Paying For College In Tough Times

Do Your Homework! Vera Gibbons Shares Advice On Scholarships, Aid And Loans For Students And Parents

(CBS)  High School seniors and their parents all over the country are struggling to figure out how they'll pay for college.

No doubt, they're overwhelmed with the cumbersome and confusing "FAFSA" forms - short for Free Application for Federal Student Aid.

Complicating matters further is the state of the economy, with government aid and college endowments shrinking - not to mention the bottom lines of many households.

But in The Early Show Saturday Edition's "Bargainista" segment, financial contributor Vera Gibbons explained how to get the most financial aid possible - all you're entitled to - as well as addressing questions posed on-camera by viewers, and some that were e-mailed in.

VERA'S VITAL TIPS TO GET THE MOST MONEY OUT OF THE FINANCIAL AID SYSTEM:

Submit FAFSA forms early
That's the first step to getting federal and state aid and money from many colleges. Deadlines are all over the map, literally - differing from state-to-state and college-to-college - so don't delay.

Search for scholarships
Look on free Web sites such as FastWeb.com. Every dollar you win in scholarships is a dollar less you have to borrow or pull from savings.

Know your tax breaks
Don't forget about the education tax benefits, such as the Hope Scholarship tax credit, Lifetime Learning tax credit, and the Tuition and Fees Deduction. Congress expanded the Hope Scholarship for 2009 and 2010 as part of the stimulus bill, increasing the amount to $2,500 from $1,800 and expanding it from two years to four. Lawmakers also significantly increased the income phase-outs, made it partially refundable, and allowed funds to go for textbooks (a huge money drain) in addition to tuition and fees.

"Financial aid applications are up," Gibbons told co-anchor Chris Wragge. "Schools are doing everything they can to not cut the financial aid budgets. They're cutting other areas because they want to keep these kids in school, and they want to make sure the incoming freshmen actually get in - and get kids to stay in.

One viewer asked Gibbons how to "navigate through the maze of red tape to get to the (financial aid) dollars.

“First of all, you want to get the (FAFSA form), then look into the scholarships, and then you want to set up the '529' plan, if she hasn't done so already. You want to get into an age-based allocation plan that's aggressive when your child is younger, [and] gradually becomes more conservative as the child reaches college age. A couple of good Web sites: SavingforCollege.com and FinAid.Org.

One man who told Gibbons he's unemployed and tried unsuccessfully to get more financial aid for his son in college wanted to know what he could do to get that additional help.

“My hunch,” Gibbons responded, “is that he didn't go about it the right way. You've got to put in a request for a professional judgment review from your school to see about getting additional aid. He might not be needy enough. Only the neediest of needy are actually getting aid. Beyond that, look at the loans. Stafford loans, PLUS loans, they're out there. There are (reasonable) payment terms. Private loans are getting more difficult to get in this environment.”

The FAFSA form is “a monster,” Gibbons acknowledged. “It is a difficult form to fill out, like filling out a tax form. However, it's only six pages long. ... The key is to get these things in as early as possible, because the free money goes fast, and then you do want to look for the scholarships. FastWeb.com is the place to go for that. ... The average award is a couple of thousand dollars.”

[MaryFallon]

There are two options for preparing your federal aid application (FAFSA) that the U.S. government sanctions - doing it yourself and filing for free OR getting help from a paid professional FAFSA advisor and preparer much like you'd go to a tax consultant to maximize the return on your income taxes.

The 2009-2010 FAFSA asks 137 income, asset, and dependency questions, and can be daunting. You can answer some questions incorrectly and still have your application approved but receive a smaller aid award. Other inaccuracies can cause rejection, which in the first-come, first-served world of student aid means that less aid will be available when your application is finally considered.

When shopping for professional help, be sure the FAFSA preparer has on their Web site a disclaimer that they are NOT the Dept. of Education. Also they should have high client recommendations, check for errors using experienced aid advisors (not just a computer program), and have a good track record with the Better Business Bureau. The law that approves of paid FAFSA preparation is the Higher Education Opportunity Act of 2008.

Other ways to get more student aid:

Don?t delay. If you file your income taxes around the April 15th deadline, don?t wait until your taxes are completed to file your FAFSA or you will miss most of the state and college student aid deadlines. Most programs award aid on a first-come, first-serve basis. Providing accurate estimates on the FAFSA is perfectly fine. Be careful when calculating or estimating your adjusted gross income. Answering this question incorrectly won?t cause your FAFSA to be rejected, but could lower your aid award. Remember, your taxable income is not your adjusted gross income.

Don?t include untaxed Social Security as income. The law changed this year. Reporting it will inflate your expected family contribution and lower the amount of aid for which you are eligible.

Children of divorced parents typically believe that the parent they live with is their legal guardian and that they are in a legal guardianship. This is not true in all cases. A wrong answer will incorrectly change the student?s dependency status to ?independent? and impact the aid calculation.

More families are withdrawing funds from retirement accounts early ? sometimes it?s taxed and sometimes it?s not. Counting these funds in both adjusted gross income and untaxed income will inflate your expected family contribution and decrease aid.

If you or a family member has had their job eliminated, you may be eligible to answer ?yes? to the ?dislocated worker? question. You need to meet one of four criteria on the day that you submit your FAFSA. Student Financial Aid Services is seeing that one in every 10 families has a member whose job has been eliminated. Being a ?dislocated worker? affects how your assets are treated and could even reduce your expected family contribution to zero.

Don?t include your primary residence as an asset, or you will be inflating your expected family contribution and lowering your potential for aid.

Not all businesses are treated the same when calculating assets. Different rules apply to family-owned businesses employing fewer than 100 people. Getting this wrong won?t reject your FAFSA, but it could lower the amount of aid for which you are eligible.

List your last name exactly as it appears on your Social Security card or your FAFSA will be rejected.

Double-check all numbers. That sounds simple, but transposing numbers is one of the most common mistakes and will affect your aid award.

The Dept. of Education says so far submissions are up 20% compared with last year and Student Financial Aid Services (www.fafsa.com) the biggest and oldest aid advisory and preparation service has seen a 35% increase in calls.

While you shouldn't wait, also know that the federal government leaves the 2009-2010 aid application window open for 18 months until June 30, 2010 so in case your financial situation worsens and you need more aid you have an option to apply and use aid to retroactively pay some college costs.

[catboyd]

I feel that the cost of a degree is locking out some of our brightest student. Middle class student have to watch the cost verse what school they would thrive in. I feel low income student receive all the finacial aid and the middle class has to take all the loans. When they all graduate the middle class student is left with the loans and both student get the same jobs. I would like to see federal loans at a 2% for all students from all walks of life regardless of what your parent have for an income. Let's make the playing field fair.

[spiritwalk]

Anyway, it is no longer a benifit to go to college for life long monetary gain. The extra income generated by a degree is all but wiped out by the tuition and costs of attending.
Posted by sockpuppet4
.............................................................
College was not supposed to be about lif long monetary gain. It was supposed to be about acquiring knowledge.

When Education became a SYSTEM, colleges and all schools became just factories for producing workers. Maybe with a college education you become a gear shift instead of just a gear, but you are still part of the machine and you are just another interchangeable part that can be replaced without effecting the machine.

Plato did not follow Socrates around to acquire a better pension, he was seeking knowledge to become a more awakened and aware person.

There is no money in a philosophy degree, but perhaps if our colleges were putting out more philosphers than lawyers we might have more ethical people in government and not so many more interested in manipulating the system instead of making the system work for the people.

[kamsack50]

The high cost of college education is the most disgusting thing after unaffordable, intimidating health care costs. And it should be a huge embarrassment to liberalism and feminism in America which has always pretended to parade equal opportunity for the poor, for minorities, for immigrants, and yet by inflating college costs with absurd programs, materials and projects, not to mention salaries, has created the problem over the last few decades.

[sockpuppet4]

The Republicans were going to pay off all college loans with a stimulus plan if elected. See how they are?

Anyway, it is no longer a benifit to go to college for life long monetary gain. The extra income generated by a degree is all but wiped out by the tuition and costs of attending.

Today more than ever it is best to choose a career that holds genuine interest to the student, which is a good thing, since the money is no longer there as a goal swayer. Another good thing about this is the fact that we have three times the amount of lawyers, CEOs, and phycologists this planet needs already.

[colvinatch]

legacyabq, People is spelled people... not peeple.

[legacyabq]

If peeple cant figure out FAFSA forms they have no business in school..

Those forms are a freakin breeze

[spiritwalk]

Education is the best investment a country could ever have. (?)

Then why don't we invest more of our attention on primary education instead of worrying about coming up with more money for secondary education.

Let's make sure Johnny can read before we worry about what he is going to major in.

Last 4th of July Jay Leno inadvertantly hit on exactly how bad education has beome. he did one of his idiot on the street bits in which he asked AVERAGE AMERICANS what the 4th of July was. He had 3 generations of one family and neither of the parents knew what Independence Day was about....the kid who was in school and should have been studying about it did not know...but grandpa knew the answer to every question.

Education is failing and failing fast. Classes are being dumbed down to the point where nobody fails and the illiterate are being passd on as literate. It is all about test scores as a basis for funding and salaries and not about learning.

Colleges now routinely have courses in remedial reading. If you can't read the how did you pass the exam to get into college? How is someone with a 6th grade reading level walking out of college with a degree?

It pretty much shows the value of a college degree today.

It is not too much to ask that a kid coming out of high school knows how to read, balance a checkbook and find their own country on a globe. Colleges do not even ask that anymore as long as their check clears.

If you think that you have been ripped off big time by the financial system the you have no idea how badly you have been ripped off by the education system.

[Chris_Butler]

Education is the best investment a country could ever have.

If education is the best investment their is, how is it that Wall Street never uses education?

[shayslaugh]

If possible, I would like to find out about more aid that continuing students can find. And you should also mention that to get a lot of scholarships, leadership matters more than your grades (unfortunately for me, coming from a small school). And a lot of the scholarships I got aren't renewable after my freshman year, so I am struggling to find something else.