College planning and financial aid adviser Drew Waterbury of Charlotte (www.oceanadvisors.com.) is busy this time of year. Right now, many families of high school seniors are receiving financial aid offer letters from colleges and must evaluate the pluses and minuses of scholarships, loans, grants and work-study assistance. May 1 is the day final decisions and deposits are due to colleges. Here’s some predicaments families face, and Drew’s advice.
Q. We just got an aid package, and it looks like we’re going to be paying more than our Expected Family Contribution (EFC). Why is this so?
The EFC (as calculated on the FAFSA form) is really the minimum families can expect to pay. Many schools are looking at tighter budgets, and there is less money for grants and tuition discounts. Families are seeing aid packages with loans and work-study programs to bridge the gap.
While not free money like the grants, it does mean that if you are short on funds you can spread out the cost of college over a number of years. Many private schools use the CSS Financial Aid PROFILE form (www.collegeboard.com) that can require financial disclosure and information not requested on the FAFSA form. A lot of schools promote the idea that they meet 100 percent of the student need-based aid, but at the end of the day, schools use their own calculation of what qualifies as need.
Q. Should we use loans or savings to pay for college?
A. That depends on your savings and your cash flow. Many parents are jeopardizing their retirement security to pay college bills. How much college you can afford is really a cash-flow question. In many cases, loans take the immediate pressure off the family and can buy them time. In today’s economy, many families don’t want to sell their investments at current prices and would rather wait for a recovery before they liquidate to pay off loans.
Q. Can I negotiate with the school for more aid?
Not really. However, the school will accept an appeal if you think there is information that it did not have when making the aid decision.
