Financial Aid Application Major Changes!! 2015 is a key tax year!

In September, 2015, President Obama changed the rules for FAFSA to use the prior prior year (PPY).  For the 2016/2017 school year AND the 2017/2018 school year, the FAFSA form (Free Application for Federal Student Aid), which is used by nearly every college and university, the income portion of the family contribution will be based on the parents’ and student’s 2015 taxes.  Consequently, this year’s tax situation is VERY significant. 

It is critical that ALL families who will have students in college in the 2017/2018 school year, do everything possible to lower their AGI on their 2015 taxes.  Sometimes bonuses can be paid in January, rather than December.  Or contractors can be paid in January, rather than December.  Business expenses moved from January to December may lower the business income (either via Schedule C for sole proprietors or via K-1 earnings).  Meet with your tax preparer to discuss your options.  Use FAFSA4caster.gov to estimate changes in your EFC based on possible scenarios.  And, be sure to keep everything legal.

As before, assets will be assessed as of the day of the initial filing of the FAFSA form.  For FAFSA, assets still do not include your home equity nor your retirement savings nor your life insurance.

This change has been advocated over the past several years by NASFAA, the National Association of Student FInacial Aid Administrators.

Expected Benefits

It is hoped that this change will enable families to file their FAFSA earlier by removing the need to wait until after January 1 to file it.  Starting in 2016, the FAFSA for the 2017/2018 school year will be available in October 2016, not January 1, 2017, as has been the previous pattern.  In turn, families will have an idea of their eligibility for need based financial aid, assuming they understand the Student Aid Report. 

Additionally, since the 2012 introduction of the DRT (Data Retrieval Tool) which enables filers to pull tax data from their filed tax returns to the FAFSA, there have been numerous problems with delays since returns had to be filed and processed before the data was available from the IRS.  With the use of the prior prior year’s tax information, FAFSA filers, even at the beginning of the season in October, will have had their tax returns filed (by April 15^th) and processed.  Late filers may have to wait but will still be able to have the information available to pull into their FAFSA well before financial aid awards are issued in March and April. 

It is also expected that financial aid offices will be able to provide families their financial aid award offers sooner, thus providing potential students a longer opportunity to sort out the financial details before they must commit to a college on May 1.  Financial Aid Officers hope to have more time to counsel students since the awards will be prepared earlier, leaving more time before students and their parents must decide.

Currently, 30% of FAFSA filers are selected by the Department of Educatino for verification, which requires getting tax transcripts and dealing with other paperwork to the school(s) before they can issue a financial award.  This has caused a significant amount of extra work for the FAOs and delayed the finalization of some aid awards until the summer, well after the May 1 deadline.

If your income changes significantly in the year after the prior prior year, you will still be able to appeal to the financial aid office (FAO) to ask them to use professional judgment to use more current income to adjust your aid eligibility.  Of course, you’ll need to provide the more current information to the FAO with your appeal.

Some schools have already committed to changing their institutional financial aid forms to use the same data (called PPY – prior, prior year).  These schools include: the University of California system, Anne Arundel Community College, Loyola University, Michigan State University, Oregon State University, Stonehill College, University of Illinois Urbana-Champaign, University of Tennessee-Knoxville, Bennington College, University of  Nebraska-Lincoln, National Louis University, Marygrove College, and University of Texas-San Antonio.  For these schools, as well as all others which adopt this policy, no additional information is expected to be required.

It remains to be seen if some of the schools will require additional information about the prior year’s income on their own, institutional forms.  At this time, the PROFILE form required by some schools will not be changing.  Consequently, if your child applies to a school which requires the FAFSA and the PROFILE forms to both be filed, you will need the prior prior year information, the prior year information, as well as a projection for the future year.  For example, for the 2017/2018 school year, you’ll need 2015 information for both the FAFSA and PROFILE forms, 2016 tax information (or estimates, depending on your filing deadline) for the PROFILE form, and a projection of 2017 income for the PROFILE form.

If you need help filing forms or estimating net college costs, please send me an email.  I’d be happy to help you!

Katherine O’Brien, MA CCPS

Certified College Planning Specialist

kob@CelticCollegeConsultants.com

America’s College Prep Specialist

Liberal Arts and Engineering, An Effective Collaboration

 by Katherine O'Brien, MA CCPS

Although many engineering students may not appreciate required liberal arts courses, more students, and more hiring companies, are recognizing the benefits.  In fact, there are several collaborative programs between school whereby students can earn a BA and a BS in five years.  Numerous schools, from California Polytechnic to Augustana to University of Dallas, offer such programs and dual or combined degrees.

In fact, per person, liberal arts schools provide more PhD candidates in the sciences and engineering, per the National Science Federation.  Their list of the top 50 science and engineering PhD producing undergraduate institutions includes 28 liberal arts colleges and universities.  For the mathematically challenged, that is more than half!

From a 2012 story on Union College’s website, the former head of MIT had this to say: "The integration of engineering and the liberal arts is essential to compete in a highly competitive and technology-based global economy, one of the nation’s top engineers told a group of educators this weekend. Charles M. Vest, president of the National Academy of Engineering and president emeritus of the Massachusetts Institute of Technology, also said the liberal arts must take charge of the online learning revolution sweeping across campuses today.”

Per Christian Knutson, Professional Engineer and Project Management Professional, “Communication skills are absolutely essential to our existence and they are the foundation for our success.  If your skills are lacking, begin first by focusing on your listening skills.  Strengthen these and you’ll be in a very solid position."  Mr. Knutson is a leader, civil engineer, and author.  He’s an accomplished professional internationally and the author of The Engineer Leader, a recognized blog on leadership and life success for engineers and professionals.  

By their very nature, liberal arts programs hone their students’ communication skills since they demand extensive reading, writing, and many oral presentations.  Collaborative projects are common as well.  Consequently, strictly from the perspective of enhancing essential communication skills, liberal arts foundations are excellent foundations for scientists and engineers.

Additionally, the smaller campus and class sizes typical of liberal arts colleges and programs enable their students to form close working relationships with their professors.  For students desiring to pursue advanced degrees in any field, these sorts of relationships lead to research and internship opportunities which are critical for successful graduate school admissions.  They also facilitate the requisite recommendations whereas students from larger schools often find themselves struggling to meet their professors furthermore developing working relationships with them over time.  

Lastly, given the state of current engineering developments, the ability to examine a problem from multitudinous perspectives is essential.  Interdisciplinary collaboration is commonplace and essential for progress.  The problems engineers are now addressing are multifaceted and extremely complex.  Hence, excellent communication skills (listening, speaking, and writing) are essential as are the various skills which support thinking outside the box.  Liberal arts programs very ably develop this sort of elastic thinking in their students.

Consequently, the combination of a liberal arts education with a scientific or engineering program forms just the sort of engineers and scientists needed at this point in the 21st century.  It also happens to open the door for more young women to enter these typically male dominated fields.

Sources:

 

http://www.nsf.gov/statistics/infbrief/nsf08311/?govDel=USNSF_178http://www.nsf.gov/statistics/infbrief/nsf08311/?govDel=USNSF_178

http://www.union.edu/news/stories/2012/06/top-engineer-calls-integration-of-liberal-arts-and-engineering-essential.php#sthash.RZ0RwEw9.dpuf

http://www.thecollegesolution.com/50-schools-that-produce-the-most-science-and-engineering-phds-2/

Practice PSAT now Available!

I'll be writing more extensively on the redesigned PSAT and SAT soon.

Today, the College Board released a practice PSAT, along with the answers.  For all sophomores (Class of 2017), it is ESSENTIAL that you work through this.  The redesigned PSAT is correlated to the Common Core curriculum.  Even if you have had Common Core since it's first adoption, you haven't had very much exposure to it, and the corresponding test questions.  Here's your chance to do really well.  Most kids don't prep for the PSAT.  So, you'll be way ahead of your peers when you do.  ePrep.com has new PSAT prep courses on their website so you can continue your prep beyond the College Board's practice test.  Remember, order your ePrep courses through me so you get 20% off their already low retail costs.

College Board's practice PSAT:  https://collegereadiness.collegeboard.org/sat-suite-assessments/practice/practice-tests

ePrep.com

Now, Carpe Diem!

Keys to Avoiding Student Loan Debt

by Katherine O'Brien, MA CCPS

Is heavy student loan debt inevitable?  The average now is over $29,000 per indebted student and, in 2012, 71% of all students graduating from 4 year colleges and universities had student loan debt  Not only is the average amount of debt increasing, the default rate, the rate of those who are over 90 days behind on their payments, has been steadily increasing since 2003.  Additionally, student loan debt has the highest delinquency rate of all forms of debt – an astounding 11.5%!  Unlike other forms of debt, student loan debt cannot be forgiven.  Nor can it be eliminated by bankruptcy.  It’s not hard to see the devastating impact of this loan burden, and the personal habits have on these students.  What can be done now, while our kids are in high school, in order to avoid this outcome?

From 2005-2012, the average student loan debt jumped from $17,000 to $27,000, a 58% increase in seven short years.  The impact on their adult lives is significant.  For example, people with student loan debt have a 36% lower home ownership rate.

It’s not surprising that many people are starting to question the value of a college education.

Key #1 Time to Degree

Overall, the six year graduation rate at American four year colleges is 59%.  At public universities, the average is 57% while 66% of students in private non-profit colleges graduate within six years.  At private for profit institutions, the rate drops to 32%.  This means that, nationally, 59% of the students who started college in 2006 were finished six years later in 2012.  But, these are four year degrees!

At most public universities, only 19% of entering students graduate within 4 years.  Even the flagship publics with excellent research, etc. only graduate 36% of their students within 4 years.  The overall 4 year graduation rate for all colleges and universities is 39%!  The Department of Education reports that graduates who started at a 2-year public institution and subsequently obtained a bachelor’s degree had a median time to degree of 63 months.  That means the community college/transfer route is taking over 5 years for half the students (longer for the other half). Bachelor’s degree recipients who didn't start college right after high school had a median time of 80 months. (almost 7 years)  44% of 07/08 first time collegians graduated in 4 years.  The other 56% didn’t; 24% still didn’t have a degree after six years! The 4 year graduation rates for non-profit private college students are much higher, 53%.  Even that leaves nearly half of the collegians at private colleges and universities still on campus for a fifth year!

Key #2: Budgeting

The Department of Education also reports that students who received Pell grants (whose families generally had incomes less that $40,000/year) graduated with nearly $5,000 more student loan debt than their indebted peers who did not receive Pell grants.  While it is certainly understandable that such students’ families would need more assistance since they have less ability to pay, these students are finding themselves very burdened as they get started in their careers.

College is an investment from which a return is expected.  Without information – and the maturity to contextualize and interpret that information – regarding the consequences of taking on significant debt while an undergraduate, students are finding themselves with degrees and too much debt.

Key #3 Getting Guidance

California is ranked last of all US states with a counselor to student ratio of an astounding 1016 students per counselor.  Public students are lucky to be able to meet their counselors; it is rare to be able to have sufficient contact with a counselor in order to get any direction about college, at all.  What a student may receive is targeted toward general college preparation ideas, not tailored to the specific collegiate goals of the students.

The national average is 471 students per counselor, a number still far above the target of 250 set by the American School Counselor Association.  Regardless, high school counselors are responsible for scheduling, disciplinary issues and the myriad special education (IEP, etc.) tasks.  College prep tasks quickly become impossible to regularly incorporate into the workday of high school counselors.

Those families choosing to homeschool may, depending on the way they acquire curriculum, get some guidance regarding course selection but none regarding college admissions and funding.

Working Toward a Better Outcome:

In order to reduce a student’s debt, the student needs to reduce their cost to degree.  This can be done by a combination of reducing time to degree and the costs of college.  Additionally, bringing the family’s true college budget into account in order to make educational decisions in line with that budget is very important.  Lastly, there are numerous choices that are made during the high school years which contribute to each student’s ability to reduce their costs in many, many ways.

First, in order to shorten the time in college, it is critically important for students to have a well formed idea of their goals.  In order for college to make sense, it needs to be leading somewhere in the person’s life.  Before progressing very far on campus, students need to have some idea what direction they want to take their educations and their lives.  Otherwise, they may find themselves educated but not employed or employed in fields they do not enjoy.  Currently, Americans change jobs 11-15 times during their career and shift careers 3-5 times.  Therefore, either having specific career goals in mind or the goals of being able to communicate well, evaluate and organize data, and learn quickly will help students be effectively prepared to join the work force.

Consequently, since I opened my consulting practice in 2004, I have worked diligently with every student on his or her career search.  Through that process, teens learn more about who they are, what they are good at doing, what they love, and what they do not like.  Taking time to explore these areas during the first two years of high school, in particular, prepares students to approach college as the next step in their journey to their future, not simply “the thing you have to do after high school”.  The process of exploring majors and careers in depth creates relevancy for high school courses, college admissions tests (ACT, SAT), and gives direction to course selection for the second half of high school.  It also engenders maturity in the students, who are beginning to seriously consider their own futures in concrete terms and take on responsibility for themselves.

Secondly, it is imperative that expected net college costs be calculated during the college selection process and a serious determination of what can be afforded be made.  Otherwise, the student will identify and apply to phenomenal programs in his or her field, get accepted to some or all, and only then find that the school is simply too expensive.  I believe part of the student loan crisis is a failure on the parts of parents and students to do the research ahead of time.  I have heard of numerous families making drastic decisions because they didn’t want to disappoint their child who had been accepted at a great school which was simply too expensive for the parents and the student to afford.  With proper preparation, however, the outcome can be a great college education for the student and financial stability for the entire family.

Thirdly, when students are invested in their own future, they behave differently.  They understand the value of their grades and test scores and the role they have to play in creating their future.  Sometimes students hear this message in a general way during high school.  Working with students one on one to discern their career goals makes it personal.  After this process, college is no longer generic, a generalized education like high school, one size fits all.  It is also no longer unfocused.  Students also discover the plethora of options available on and off campus, options they can prepare themselves for and attain.  For example, undergraduate concentrations or specializations in numerous majors are offered, as is undergraduate research (starting freshman year at some schools!), internships, co-operative education programs (working in your field while you are still a student), interdisciplinary studies, etc.  The list goes on and on and, for the informed student with a focus, it is no longer bewildering.  Having a career and/or life goal gives college a purpose.  During the course of collegiate study, students will refine their goals and might adjust their majors.  However, because of the foundation laid during high school, extreme changes (like my own switch from engineering to theology) are unlikely.

SOURCES

http://www.forbes.com/sites/halahtouryalai/2014/02/21/1-trillion-student-loan-problem-keeps-getting-worse/

U.S. Department of Education, National Center for Education Statistics. (2011). 2008–09 Baccalaureate and Beyond Longitudinal Study (B&B:08/09): A First Look at Recent College Graduates (NCES 2011-236), Table 3.

http://www.nytimes.com/2014/12/02/education/most-college-students-dont-earn-degree-in-4-years-study-finds.html?_r=0

U.S. Department of Education, National Center for Education Statistics. (2014). The Condition of Education 2014 (NCES 2014-083), Institutional Retention and Graduation Rates for Undergraduate Students.

The Institute for College Access & Success, 2014. Quick Facts about Student Debt. http://bit.ly/1lxjskr.

https://www.schoolcounselor.org/asca/media/asca/home/Ratios10-11.pdf