College Pricing Tips

Satellite or Mother Ship? The vast majority of state-owned university systems have one “main campus” and several “satellite” campuses located throughout the state.  The cost of attending one of the satellite campuses is usually less than attending the main campus, even though the name on the diploma at graduation will be the same. For example, you can attend the Penn State Altoona campus for about $1,500 less per year than you would pay at the University Park campus.

College of Charleston or Stanford? ($20,000 Degrees of Separation) These colleges could fall in the famous category, but the point here is that one is a lower cost state school and the other a higher priced private school. For some common types of degrees – education, nursing and biology, for example – it might not “pay” to go to a private school that is $20,000 more per year when you might be able to get an equivalent education at a less costly college. Of course, this is no reflection on Stanford or the value inherent in a Stanford education.

The No Shame Game: There is no shame in attending a local community college for the first few years of college to complete the majority of the general education classes that most four-year colleges require.


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Unemployment Rates of College Majors

The big question: Can I get a job when I get out of college, has been answered by a new study from the Center on Education and the Workforce at Georgetown University.

The study, Hard Times: Not All College Majors Are Created Equal, was published in January of 2012, and offers valuable insight into the employment and earnings potential of various college majors.

The table above provides the unemployment rate and average earnings of recent college graduates in several categories of study, but the report also breaks each of these categories into more specific majors. “The risk of unemployment among recent college graduates depends on their major. The unemployment rate for recent graduates is highest in Architecture (13.9 percent) because of the collapse of the construction and home building industry in the recession. Unemploymentrates are generally higher in non-technical majors, such as the Arts (11.1 percent), Humanities and Liberal Arts (9.4 percent), Social Science (8.9 percent)1 and Law and Public Policy (8.1 percent). “

Technical majors are experiencing good employment and good initial earnings, but both vary depending on the specific area of the major.  “Unemployment in majors related to computers and mathematics vary widely depending on the technical and scientific content of the major.

Employers are still hiring technical computer specialists who can write software and invent new applications. But for information specialists who use software to manipulate, mine, and disseminate information, hiring slows down in recessions. We can see the difference in unemployment between people who invent computer technology as opposed to people who use computer technology.

The unemployment rate for recent college graduates in Information Systems has spiked to 11.7 percent, while the rates for majors in Computer Science and Mathematics are 7.8 percent and 6.0 percent, respectively. “

“Majors that are more closely aligned with particular occupations and industries tend to experience lower unemployment rates. Majors such as Healthcare, education and those related to technical occupations tend to have lower unemployment rates than more general majors, like Humanities and Liberal Arts, where graduates are broadly dispersed across occupations and industries.  Unemployment rates for recent graduates in Healthcare and Education are 5.4 percent compared to 9.4 percent for
people who majored in Humanities and the LiberalArts.”

Researchers Carnevale, Cheah and Strohl have decades of high level expertise in education, the economy and the workforce. This study is not only helpful and insightful, but it addresses the big question that has been widely debated in the media in recent years as the economy weakened, college costs have risen and jobs have become more difficult to get. “The question, as we slowly
dig out from under the wreckage left by the Great Recession, is unavoidable: “Is college worth it?” Our answer: “Yes, extensive research, ours included, finds that a college degree is still worth it.” A Bachelor’s degree is one of the best weapons a job seeker can wield in the fight for employment and earnings. And staying on campus to earn a graduate degree provides safe shelter
from the immediate economic storm, and will pay off with greater employability and earnings once the graduate enters the labor market. “

“Although differences remain high among majors, graduate education raises earnings across the board. The average earnings for BA’s now stands at $48,000 compared with $62,000 for graduate degrees. With the exception the Arts and Education, earnings for graduate workers range between $60,000 and $100,000.  It is easy to look at unemployment rates for new college graduates or hear stories about degree-holders forced to tend bar and question the wisdom of investing in higher education when times are
bad. But those questions should last only until you compare how job seekers with college degrees are doing compared to those with out college degrees.

Today’s best advice, then, is that high school students who can go on to college should do so with one caveat. They should do their homework before picking a major because, when it comes to employment prospects and compensation, not all college degrees are created equal.”


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Financial Aid Question of the Month

Q. For several years, I have been taking care of my brother’s student. I’m not the legal guardian and my brother and his former wife are rarely seen or heard from. How does this affect the FAFSA?

A. As long as at least one of the student’s parents is still alive, the student is considered a dependent person and the parent’s information must be reported on the FAFSA even if he has a guardian, legal or not…Unless the school has a documented reason to perform a dependency override which will convert the status to independent. To get a dependency override you will have to contact the financial aid department.

If a student is living with her grandparents or other relatives, the same principle applies. Unless the relatives have adopted the student, their income should not be reported on the FAFSA as parental income. Any cash support from persons other than the student’s parents should be reported as untaxed income. The school may also consider other kinds of support as part of the student’s financial resources and use professional judgment to include the support under the item for student’s untaxed income. Any support the student receives from his or her legal guardians gets reported on one of the FAFSA worksheets, but the student does not list them as parents on the FAFSA.

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Should You Put Your Kids’ Education ahead of Your Retirement?

If you’re like most parents, you want nothing more than to provide your children with a college education. Some have been saving since before their children were even born, but more often than not, a substantial number of parents find themselves in the uncomfortable position where their kids are fast approaching college age, but they themselves are staring their retirement years right in the face. So the question becomes: Should you sacrifice your retirement savings to put your kids through school?

During a conversation about this precise question, a wise insurance professional reminded us that while college-bound kids can always get financial aid, there is no such thing as “retirement aid.” And while it’s a nice wish, paying for a child’s education is not an obligation; and it’s certainly not worth taking out a second mortgage, cashing in a life insurance policy, or tapping into your IRA. Those funds can never be replaced, but your children will earn their own money. I can personally attest to this fact. My parents worked hard their whole lives, but simply couldn’t afford to contribute to my college education. While I could see that this pained them, I knew I could take care of myself. I reminded them that I would far prefer that they enjoy the fruits of their labors and live out their golden years without financial or emotional strain. So, I took out copious student loans to attend a private university where I pursued a double major, made the Dean’s list, and graduated with Honors — all while working 40 hours a week behind a bar, serving drinks to my more affluent classmates. I’m still paying those loans, but I’ll never regret the education I received — an education I earned myself.

While at university, I also noticed a powerful trend among my classmates, the majority of whom had their parents paying their way, and even supplementing their lifestyles with allowances and cars. These kids were no less intelligent than I, yet despite my over-burdened schedule, I was earning As while they were struggling to maintain a C average. It occurred to me that one of the reasons I felt so compelled to achieve was that it was my own money — money I was not about to go to waste. My education simply meant more to me, and my friends who were living off handouts were far less appreciative of their good fortune than I — and probably their parents — would ever have expected.

Anecdotes aside, the easy answer to this dilemma is to take care of yourself before you raid your retirement accounts and assets to fund your children’s education. They’ll certainly survive — and perhaps even thrive — knowing it’s something they’ve earned. Armed with an education, they’ll enter the workforce and establish their own retirement funds. With lifespans steadily increasing, your retirement could conceivably last upwards of 30 years, so ensuring you have the funds to support a long retirement means you won’t become a “burden” to your children, relying on them for shelter, money or care. And if this were to happen, what was all your sacrifice for in the first place?

Keep your nest egg, encourage your children to achieve, and with a solid planning strategy and a bit of luck, you’ll lead a long, happy retirement — one that allows you to spend time doing what you love with those you love, like those grandchildren you’re probably looking forward to spoiling!


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To File or Not To File

That is the question. Sorry. Couldn’t resist. Every now and then families with six figure incomes tell me that they will not be filing financial aid forms because they feel they will not qualify for any financial aid. I also know that hundreds of thousands of students from lower income families don’t file either.

Over the years I’ve learned that parents should file the financial aid forms REGARDLESS of their circumstances. If anything is true, it’s that things can change. Other than the one I mentioned, parents offer these reasons why they don’t file for aid:

1. It will hurt the student’s chances of being accepted
2. Don’t want to share financial their information
3. The forms are complicated
4. Not wanting to take aid from another student

To the point that filing financial aid forms will hurt the student’s chances of admission there is some validity. Some colleges are need-aware and can offer admission to only so many students needing financial aid.

What this can mean is that two students who are academically similar, but one needs aid and the other doesn’t, is that the college will take the student that costs the college less. When a college sees the affluent student’s list of schools applied to, the college can find some money to attract the student.

Not wanting to share financial data is a legitimate concern but the information will be as secure as it is with the IRS. Only a few people will ever see it. It’s true that the financial aid forms are complicated, confusing and time consuming. That’s why we complete those forms for our clients. But if you are doing it yourself, it shouldn’t take you more than ten hours or so to complete all of them (assuming that your student is applying to colleges that have multiple forms). If only applying to a state school or two then it will only take a few hours to complete.

Some affluent families feel it is morally wrong to ask for financial aid when there are so many students that need the money. I won’t argue the ethics. However, these families won’t qualify for most federal grants anyway so they won’t be taking any money from another student. Some colleges also require financial aid forms for academic scholarships. The money won’t go to anyone if that parent doesn’t file.

Finally, we have seen too many instances where something happens to a family’s ability to pay and they want to or need to reconsider their position on filing for financial aid. It’s better to have the paperwork all in so funds can be distributed quickly, rather than it taking months. The last chance to get retroactive financial aid has to before end of classes for the academic year. Consider filing the forms like car or health insurance. You hope you won’t need it but it’s there if you do.

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What To Do If You Need More Financial Aid

Appealing a financial aid award is a common practice but has its challenges. Many parents need more aid than ever, and college endowments have yet to gain back their losses. Some colleges will respond to your request to review your student’s award letter. Reasons why they should do so: your finances have changed; you had unreimbursed employee business expenses, unusually high medical expenses, or your student was offered a much better offer at another college that is very similar to the one he or she really wants to go to.

However, if you ask for more money without documentation of your problems or other award offers, it is doubtful that the school will see it’s way clear to offering your student more money. In fact, when you ask for money and don’t get it, 90% of parents end up sending their student to that college anyway. And financial aid directors know this.

Even if the odds appear to be against you, if you feel that you honestly deserve more help, then ask. The worst thing that can happen is they say no.

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Should I Wait Until I’ve Filed My Taxes…?

Don’t miss financial aid deadlines because you haven’t filed your taxes yet! Most schools have January and February deadlines for first-year students. Because they don’t expect parents to have their taxes done that soon, income estimates are perfectly fine! Use last year’s taxes and end-of-year pay stubs to make an educated guesstimate. Assets should reflect last known values. Usually this will be your most recent statement. Unlike income figures, asset values should NOT be changed on the FAFSA without a really,
really, good reason.

Business owners may use estimates based on 2010.

In the meantime, make every effort to get your taxes done by March 1st. I know this can be a difficult task, but some colleges and universities will ask you to send them a copy of your tax return and your student won’t get a dime until they receive them. If you will owe money to the IRS, send in your return anyway. The rule is that you send a signed and completed return, even if it hasn’t been filed quite yet.

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Before You Do Anything Else…

You and your student have been so busy with the application process for so long that it feels as though you should still be working at it until your student has that acceptance letter in hand. It’s difficult to stop. Here are a couple of things not to do:

  • There is no reason to call admissions to check on the application. The admissions process takes time. Calling constantly to check on the status of the application will not help. Calls from parents especially will not help. Unless there is a major change in some information in the application, do not call.
  • Don’t ask your student if she has heard anything, or whether her friends have heard anything. It’s time to put this on the shelf and let her enjoy high school for a while knowing that the job was well done. Let her live in the NOW.

If you wish to discuss graduation rates with admissions, I’ve found it productive to ask what steps your student can take to increase the chances of graduating in four years rather than asking why the four year rate is low (or low compared to others).

Here are some top reasons why a student might not graduate in four years:

  • Transferring to another college
  • A change of direction or major
  • College not offering enough classes each semester
  • Completing a double major
  • Failing too many classes
  • Artificially raising GPA to keep scholarships by withdrawing from too many classes
  • Low GPA
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Standardized Tests, What You Should Know

Standardized tests are a fact of life. They are not going away anytime soon. Even the so-called “SAT Optional” schools that don’t use test scores for admission still use the tests to award merit money.

The SAT is a reasoning and critical thinking skills test. The ACT is an achievement test. Students can do better on one test than the other. Because colleges accept either test, it’s a good idea to know which test your student will shine. So the question that begs to be asked: “Should I invest in a test prep course for my student”?

To help answer, a recent report by the National Association for College Admission Counseling criticizes common test-prep industry marketing practices, including promises of big score gains with no hard data to back up such claims. The report also finds fault with the frequent use of mock SAT tests. These are often much more difficult than the real tests, and so these lower scores can be used to inflate your student’s improvement when compared to the actual scores.

Jonah Varon, a straight-A student at Lowell High School in San Francisco, took a mock SAT from a test-prep company and scored 2060 out of a possible 2400. A few weeks later, he took the real test. Even though he didn’t take that company’s tutoring course, he scored 340 points higher and got a perfect 2400. If he had taken the course, his parents would have spent $1,500 with no improvement. In fact, most students who took the SAT before completing such a training course showed improvements of only 30 points.

To get higher scores on standardized tests, it’s better to learn the necessary skills and not rely on tricks to “test well”. There are tools that increase knowledge and build skills and are very affordable. One of them is the SAT Question of the DayTM. Each day a new question is emailed to your student and you can be copied, too. It’s very simple to register.

  • Go to The Official SAT Question of the DayTM website and log on in to the MY ORGANIZER section (lower left of your screen) by clicking GO.
  • Enter their user name and password and click SIGN IN.
  • To the right of the MY ORGANIZER banner, you will see Manage My Email Subscriptions.Click on it.
  • On the left at the top of the many the student emails you can get is The Official SAT Question of the Day. Check the box and click Submit at the bottom of the page.

IF YOUR STUDENT DOESN’T HAVE AN EXISTING COLLEGE BOARD ACCOUNT click: Create a College Board Account and enter the required info. That’s it! Easy peasy, lemon squeezy. The ACT has an ACT Question of the Day, but it doesn’t email the questions to your student, they have to remember to log on.

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Tax & Financial Aid Tips

When it comes to paying for college, everybody needs all the help they can get.  So this week let’s talk about some tips to help with financial aid and tax aid as well.

Tax Aid Tip

The American Opportunity Tax Credit has been extended for tax years 2011—2012, and is available for taxpayers with a modified adjusted gross income of up to $180,000 (for married filing jointly), and $90,000 for single tax filers. The amount of the credit is based on 100% of the first $2,000 of qualified college tuition and fees paid, plus 25% of the next $2,000 in tuition and fees, for a credit of up to $2,500 per child. The credit phases out between $160,000—$180,000 of MAGI for married taxpayers filling jointly, and between $80,000—$90,000 of MAGI for single taxpayers. This credit can be used to reduce the taxpayers federal tax dollar‐for‐dollar, and is refundable up to $1,000 for some taxpayers.

Financial Aid Tip

1) If you are unemployed, you may be considered a “dislocated worker” for financial aid purposes, and that may help increase your child’s need‐based financial aid eligibility under the federal financial aid rules.

2) Some colleges require both the FAFSA (Free Application for Federal Student Aid) and the CSS Profile when students apply for financial aid. Both applications can be completed online.

3) Many tax deductions, credits and favorable tax rates have been extended for through 2012. Check with your tax preparer to make sure that you are making the most of all of the tax changes.


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