Admission And Financial Aid Realities Part 2

Most families that have students that will be attending college will face completing financial aid forms. Many of these individuals have been told completing the financial aid forms is simple and can be completed in less than an hour. While others have been told the financial aid forms are complicated and difficult to understand. Needless to say this can be very discouraging too many parents and students.

4. Many Colleges Will Give Less Financial Aid To Some Students In Order To Persuade The Students To Not Attend

Many colleges will offer some students a financial aid package that is less than the students financial need, this is called Gapping. Gapping occurs when the college doesn’t have enough funds to meet the student’s full financial need above what they qualify for through the federal and state financial aid system. Therefore, some students will necessarily be left with Unmet Need at some schools.  Gapping or Unmet Need normally occurs when the student is applying to state-supported colleges or universities. In a few rare situations a private college could Gap a student that they are not interested in.

5. High Income Families Are Out Of Luck In Getting Financial Aid

Many middle and high-income families are under the assumption that they could qualify for gift money from the federal and state governments. However, in the majority of the situations this is NOT true. The largest program that provides gift money from the federal government is the Pell Grant rant program. However, in a few unique situations high income earning families could qualify for the Pell Grant. Most families think the Pell Grant is based on the financial need of the family. The Pell Grant has nothing to do with a family’s financial need. Pell Grant money is given out based on the family’s expected contribution, better known as your EFC.

The biggest driving factor of calculating your EFC is your adjusted gross income. If you make a substantial amount of money, but have a large amount of business or other losses it could drop your adjusted gross income to a level that would cause your EFC to fall into the guidelines of qualifying for the Pell Grant. We have seen families that made six figured incomes and due to their business or other losses caused their adjusted gross income to be very low, therefore qualifying them for the Pell Grant.

Many middle and high income families could qualify for educational tax credits directly from the Internal Revenue Service. The best known is called the American Opportunity tax credit. The maximum amount of tax credit that could be received is $2500 per year, (over four-years), for families earning up to $180,000 and single parents earning under $90,000. In addition, the Unsubsidized Direct Loan is available to students from families at all income levels.

6. Students Must Pay Back 100% Of All Principal That They Borrow From The Federal Student Loan Program As Well As The Interest That Has Accrued 

According to the College Board, there is approximately $1 trillion in student loan debt that has been amassed over the last several years. In the past, many families were able to pay for a college education with little or no debt at all. However, borrowing for college is now the norm.

In the past, all students had college debt repayment schedules set at a 10 year payback. However, today there are several options in which the student can pay back their student loans.

There are income-driven payback programs which are tied to the borrower’s discretionary income. Under one program, if a student works 10 years for public service their loan could be forgiven after 10 years even though they have a balance remaining.  If the student works in the private sector, they can have their loan balance forgiven after 20 or 25 years.

Many college students that graduate with thousands of dollars in student loan debt are entering the workforce with a chain around their neck. What most parents and students do not understand, borrowing for college is NOT necessary. With a little time and effort most students can graduate from college with zero debt.

If you want to understand and learn how to pay for a college education and graduate with zero debt, call us, 781-828-1114, or send us an email [email protected].