Updated: May 3, 2013 12:14PM
Originally published: August 7, 2001
What if your child is ready for college and you aren’t?
Last week, I showed you one way to save money for college, through the CollegeIllinois prepaid tuition program.
But time is short, so you’ll have to act quickly to apply for scholarship programs at most schools. In this case, the sooner the better because much financial aid is distributed on a first come, first served basis.
Useful web sites
Here are some of the best Web sites for seeking help in securing financial aid in college:
A free search for all sorts of scholarships and grants
The federal government’s site, with all the forms and instructions.
An educational site for student loan borrowers.
The SallieMae site filled with useful information.
A total guide to financial aid.
If you use these Web sites--and they’re easily accessible at the public library--you’ll never fall for those consumer ripoffs that urge you to pay fees to get financial aid, or help you process your application.
Don’t make the mistake of not applying because you think you won’t qualify based on need. Even middle-income families usually can get some sort of federally subsidized loan.
It all starts with parents and students filling out the dreaded FAFSA (Free Application for Federal Student Aid) required by almost every educational institution. You can’t file before Jan. 1 of the year in which you’re seeking aid, so if your child is a graduating senior seeking aid for this fall, the rush is on.
Deadlines for submitting the FAFSA vary by school, but many are as early as March 1. In Illinois, the deadline for first-time filers for aid is Sept. 30, but many schools have earlier dates for their own institutional aid programs. In Indiana, the deadline for applying for funds is March 1.
Be sure to check with individual schools for their deadlines.
You can get the FAFSA at your high school guidance office, or complete and file it online at www.ed.gov. Or call for a copy at (800) 4-FED-AID.
Plan to spend some time on this project. The form requires you to include not only your income, but also your assets. You’ll need your W-2 form, showing your 2000 income. And it will help if you’ve already done your taxes for last year, even though the tax filing date is not until April 16.
Be accurate. If the form is returned because of omissions, or even because you forgot to sign it, the delay could cause you to miss out on the first round of aid distributions.
The forms require parents’ and student’s financial information, including 1099 earnings for 2000, as well as current banking and investment records. Because money held in the student’s name counts about seven times more heavily against the family in the aid formula, it is highly recommended that you spend down custodial accounts in the student’s junior year, perhaps buying a computer or car or other items to be used for the student’s benefit.
Once the data are submitted, the government processor uses a federal formula to calculate what the family can be expected to pay toward college expenses. This is known as the EFC--expected family contribution.
This information comes back to the family on the SAR--student aid report--within about four weeks, or earlier if you file electronically. You also can designate up to six schools to receive the information on the FAFSA (much as you have SAT scores sent to schools).
The financial aid office at that college will take the EFC and compare it with the total cost for that school. Then aid personnel will create a package of loans, grants and/or work study programs.
When the student receives the aid offer, there may be a chance to negotiate for more aid. Or the student can choose to attend a school that offers a better aid package. The Internet has simplified the process of searching, understanding and filing for financial aid.
Now, here’s a bit of bad news. You also may be required to file another form--the CSS/Financial Aid Profile, administered by the College Board. Though much of the information is the same, it still takes time. And if you think filing the FAFSA was tough this year, wait until next year. You’ll have to file all over again for every year in which your student seeks financial aid. But it’s worth it.
And that’s the Savage Truth.
Terry Savage is a registered investment adviser for stocks and commodities and is on the board of directors of McDonald’s Corp. and Pennzoil-Quaker State Co. Send questions via e-mail at savage @suntimes.com.