Don Croghan, CPA

Many families approach college with the goal of having their child accepted by a college, and they typically have a particular type of college in mind well before the process begins. Instead, the goal should be to get accepted at the college that “fits” the student and at the best possible price. Since most students don’t truthfully know if the college really “fits” them until they are on campus and face a personal challenge; this process usually doesn’t see its completion until the end of the freshman year.

So how does the family make sure they get the best possible financial aid package? The family and student need to start the process of being “acceptable” to a college at least by the freshman year in high school. Because colleges today are looking for students that can be an asset to their student body, they rarely look just a grades and classes taken in high school.

Position your student by taking the right course work and being involved in community, school or church activities. Being active in community organizations, doing some volunteer work and taking leadership roles in these activities shows the college admission department the individual is well-rounded and is likely to have interests beyond the classroom. These characteristics are desirable as a college student and as alumni!

The calculation of the EXPECTED FAMILY CONTRIBUTION (EFC) is another vital part of the planning process. The EFC is the starting point for what the family is expected to pay, from its own resources, toward the cost of the college education. If a family doesn’t know what the cost exposure is, proper planning cannot be accomplished. Several internet websites have basic EFC calculators.

A knowledgeable college planner can assist the family in making sure the family and student handle the entire college application process in an efficient and rewarding manner. With the cost of a four-year education ranging from $60,000 to $120,000, many families are finding college planners to be a real bargain.

The college funding landscape is changing in some astounding ways recently, espically relating to the financial packages some well-healed colleges are awarding their students. Colleges are moving to ease-and in some cases, eliminate-student debt in the aid packages being offered. This is in response, partly, to pressure in Washington for them to spend a larger percentage of endowment funds to help families and students pay for the ever-increasing cost of a college education.

Late last year, Williams College announced that loans will be eliminated from the financial aid offers sent to prospective students. The loans will be replaced with grants. This is an important development, since loans have to be repaid (with interest) while grants are a form of gift aid that does not have to be repaid.

The Williams College announcement follows similiar initatives by Amherst College, Davidson College and other colleges that are reducing the emphasis on loans and increasing grant monies.  Harvard University, last year, expanded its low-income program to cover selected families that earn up to $80,000.

Surveys of schools show that about 8% of all colleges have endowments that exceed $1 billion, a percentage that has doubled since 1996. This news, coupled with stories of college students building substantial debt loads during their college years, has members of Congress prodding schools to spend more of their endowments.

I expect this trend to filter down from the eastern “upper-tier” colleges to the point where other private colleges will feel the need to supplement their students’ aid packages with more gift aid. This will help them be competitive with their peers and allow them to recruit the type of student they desire. 

So, what is a family to do with this information? The most important strategy, I believe, is to apply to at least five or six colleges. You also need to visit these colleges so they have some kind of record that you are interested in the institution. When each of these schools sends their financial aid award letter, a careful analysis is needed to determine how much of the package is loans vs. grants and other gift aid. It is possible, then, that an appeal could be made to the financial aid officer to reconsider the package and decrease the loan amount in favor of gift aid.

Be sure to contact us to get help with this important process. 

Today we’ll talk about the FAFSA form and how it is used to help determine how much your child will papy for college.

FAFSA stands for Free Application for Federal Student Aid. It is the primary means for transmitting your families financial information to colleges and universities so they can determine what kind of financial aid package. The FAFSA is due ASAP as you can get it filed, but not before January 1st, of the year your student will start his/her next year of college. (YOU heard me right, you will need to file one each year of college life).

On the FAFSA, you will report the parents and students assets and the parents and students income. The income is what is reported on the tax return for the previous year. For example, if your child is going to college for the first time in August, 2008, your FAFSA is due next month. The income figures will come from your 2007 tax return (estimates are OK), with some additional information requested to give the colleges a better insight into your actual “income cash flow” for the year of 2007.

You will also report your and the students assets on the form. The assets are valued as of the date the FAFSA is signed.

But be careful !

I’ve seen scores of FAFSA’s filled out showing all kinds of assets that are not reportable–things like IRA accounts, annuities, cash value of life ins. policies. The colleges need to get some idea of what kind of income and assets are available for education costs. IRA’s, annuities, etc. are not readily available, without some serious tax consequences, for these costs, so they are not reportable. This is by no means an exhaustive list!!

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Hello everyone! I hope you’re getting ready for the Thanksgiving weekend and all the joys this time of the year brings!

In my last posting, we discussed the admission process and how you should apply to at least 6 colleges and not get trapped into the “early decision” mistake.

Applying to at least six colleges lets you know what is out there as far as financial aid packages and what colleges have to offer your student in grants and scholarships.

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OK you seniors in high school, this is especially for you and your parents!

You need to investigate and APPLY TO at least six colleges during the next few months of your search process. Many schools will waive or reduce the admission fee if you apply on-line or apply the day you visit the campus. Applying early can often double or triple your chances of being accepted. (Just remember, the goal is not to just be accepted, but to get the best possible college fit at the best possible price.)

When applying early, just don’t fall into the “early decision” trap. Early decision is an agreement between the student and the college where the college will grant admission and the student agrees not to apply at any other school. If you have applied at other colleges already, you will agree to withdraw those applications. The problem is, you then become a “slam dunk” for the financial aid office and will lose any leverage to negotiate a better financial aid package. So…..keep your enrollment options open, but don’t be afraid to apply early!

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Talk about a startling intro! I saw a report on a local TV station that said the average cost of a private college education has hit $30,000 a year. The reporter went on to project the cost of a year of college (in 15 years) if costs continued to increase at a 6% inflation rate. (You don’t want to know). He finished the report by saying families should start saving right away. While that is good advice, there is a good way to save and a bad way to save. And while you’re saving, why not take some other pro-active steps to prepare your child for college?

Then I open the Wall Street Journal to an article entitled: “As tuition soars, federal aid to college students fall” (WSJ, 10/25/06, Marketplace Section). The gist of the article was that changes made in the federal calculation of families need made it look as though the need was not a great, so families that qualified for federal grants in the past no longer qualify, or qualify for a smaller amount. A Pennsylvania State Univ. professor observed, “They are getting killed on the aid side, and they are getting killed on the tuition side.”

With everything seemingly going against todays college students and their families, it no wonder that a college planner is becoming more of an option. My service takes a pro-active approach to preparing for college, with the desired result of less emotional strain on the family and a better financial aid package. Like so many things today, it’s an investment in your student that (hopefully) pays dividends in the long run. If you’re investing $30k or more in your child’s education, why not do it right?

Hello,
My name is Don Croghan, a CPA from Knoxville, IA. Knoxville is the birthplace of the Iowa flag and home to the Knoxville Nationals, a 4 day sprint car event known around the world as the ‘best sprint car racing anywhere”.

I have been helping with the tax and financial challenges of my clients for the past 25 years. Over the last several years, however, a new challenge has been facing the families of high school students: how to provide the best college education for their children without sacrificing everything (financially) they have worked toward to this point in their lives. You know us parents, we want only the best for our children and sometimes find it hard to find a voice of reason when it comes to college.

The parents I’ve worked with find it a challenge to file the FAFSA form, visit the colleges, get the ACT testing completed, and on and on. It’s simply too much of a stretch to find information on all the facets of getting their child ready for college these days. Most families focus on getting their child ACCEPTED at a college with a good reputation. What they should be focused on is getting their child accepted at the RIGHT college at the BEST POSSIBLE PRICE. That’s where a good college financial planner can help.

As I was gaining the knowlege to add college planning to my practice, I was sending my oldest child to college. In looking back, I know we paid a couple of thousand more than needed for her education, simply because I completed the FAFSA form incorrectly! I also could have picked a better option for college loans. The thing is, most families don’t know what they don’t know. A good college planner is worth double or triple the investment families make for their services.

So, stay tuned. In this blog I will share some insights with you that you can use to prepare for your childrens’ college education. These tips will get you more in tune with the things that make a difference on applying and paying for that college education that is so essential in todays economy!

My next post will discuss the letter that most colleges require with application to college.

Until then, if you wish to communicate with me, use the form below:

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