much at a SUNY school, which everybody else was telling us was the best bargain around. As we discussed, I think it is a shame that so many people feel OCC is their best option. (As the financial aid rep at Colgate told me, the $41,000 per year in grant $ they were offering her would absolutely not be available to her if she came in as a transfer student after 2 years at OCC.)
The important thing to remember is that every student's educational needs and every family's financial situation is different but making a financial decision for your child's education based on the sticker price of a school is a mistake and should be avoided. Understanding the financial aid process is critical step in understanding the cost your family will pay for their education.
The 10 Biggest Financial Aid Mistakes:
These are the top financial aid mistakes we commonly see in our practice.
10. Waiting until the last minute Federal financial aid is on a first-come, first-served, basis so waiting or applying post deadline is not a beneficial practice and could affect your aid.
9. Applying to only out-of-state state schools
State schools typically don't maximize your need because of low financial resources. State aid helps offset these resources for higher need families for residents of their state. Out-of-state schools don't apply in-state aid for out-of-state residents and often have higher tuition rates making it an expensive option for most out-of- state students.
8. Applying to only a few schools
Before you receive a financial aid award you must apply and get accepted. If you only apply to a few schools, not only will you reduce your chances of getting accepted, you may also end up with an inadequate financial aid award that is not suitable to your financial need. This is often the reason why there is low aid or unmet need.
7. Mistakes on the forms
Completing the forms accurately: While this seems obvious, the questions on the forms are detailed and parents often rush to get them completed, often resulting in errors on the forms. Errors often go unnoticed and typically lead to lost financial aid.
6. Distributions from your IRA
Distributions from an IRA are not only often taxable but add to your income making them a very poor choice for paying for college. This is due to the fact that they increase your Expected Family Contribution in college going years.
5. Applying only to schools that are need aware or (NOT need blind)
If your family is a high need family, applying to need aware schools may affect acceptance. Most colleges and universities are more aware of financial need than ever before. Offices of enrollment management look at these factors in making acceptance decisions, so for families with high need it may be important to look at schools that are need blind.
4. Business assets on the FAFSA
Business owners commonly answer the FAFSA question when they generally shouldn't do so. In the help language it clearly states only to list business assets if there are greater than 100 employees. However, there are additional forms that do look at business income and assets in the financial aid process and it is important to understand what these questions are asking. Many business owners also refer financial aid questions to their tax professional which often further hurt their aid. Understanding how these questions affect aid is an important factor. Simply put, tax strategies do not always apply to financial aid strategies.
3. Electing to apply early decision if you're a high need family
Early Decision, while it may increase the chances of acceptance, typically does not equate to the best financial aid package. For families with considerable need, applying Early Action or regular admission is a safer option. In Early Action, you have the benefit of early acceptance, without being contractually bound to withdraw your applications to other schools, therefore you still can compare financial aid awards.
2. Applying to schools that meet a low amount of need
Most schools publish their average need met and these percentages can be a great starting point in calculating your need. Schools that meet a higher percentage of need typically result in better aid awards and lower out of pocket costs for most families. Understanding the amount of need a school meets is a crucial step in maximizing your aid.
1. Not having a professional review your situation
Would you buy a house without an attorney at your closing? The answer should simply be no. Unfortunately the cost of college for many families is more than the cost of their home. Financial aid is a complex web of forms that assess your ability to pay. In addition, the college which your son or daughter chooses affects the ability for you to maximize your aid. These are just a few of the pitfalls that affect the average family. Few college planners work with both the student and parent side of the equation to maximize your financial aid and minimize your costs. Let us help. Call 1800 692-6802 or email for a free consultation today.
Michael Zoli & John Ruman - Certified College Planning Specialists