Edited Session Transcript

Financing Your Education

Pat Billies


Good morning. My name is Pat Billies. I'm from NETAC (The Northeast Technical Assistance Center), in Rochester, New York, one of the four PEPNet regional centers.

This presentation is called "Financing Your Education", and it covers more than those students going to college. We will discuss the VR process and SSI, as well, and it has relevance for students who may be interested in Training Programs as well as students headed to college.

There are a tremendous number of links within this presentation, but there are three slides that I would say you should circle now so that you have them starred in your records.

The first slide that I would suggest you circle is the very last one. That's our Web site down at the bottom (http://netac.rit.edu), and everything you need to know is on that Web site, so you can always refer back from that. When you go to the live Web site look on the left for the category that says Financing Your Education, and if you click on that what you'll get is a resource of everything we're going to talk about today.

The first entry there is a list of every single scholarship there is out there for deaf and hard of hearing students, and another great resource for students from underserved populations. I can't tell you that every Latino scholarship is on there but I can tell you with every bit of certainty that every deaf and hard of hearing scholarship is on there. But you can select under represented groups and you will notice that there's a category for deaf and hard of hearing and late deafened, there's another for physical disability, so pick the ones that you have interest in. Let's just take deaf and hard of hearing. All the scholarships that we've found anywhere are listed there.

If you click on any one of those, it has a live link to the Web site for that scholarship. And all the deadlines and contact information and so on. So that's a tremendous resource in terms of scholarships.

Everything we're going to talk about today in financial aid is located here.

This is for students going on to college. All the links for FAFSA and grants, all the links for all the state grants, all the state grant programs, information from the Federal Government, and I'll talk about that today. The Federal Government has two wonderful resources.

  • The one that you should start with first is called Funding your Education, the lower one. These are available in English and Spanish. The first one, funding your education, is a little simpler, a starting point.
  • The second one, The Student Guide, is a little more complicated, meant for like seniors in high school, as they're getting ready to apply to college.
    You can download both of them.

There's information on tax credits too.

Now, there are two sections here for scholarships. The first one will take you right back to where we were before on scholarships. The second one are Web sites to search for other scholarships. Other places where scholarship resources are available. So that's under financial aid.

There's a section on VR. We'll see today acronyms for all the VR offices, lots of people don't know, for example, that something like DORS is, in fact, VR. There's information on the interagency agreements. What's really wonderful is there's a link here to every state and every local VR office within that state. Now, I'm probably going to pick one that--you can see here, here's Washington state, and when I click on this- it will take me to the office locator in the state, and I can click on whatever city I want. Now you click on your cities down here, and it will take you to the local offices.. But in any case, all the local VR offices are available.

The next thing down is information on SSI, and we'll find this as we go through today's presentation. Again, a local office locator, and what's interesting is this benefit eligibility screening tool, where people can tell whether they're likely to get it or not, and questions. I'm just running through this very quickly.

Local funding resources, this is not mentioned in the PowerPoint presentation but some other suggestions for places to look for aid within your locality.

And lastly, and a lot of VR counselors have done this, you can click on this last button here and actually download the entire PowerPoint presentation into your laptop. It downloads as a PowerPoint show instead of a PowerPoint file, but-what that means is you can't change anything. We fixed it so that you can't eliminate slides or anything. We wanted some control over what was put in there. But you can download the whole thing and then display it yourself. So that's what we have developed. Again, this is on the NETAC Web site. http://netac.rit.edu, and click on Financing Your Education. So that's the first slide that I would suggest that you circle, which is the very last slide in the handout, giving you the URL and the resource for everything.

The next-I just want you to get these circled in case you have to leave. The next slide that I would like you to consider circling is my slide No. 21. On the bottom of Slide 21 is a resource called Fast Web. It's the very end of that slide. Fast Web stands for financial aid search through the Web. A tremendous resource. We'll talk about this as we go through the presentation but you go give them some basic demographic data, and they e-mail you when they hear of a scholarship that comes up that might be appropriate for you. I went myself, filled it out, lied, told them I was a student, and then-about halfway through that process I was feeling guilty about having lied to them so I stopped, and aborted the process, and they still e-mail me from time to time scholarships that I should be looking at and I didn't even finish filling it out. So that's a great resource instead of paying someone else to search for you.

The last thing that I would suggest that you circle, which is a tremendous resource-I've given you copies of it. You have a white copy there from the Finaid. My Slide No. 34. At the bottom is the URL for the information that you have, called maximizing aid eligibility. (http://www.finaid.com/fafsa/maximize.phtml) It is hands down the best resource I've ever seen on how families, whether they're students have a known disability or not-how families can maximize the amount of financial aid they receive from a college or an institution. And we'll talk about that as we go along.

Please stop me if you have questions. I really hope that when you're done today that you can take this and run with it yourself. Basically it's the responsibility of families and students to get ready and prepare for college, but you can lead them to these resources. Financial aid is a partnership. But the key thing to remember is the primary responsibility for funding college does not rest with VR, does not rest with the government, even if a student has a disability, mom and dad and the student are the ultimate ones who are responsible for funding college.

This PowerPoint presentation basically will take people through three sections of concerns or resources to look at with financial aid.
1. The first are from the Social Security Administration, SSI and SSDI, we'll go through a little explanation of that.
2. The second, VR
3. The third, the financial aid process, grants, loans and scholarships. That's where we're heading today.


Both of them are administered through the Social Security administration, which you know. You might want to underline the first sentence there, at age 18- -- and this is going to be in sharp contrast with other stuff with financial aid. At age 18 a student is considered independent of parental income. This is for SSI only. The whole issue of independent student status and receiving financial aid from colleges is completely different, but for SSI, at age 18 a student can be considered independent.

Some students with a disability do receive aid, SSI, as children if their parents qualify financially. And each state is different, of course. There's a link here to take you to the Social Security Administration. But the key at the bottom is this is an eligibility program, not an entitlement program.

What to do. Close to the 18th birthday you fill out the application, and there are some criteria for being eligible for SSI. One of the most to be aware of is this issue of resource limits. If a student has 10 grand in the bank to save for college, his or her chances of SSI are not strong, so if a student has money that's earmarked for college, and if that student is going to need a computer to study-to do his or her work in college, and if that student is going to need a car to travel back and forth to college, that student might want to consider spending down that saved money. If you've saved it for college, you might want to spend some of that money before you apply for SSI.

There used to be a huge problem with SSI and employment. I work at NTID. NTID and RIT require co-op of all their students. What we used to find that some students who were deaf or hard of hearing were reluctant to go on co-op. And it used to be that if they earned too much money on co-op or if they took summer jobs and earned too much money they would jeopardize their SSI payments. Those rules have changed. No matter what a student does on campus, they have to report all work experiences to the Social Security Administration. In the past they could only earn up to $400 a month, flat , and if they earned over that, whether it was summertime or co-op, they jeopardized the rest of their SSI support. Now in a given month a student can earn up to $1290, and in a given year they can earn up to $5200, and, you know, beware, those rules could change. That really allows a student to go and get good summer employment.

What a lot of students don't realize is that SSI has an appeal process. Many students apply to SSI and are rejected and wash their hands and say, I didn't get it. The problem is this. If a student accepts the first denial of service with SSI, gives up on going to college, go out and works, then applies the next year to go to college, because they have worked they're usually not eligible for SSI. They can apply for the next thing we'll talk about, which is SSDI, and SSDI payments are not as high. So it really is in their best interest to go for it and go through.

There are three levels of the appeal process. If the student is going to appeal, keep good records. Don't just call and say, I called and talked to somebody last month. Keep good records of who you've talked to. 50 percent of the first group of people who apply are denied first pest get it. In the next appeal process, half the people get it, half the people don't. In the next process half the people get it, half the people don't. So that if a student is persistent, it's possible that a great percent of them could get it. You just don't give up. You're never going to get rich on SSI, but it sure can help you with room and board and books. It's not going to pay all your way but it can be very helpful.

If we're talking about an older student who has been working, they're not eligible for SSI, they can apply for SSDI. Here is where that BEST test (benefit eligibility screening tool ) comes in handy, that screening tool, the fourth bullet down. And there's a resource there for frequently asked questions. There's a great handbook that you can download from the Web. And I think that's all we're going to do on SSI today. We'll move into VR. The process for-oh, excuse me. Yes?

>>: I just wanted to ask you, SSI and SSDI, some people apply for SSDI and don't have enough credits so they get SSI instead? Are there two separate programs?

>>: No, can't they simultaneously get both, because one is not enough and they can supplement with the other?

>>: It is my understanding-I could be wrong but it's my understanding that SSI and SSDI are two separate programs, and the key to it is if you have worked in the past year you are not eligible for SSI because you will have too much money, you apply for SSDI.

>>: You can get both.

>>: You can get both? Thank you. And under what conditions?

>>: I haven't done it for a long time but I know that I've had clients in the past that get both.

>>: Yes, right. I just wanted to make sure.

>>: Well, thank you for that. I wasn't aware of that.

>>: Because SSI I think people can get-that's not-the D is the disability. And SSI, other people can qualify for also, so they can qualify for those and then add the disability and get that also.

>>: Well, good. Thank you. I'll have to research that. I wasn't aware of that. Thank you for raising that. Yes?

>>: But under SSDI you have to have worked a certain period of time to have put in in your taxes by taxes in order to qualify also for SSDI.

>>: Okay.

>>: If SSI-maybe the person could apply for- maybe the SSI is too much and they get SSDI, and the SSDI is a smaller amount, then they can try again to apply for SSI.

>>: I'm going to guess that those questions would be in the frequently asked questions section at the end of that slide.

>>: Yeah, sure.

>>: But thank you for clarifying that. I wasn't aware of that.

Pat's note 6/30/03: It is possible to receive support from both SSI and SSDI, but this situation is very rare.


You know the process with VR. You contact the local office, interview with the RCD or RCDHH, fill out an application, and submit documentation. Critical thing is this is an eligibility program, not an entitlement program, and again, VR doesn't necessarily cover everyone who applies for it.

Here's a whole list of acronyms for VR across many states.

How will VR help? As you know, it varies from state to state. Are you all familiar with what are called interagency agreements, the last-the white bullet there, interagency agreements? Do you know what that means, everybody? If you don't, we'll talk about it. Okay. About two or three years ago the Feds became aware that VR was funding support services for students in a variety of ways, and sometimes in the same office people at two different desks would give different kinds of services. One would support interpreting services, the other one would not. One would support CART services, the other one would not. And in an effort for conformity within each state, not across the United States but within each state, the Feds put the onus on the governor of each state to make sure that VR and colleges of higher education interagency, those two, VR and the colleges, came up with a plan that would apply within each state, within their state. Now, sadly, half of them still don't have them, way past the deadline. The information about those interagency agreements is on the PEPNet Web site, www.pepnet.org
And you can check to see if there is an agreement within your state and what it might be, and I want to tell you, the range of these agreements has been interesting. In some states VR paid for all services and the colleges don't have to pay for a thing. I mean, under ADA it says colleges are responsible, but in some states VR pays for everything still, which is amazing. In many cases the colleges assume the responsibility for support services, and maybe VR- maybe the colleges pay for classroom support and VR would pick up interpreting for floor meetings in the dorms or soccer events if the student happened to be on the soccer team: In one state the college paid for daytime classes and VR paid for nighttime classes. So it's all over the map with what's been decided. In other states there have been some states where VR initially agreed to pay for all support services, then they read on the Web site about how in the neighboring state the colleges are paying for the whole thing so they've gone back and revised it. In some states there's a different agreement for community colleges than there is for four-year colleges. I mean, it's bizarre the way the whole thing has worked out. But if you're interested in what's going on in your state, this is a good place to look for it. Yes?

>>: In general, from what I understand, where I work in VR, they have a law requiring what VR can provide. They give a list of services and other-connected with their disability and employment roles. Suppose the client asks for specific items and sometimes VR shares with the other agencies to pay for it, for whatever reason, maybe the client feels that they're not getting what they should be getting. They can ask for a CAP client-

>>: Right.

>>: The Client Assistance Program, and they can be reviewed for their needs, and VR may ultimately decide to pay for that but it's all contingent.

>>: Thank you for bringing that up. Just as SSI has an appeal process, VR also has an appeal process, and like you say, it's called CAP, and that's the client assistance program? Is that right?

>>: Client-yeah the client assistance program. CAP. In the beginning of the process, when you first apply for VR services, you should let them know what you're offering, what you can do and so forth as part of the application and the eligibility process. You cannot be silent to those needs in the beginning, you have to let the consumer know so they can be familiar with what you have to offer them. But you still have to go through the eligibility process. If you're qualified, then you can figure out what the needs are. And again, you said it varies. And partly yes, but ultimately it should be related to the disability, what the barriers are. Sometimes some of the issues that they have, and they say, oh, I don't need-they don't need the equipment and they want them. It has to be related to their disability and ultimately achieve the goal of employment and education. Maybe the counselor themselves is very strict and maybe another counselor is very soft hearted. That's I think where the variety comes in, and also budgeting issues.

>>: Right.

>>: I agree with that, because some counselors will pay for interpreters in some states, some don't, the director-a new director came in and said, no, we don't pay for it, the college pays for it, because they have to be access I believe to all disabilities. And another thing that's happened that's great for the clients is that about a month ago they sent out an e-mail that said they're supposed to use their Pell for living expenses, and right now we pay their schooling and Pell pays for their monthly expenses.

>>: Are you talking about Pell grant?

>>: We'll talk about that a little later. That's financial aid, Pell grant.

>>: Okay.

>>: Another issue that you raise is the fact that VR's goal is good employment.

>>: Absolutely.

>>: College is a way to get to that goal.

>>: Right.

>>: It might be important for a student to aim high in the beginning. For example, supposing the student wants to become a physician. If that student go in and says I'm going to major in biology, and if VR is willing to support that, once that student graduates with a bachelor's degree in biology, VR is likely to say, we're done. You have your bachelor's degree, you are employable, there's a lot of nice jobs out there. Go get one of them. And they might help with that process of finding a job. If the student goes in saying, I want to become a medical doctor, There are cases around the United States where VR is supporting a student through that process. But you're much more likely to get support if you make that known ahead of time. Now, the irony is a lot of 17-year-olds don't know what they want. So it's just probably better to aim high in the beginning. And again, as I showed you in the beginning, our Web site will take you to all the local offices of the rehabilitation administration.

Financial Aid

Now we're going to go into some traditional financial aid issues, which is really related to those students who are planning to attend a college or a university. I told you in the beginning that there are two wonderful resources available from the Feds, both in English and in Spanish. Start first with funding your education and then go to the student guide.

>>: Do you have those to give out?

>>: I don't, but you can get your own. They're free. You can download them. I think they will send you up to five copies each. And then I think you have to pay. Our Web site also contains a lot of other Web sites to search for financial aid, and some of them are listed here.

  • What is financial aid? It is money for college. That money is either given, paid to you or loaned to you.
    Gift aid, the first one, are grants and scholarships, free money.
  • Self-help aid, work study and loans.

I want to talk to you for a minute about work study. It doesn't come up any other place in this presentation. If your son or daughter or your client is eligible for work study from a university, they should run for it and grab it. Here's the difference. To the student, he might get a job in the bookstore under work study, offered to him by financial aid office, or he might go to the bookstore and get the same job under student employment. If he goes and gets a job under student employment, if he doesn't qualify for work study, he gets it under student employment, then he has to declare that income on his income tax the next year, , which affects financial aid given to him by the college. If that student is given work study money it's like free money. It's like a scholarship in disguise, and they don't have to claim it on their income tax. So any money that's offered in work study, a student should grab.

In order to qualify for work study, your income-you have to be in a lower income bracket, so some students won't even qualify for it. But if they do they should definitely go for it.

Grants come basically in two forms, from the Feds and from the states, locals. The Federal grants program is the Pell program. Generally the award ranges between $ 400 and about three grand, depending again on income. And depending on what's called the expected family contribution or the EFC. We're going to talk about that in a minute. The expected family contribution must be less than $3,500. I'm sure you know a lot of students who are receiving Pell grants. Run of the million middle class American families are going to be told on the expected family contribution that they should be giving way more than $3,500. Way more than $3,500.

The state tuition assistance is often higher than the Pell grants. Some states have one program, some states have two programs. Every state's grant program is listed on our Web site. So if you go there and go under financial aid and go under grants you can find the contacts and the name for your own state.

A word about tax credits. The first one is a misnomer. The Hope scholarship is not a scholarship; it is a tax credit. The Hope scholarship is intended for students who are freshmen and sophomores only. It's based on the family's income. The key with this one is that each student in a family can receive up to $1,500 a year. So if there's three or four kids in a family all in college and mom and dad, each person in that family could get up to $1,500 a year. Basically when you're all done with your income taxes, at the very end you take the $1,500 off. It's a tax credit. For students who are not freshmen and sophomores, older learners, graduate students, juniors and seniors, they can apply for something called the lifetime learning tax credit. The difference here is that each taxpayer or family has a max of a thousand dollars a year, and it gets matched one for two. If you spend a thousand dollars you get $500. All the information about that is on this Web site from the Feds. And this will be renewed this year in Congress so we'll see what happens to that. The important thing is the first one, the Hope scholarship, is, in fact, not a scholarship. But speaking of scholarships, I showed you-

>>: I showed you earlier that our Web site has a list of all the scholarships for deaf and hard of hearing students and it also has Web sites to search for other scholarships. This incidentally has been-this one particular place has been the biggest hit URL on our whole database. Since last July we've had almost a hundred thousand hits on this one Web site alone for scholarships. Here's the one that I told you if the beginning to circle, www.fastweb.com.

A tremendous- financial aid search through the Web. You go give them all your data and information, your cultural background, what you're interested in studying, whatever, and anytime anything comes up that you might apply for, academic or otherwise, they will e-mail you, register- they send you email alerts. I signed up for it. Here's a sample email: Hi, Patricia, here's two places for you to go and look for scholarships. You click on that, you have to give them a password that you put in and they'll send you all the information.

>>: At what page should a kid, I guess, start doing that? Like do you wait till closer to senior?

>>: Senior year.

>>: When they're ready to go to college. Because you can't apply for a scholarship until you're in the process. So it's for seniors And on through college. I want to show you a fun one. This scholarship started two years ago. The only place they advertised it was fast Web. It's called the first annual stuck at the prom scholarship contest. First one was in 2001. Here's the deal. The dates for the prom, boy, the girl, had to completely make their prom outfit out of duct tape. Here's the winners. Each one of those kids got $2,500 and their school got $2,500. The next year they did it again and they split it out-the school didn't get the money the following year, they had all kinds of runners up and whatever and they took the money that was given to the school, and it's fun. People from all 50 states participated. I mean, my daughter would have been horrified. She would have never gone to a prom in a dress made out of duct tape, but you know what, it's hard to turn your back on that much money.

>>: So everybody- the entire outfit is made out of duct tape?

>>: The entire outfit is made out of duct tape. And the only place that the duct tape company advertised this scholarship was at fast Web .com. $2,500 each.

>>: It's fun. Okay.


There are two basic kinds of loans, money for students and money for mom and dad. The student loans we'll talk about first.

Direct loans are loans from the Feds. The FFEL, federal family education loans, basically are from banks. Those loans can be subsidized or unsubsidized. If you have a chance for a subsidized loan, go for it. It's based on need and the key thing is you don't begin paying it back until you're done with school, which is cool. Unsubsidized loans, you start paying interest right away. So in your freshman year you start paying interest on that loan. You start paying the premium on that loan. Student loans are wonderful to get if a student is eligible for them. Especially for later on. All of us know in hard economic times that even if you have one of these subsidized loans, where you don't even have to begin paying it back till you've graduated, a lot of students don't get jobs right away, or they'll get lower paying jobs at first. They may have fabulous law degrees that are going to earn them six figures in no time, but right after graduation they're in some lower job in the court system and there's no way they can pay back $75,000 in loans. With the student loan program there are a lot of ways you can delay payment if you need to. If you get drafted. If your income is less than a certain percentage of your loan. If you have a hardship, a financial hardship, that you need to delay. You have to pay interest during that time, but you can postpone a student loan. You know yourself, if you get a loan from a bank you got to make payments on that loan. My own son had a good sizable bunch of loans and some loan officer convinced him to consolidate all of his student loans and get a loan from whatever the bank was. I said, you can do that too with your student loans. You can consolidate them within the student loan program, and then, God forbid, if you ever get injured or you ever are laid off, there's a mechanism in place to delay payments. From the bank, they're not going to say, I'm so sorry you can't pay for the next six months. You're dead in the water. Yes?

>>: You also if you become disabled you can get it canceled. I mean, it's not real easy to do but you can do that.

>>: Right. So for the student loan program, if a student is eligible for it, I would say go for it, encourage them to get it.

Mom and dad can also get plus loans, parent loans.


Now, we're going to talk a little bit about process. All schools require the FAFSA. The FAFSA is the free application for federal student aid: When my kids went to school that stupid thing was 15 pages long. It asked us every question in the world. It's now four pages long. You can file on line, all the information you can-there's links to the FAFSA Web site here. Deadlines vary from school to school. We're going to spend a little time talking about this FAFSA.

Once you complete the form and send it in it takes about a month or a month and a half to process. You'll fill out a FAFSA every year. You don't fill it out in your freshman year and that takes care of the rest of your time. Every single year you have to complete another one. It's available in December. You can't begin filling it out until January because you need your income tax results to work on the FAFSA. It is always best to complete your income tax form first. You can estimate your taxes and fill out the FAFSA. If you estimate your taxes you will be audited. If you have hard data from your income tax form you still may be audited. They do a percentage of them. But if you estimate you will be audited.

Hints for success on FAFSA

You want to get it done as quickly as possible, and you want to feed it into the school, so that your chances of any aid money from the school, scholarships or whatever, is increased. You don't want it held up because you goofed up. It is important before you send it in that you check it all over for the appropriate Social Security numbers and birth dates and school codes. There's something called the CEEB code for every college in the United States. It's a four-digit code that you look up on the FAFSA and then you say, I'm interested in these five or six schools, and the Feds, when they complete this, will automatically feed that data to those schools, so you want to have an idea ahead of time where the student is going to apply.

You have to remember to sign the FAFSA. You have to write so they can read it.

No blanks. And you have to- the males, have to register for the selective service. No choice. If you're deaf you're not going to get called up, but you have to register it or the FAFSA will bump out.

I'm not going to go through this whole list with you on Hints for Success, but the first one is the really important one. (If you're estimating your taxable income for the FAFSA.) In January you get those W-2 forms from your employer. The W-2s give the taxes that have been withheld from your income, and many people make the error of taking that number and plugging it into the FAFSA as taxes paid. That's not the taxes that you're paying! Sometimes you get money back when you file your taxes. Sometimes you pay money in. What the FAFSA wants is the taxes paid. You can't get that off your W-2.

Down in the third and fourth areas it gets really, really sticky with families where a divorce and remarriage have happened. A custodial parent, the parent paying child support, all that kind of stuff gets messy. The child support that one spouse has paid may be excluded but you have to fill out a worksheet for it. And then if you want to exclude some assets, there are some items on there that must meet the criteria and so on. You can read through that if that situation pertains to you.

Now we go into expected family contribution. What families are expected to give; there's a Web site on the bottom with questions. When I started putting this Web site together I took a straw poll of people and said, what is there about financial aid that you want to know? But by and large what people said to me is, it just doesn't feel fair. You know, people don't talk to each other about the income they earn, but if you live in the same neighborhood you can guesstimate what the income of your neighbors are. But people don't talk about that. It's a different thing with financial aid. Moms and dads of seniors will go around bragging about the financial aid packages from a university. My daughter got $10,000 in financial aid. My son got $15,000 in financial aid. And people would look at-especially the neighbors that seem to be spending a lot of money and saying how is that possible? I know we're about on the same income level, and look at them. They go off to Europe every year and they have a boat in their garage and blah, blah, blah. It's not fair. I've been scrimping and saving my whole life. It's not fair.

So that understanding how the Feds compute this expected family contribution is important to people. There are some things you can do to maximize your aid. It's a formula the Feds keep to themselves, but it includes last year's income, (mom and dad and the given student), the assets that mom and dad and the student have, the number of household members altogether, how big a family, how many of them are attending college at least half time. So, if mom and dad are thinking about going back to school for some reason, it's a really good idea to do that when your kid's in college, and increase the number of family members in college. Now, to maximize aid, the very best thing you can do is have your babies boom, boom, boom, boom, boom, one right after the other, so you'll have three or four in college at the same time. But by the time the kids are 18 it's too late for that. I read where some families with kids two or three years apart will hold the oldest one back a year or two and push the younger one ahead so that they're both going off to-I mean, my kids would have never stood for that. I don't know about your kids. But, you know, there are some creative things that people can do, especially if they're going to college anyway.

>>: How do they define households? Does that mean people related by blood or marriage or does that mean actually how many people are living in the home as a family?

>>: You will get all of that through the FAFSA. And like I said, nothing in this process is stickier than custodial parents, non-custodial parents, who pays, because sometimes, if mom and dad have split and they both remarried, sometimes all four incomes are counted. Sometimes if mom and dad have split and the kid lives with dad but mom is paying child support, her income takes. Sometimes it's the true parents. It's really a mess. And the college that you're applying to is where that comes into the factor. I think that the clean answer to you would be in a consolidated family, mom, dad and the kids, mom, dad, three kids, five members. It gets really much stickier if the non-custodial. So you just have to go through the FAFSA and answer the questions let them figure it out: . I don't have a good answer for you.

>>: I've had some experience with clients filling out the FAFSA. Whether it's the student or they include a parent, you have to be very clear. If the parent is paying-is including the child as a dependent, that means you need to count the parent's income. If the client is emancipated, perhaps lives with the parents but pays his own taxes, perhaps, has a part-time job or maybe he pays rent, shouldn't be counted as an independent. So you have to be very clear with people when they come in, can they apply on their own or as a dependent. Once you declare yourself as a dependent, you have your own place or whatever, you're a dependent, but if the parents are not including them in their taxes and claiming them as a dependent, it's probably always the first year you have to include the parental income, but if the student declares them self to be independent, then for FAFSA the next few years you can have that.

>>: We're going to touch on independent stuff next on FAFSA, because that's a really hard thing to claim, independence.

Let's hold that for just a minute and go back to this expected family contribution. The last factor that figures in is how close the older parent is to retirement. The older mom and dad is the less money the Feds tend to take away, knowing that you're going to need that for retirement.

Here's the independent student criteria. I wanted to claim this when my oldest child was going off to the University of Michigan. We live in New York State. Because we were out of state, her tuition was three times the in-state student tuition. So we said, we'll just take her off our income tax, call her independent. We even considered buying some kind of a condo or something for her out there. And she'll just be independent. Well, you know, it's such a hassle. It is not anything that's easy to do, and they've made it more difficult.
We were not successful in claiming this. Because, even if mom and dad say, I am not supporting your college education, period, I'm not going to pay for it, claiming-the students claiming that they're independent is not easy. They have to be more than 24 years old to be independent, or married, or a veteran. Down at the bottom there are some-you know issues, you've had-you've seen students, you know families where the child has been abused or neglected or whatever, there are cases where the courts will declare that person independent, but they're rare. And the most important thing for you to realize is that this is very difficult to prove. It's probably not worth a lot of effort.

>>: Are you talking about the marriage part or-

>>: No, I'm talking about the whole independent student thing is hard to prove if the student is under 24 years old. If you're older your chances of independence are MUCH better.

The Process for FAFSA

The student fills out the FAFSA on the left, sends it to the application processor, they input all the data. You have a better chance of getting the data right if you input it yourself by filing electronically. It's not a bad idea. That comes around and gives you something called the SAR, the student aid report. You check that out, make sure the data's correct, send that back to them.
They then compute the EFC up there, the expected family contribution, put it through a central processor, and send it out to all the colleges that you applied to. That's the process. With that student aid report, spend some time checking it over, because that's where eligibility for Pell is taken from.

Now, financial need. How is that computed? It's not just tuition and room and board. It includes things like getting back and forth for Christmas break, and personal money that you need. You need 20 or $30 a week for spending money. All that stuff gets figured into the cost of education. Then the expected family contribution comes out of that. And the expected family contribution comes from mom and dad and the student, a percentage of their income and a percentage of assets. And when we're all done with that and the expected family contribution is subtracted from the total cost, we come up with a financial need.

Here is another key point, and I guess I can do this. Yes. Mom and dad have other things to pay for. The other kids in the family, their own retirement and whatever. So the percentage of money taken from the parents is usually less than the percentage of money and assets taken from the student. If the student has 10 grand in the bank for college, the Feds figure that's for college. Originally I thought they took 25 percent every year, a quarter of it, figuring four years in college. It's actually greater than that. It's like 33 percent in the beginning, assuming that the rest of the money in the bank will continue to earn some money. So that the money that's in the student's name gets counted in the expected family contribution at a much higher percentage than mom and dad's. This is where it turns around to bite you, because the whole time the kid's been growing up, grandma and grandpa give them money for Christmas and their birthdays or whatever, and we take that money and put it in the kid's name because they're not taxed, but that turns around to bite you when you're ready for college.

It's important to realize that students shouldn't say they can only afford to go to a community college. I'm not downing community colleges, but if they have the academics to get into an ivy league school, they should go for it, because the expected family contribution is going to be the same. The need is greater, obviously, in an ivy league school, but oftentimes those ivy league schools have money, and they can give a student some or all of that need. So they should go for it.

Maximizing Aid

This is probably the most important thing that I can share with you today. I've printed it out on this white paper, Maximizing Aid Eligibility. The Web site is going to show up at the bottom here for you. This is an excellent resource for you. It is 17 pages long. Anybody with a student going to college should read this. Whether the student has a disability or not. This answers the questions of assets and what assets count and what assets don't count. Where should money be held, in the parent's name or the student's name? I mean, clearly it's each family's decision, but if you read through this, there are some charts that might convince you it's better not to have that in the student's name. Or it's better to spend down that account before December 31st. I gave you an example before. If a student is going to need a computer and going to need a car to get back and forth to college, what do families tend to do? Give it to the student as a graduation gift in June. If you do that, then that money is sitting in the bank on December 31st, and that money in the bank shows up as an asset, and the Feds say you got that money in the bank, we're going to take a percentage of that. If you give the kid the car and the computer and the things that the student needs for college as a holiday gift, you might say that car is an asset. You'll find in that white paper it doesn't show up as an asset. You might think that computer is an asset. It doesn't count. And sadly, I have to tell you, that the big yacht in somebody's yard doesn't count as an asset, either. Which is pretty alarming. But you're much better off purchasing those things before December 31st, spending down some of that money, so that it doesn't show up in the taxes that you-it doesn't show up as an asset when you complete the form in January. It is also better to spend down the student's money first, and you'll be convinced of that after reading that white paper by the financial aid people. As the kid is growing up it's certainly better to keep the money in the kid's name because you don't pay taxes on it. As it gets closer to the time that they're graduating it's not such a hot idea. Should parents borrow from their retirement funds? Hands down they tell you no. Those retirement funds are for you in your own retirement. How about grandma and grandpa? Should they pay? Should they help? These folks say grandma and grandpa should stay out of the picture until the student is finished with college and then help them pay back the loans. What assets are included in the needs analysis? That is all spelled out-let me see if I can find the page for you. It starts on Page 7 in this book and runs through-you will be amazed at certain types of property. I'm now on Page 11. Such as automobiles-

>>: Page 11 in the white page: No. 4. Certain types of property, such as automobiles, computers, boats, furniture, appliances, books, clothing and school supplies, do not count as assets. Boy, does that feel unfair. If I go and spend $75,000 on a yacht, wouldn't you think you'd be jeopardizing your kid's education? Not. So encourage-I would send this Web site to any friend I knew, whether their student was disabled or not.

The application flow, you get back the student aid report, you send it back corrected, it goes to the schools, the school matches that you have to apply, no school is going to give you financial aid unless you've been an accepted student. The school matches the accepted students with the request for financial aid, and mails you an award letter, which is called the financial aid package. The next slide has a time line for what to do. The early bird gets the worm. Apply early. Schools are going to have more money in January and February than they do in June. There's information on our Web site too about some change, and this is important. Particularly there's some colleges that are beginning to take into account things like cost of living. A student from San Francisco has a much higher cost of living than a student from Selma, Alabama, and mom and dad are going to need more money to pay for their rent or their mortgage payment from those kind of places. Some schools are becoming fairer about divorced parents or student assets, and beginning to tax them at the same rate as mom and dad. Most of them are not. But there are two great articles about that, one from the New York Times and one from the U.S.A. today, and those are on our Web site for you to read, and it lifts the colleges who are-

>>: Would you say that again? They're considering divorced parents how?

>>: Remember, I told you that sometimes it's the you will natural parents of the child whose incomes are considered, and sometimes they consider the custodial parent, and other times they consider the parent who is supporting, and sometimes they consider the spouses of the natural parents, and sometimes they don't. So that this group of colleges have decided to become more uniform. Many of them are ivy league but their thinking is the money that a student gets now should be approximately equal to the money from Brown, should be approximately equal to the money the student gets from Yale, so that a student shouldn't be making a decision based on financial aid package. And I can tell you, that is the single stickiest issue of all. And how many of our students come from broken families, if you- that's a terrible word, but there's a lot of students who are in this boat, and that's where things get really, really mushy.

>>: So there is still variance is what you're saying?

>>: Oh, there's huge variance. You know, it's just a group of colleges that have said enough. Let's try to get uniform with this. There's a lot of material on our Web site, as I told you. So it's important to look at who is making these kind of changes.

>>: And the retirement, what are they looking at there?

If you don't have retirement benefits at work, this new stuff makes some allowance for that. But there's a small number of colleges considering the 10,000 across the United States, there's only 28 of them that are in this. But if you're interested in one of those 28, that's cool. The material is on our Web site, as I showed you in the beginning. We went through this in the beginning with the live connection. Here's all of our contact information. And you know what? Two minutes late. But this is all there for you. You don't need to be a financial expert because each one of those links will take you to the questions of frequently asked questions and whatever. I didn't know the answers to all your questions. I'm going to certainly look into some of them, as you can too. But it's a pretty straightforward process. Good luck. If there's any questions you have, I'd be happy to-I'm really good on e-mail. Thanks for coming.

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