 Economical hard times calls for more knowledge in College Funding, Scholarships, Loans and Grants
An interview with Worldwide Baseball Prospects College Funding Advisor, Todd Hughes during the trying times of the economy.
WBP: What is a College Funding Advisor anyways and why do I need to speak to one?
TH: A College Funding Advisor is a type of financial planner that specializes in sound financial planning as it relates to maximizing a family’s eligibility for financial aid. We also help you develop a plan to get all of your children through college comfortably without sacrificing your retirement savings.
Dealing with the financial aid system is the equivalent of the IRS giving you all your tax forms and telling you to fill them all out without the assistance of a CPA or any tax software. And if you make a mistake, it could cost you thousands and thousands of dollars in lost financial aid each year. A College Funding Advisor makes sure you know exactly what you need to do and when and also helps you maximize your eligibility for financial aid.
 WBP: How does a post-secondary institution acquire funding to hand out in the form of scholarships?
TH: In 2008, 40% of all the 169 Billion dollars in financial aid came by way of Federal Loans. The colleges and all their grants and scholarships (free money) made up 20% of all the money that was passed out. So the colleges themselves passed out in FREE money 50% of what the federal government passed out in loans.
Don’t overlook the colleges and all the money they pass out after you fill out the financial aid forms. Some colleges have large endowment funds and alumni funds. As a generalization, some schools (mainly private schools) have more money to pass out versus others (mainly instate public schools), So if you don’t think you can afford college, you may be surprised that it may cost you less out of pocket to go to a private, higher “sticker priced” college versus an in state school.
WBP: How much money is Available and where how do I access it?
TH: As I said, in 2008, there was 169 Billion (with a B) passed out in financial aid. The private scholarships, those scholarships you don’t have to fill out any financial aid forms for only made up 3% of all the money that was passed out. You have to fill out the financial aid forms to get access to the other 97%.
However, you should still put a little effort in looking for private scholarships. We suggest having the student go on to fastweb.com.
WBP: We all know that “some” schools have athletic funding. What are the other areas of funding that can help a student-athlete and family pay for college?
TH: It is always nice when a student gets an athletic scholarship. However, it really isn’t something that you can set a financial plan to, especially in baseball. You may get something, but you still need to cover tuition, room and board, books, food, medical plans, transportation …. That entire amount is what financial aid eligibility is calculated on. We suggest everyone fill out the financial aid forms to get access to federal loans, federal grants, state grants, state loans, and the school grants. You never know how much you are going to get in an athletic scholarship and if the very unfortunate happens and your child is no longer able to play sports because of an injury, you are now left with a very big unknown.
WBP: How can a college funding advisor help my family and son get a baseball scholarship? By accessing funds in other areas does this free up potential athletic money, if available, that could be added to my funding pie?
TH: All schools work different in their awarding of financial aid. If you receive an athletic scholarship, that amount may decrease any need based financial aid you may receive, or the schools may just apply that amount to what they expected you pay out of pocket. It is really impossible to say how Financial Aid Officers will treat outside scholarships.
WBP: Do you have any advice on some of the things that a family should not resort to, to pay for college, like credit card advances etc.?
TH: Credit cards are definitely not suggested. Even though the loan industry is difficult for college loans, they are still out there. Also, if a family needs to borrow for college, we frequently suggest that they at least consider looking at the equity in their home if they have any. If the parents are going to have to borrow anyway, with using a loan against the house, you get the best interest rates, the best tax deductions, the best pay back terms and if the colleges take into consideration home equity, you have less home equity to report.
In addition, if you have funds available in both the child’s name and in the parent’s name, use the child’s funds first. The funds in a child’s name decrease their eligibility for financial aid much more than the parents’ funds.
WBP: What are the things parents should do and consider during these tough times and how early should a family start TAKING ACTION with planning for college funding?
TH: Well the best time to start planning for college is when you get that positive pregnancy test. However, the sooner the better. But be aware that a family’s financial situation starts being assessed January 1st of the child’s high school Junior year. So planning before then is most ideal.
And for those families that are saving for college, we frequently suggest parents look at saving in conservative locations such as high cash value Life Insurance policies. We like Life Insurance versus 529 savings plans for many reasons. The cash value in life insurance does not count against your eligibility for financial aid unlike 529 savings plans. For example, let’s say mom and dad have 3 kids and they saved $25,000 for each child in a 529 savings plan. Unfortunately the colleges will add up all three plans and count that as a $75,000 parental asset for EACH child. So the tax savings with a 529 plan may be negated by the loss of eligibility for financial aid. We are also seeing a tremendous amount of loss in 529 portfolios with the severe stock market situation. The conservative fixed life insurance policies we suggest guarantee that you never lose any principal value. You will be able to sleep knowing that the funds you have saved will be there. In addition, in the event of an emergency, you can use the funds without getting penalized because the funds weren’t used for college expenses.
WBP: Mr. Hughes do you have any advice for those that need some reassurance with paying for college?
TH: I have to admit, now is definitely not a great time to be going to college. More children are applying to college in record numbers. Colleges are more expensive than ever and increasing on average 6-8% a year. Only 50% of college students are graduating in 4 years. And loans are becoming more difficult to get with higher interest rates. However, it is definitely possible with good planning ahead of time. The sooner you start your planning, the less painful it will be. Take the time to figure out exactly how the financial aid system really works and do everything that is required.
Todd Hughes has been a certified College Funding Advisor for the last 4 years and works with Strategic College Funding Solutions. Strategic College Funding Solutions is a member of the National Association of College Funding Advisors, the College Planning Network, the National Association of College Admission Counsellors and the Better Business Bureau. |
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