ADVISOR PLAYBOOK COLLEGE PLANNING • Big Changes on the College Admissions Scene • Twelve Things You Need to Know About College Loans • 10 Ways to Cut the Cost of College • Cracking Financial Aid Forms • Seven Ways to Appeal a Financial Aid Award • Three Tools to Cut the Cost of College • Nine Things to Know About College in Europe • When Clients’ Teens Are Wait-Listed • Eight Things Clients Need to Know About Athletic Scholarships • Using Retirement Money to Pay for College WEALTH PLANNING what you need to know: Big Changes on the Parents can now file for financial aid three months earlier than in the College Admission past. Traditionally, fami- lies couldn’t access the FAFSA until Jan. 1 each Scene year, but the federal gov- ernment has now begun SIGNIFICANT CHANGES HAVE JUST KICKED IN FOR THE FAFSA. BY LYNN O'SHAUGHNESSY releasing the FAFSA on Oct. 1. The earlier release date wouldn’t be all that remarkable except for the other major develop- Higher-education selves. What seems clear is ment. For the first time industry insiders have been that families should be the ever, FAFSA filers will be speculating about what the big winners. completing their applica- new Free Application for tions using two-year-old Federal Student Aid rules A Look at the tax returns. This change is will mean for families and Changes being referred to as prior- also the colleges them- Here is a rundown on prior year or PPY. Photo: Steve Shepard/Getty Images Shepard/Getty Steve Photo: WEALTH PLANNING Using two-year-old tax tax returns were wrong, Nearly a third of schools returns means that for stu- a school’s financial aid said they were exploring With the new dents heading to college package would be based adding the application admissions for the 2017-2018 school on faulty figures. In some choices of early decision calendar, students year and for returning cases, a school could with- and/or early action. college students, parents draw an aid offer or lower With the admission and their families will use 2015 tax returns. it weeks or months later. cycle pushed up, schools will have to start Under the old system, par- The FAFSA and anticipate reaching out to thinking about ents would have used 2016 PROFILE changes will students sooner. At the college choices (one-year-old) returns. also help families by giv- start of every school year, earlier. The CSS/Financial ing them more advance admission representatives Aid PROFILE, the second notice in the college have fanned out across the most popular financial aid admission process. With country to make a final application, has followed parents now able to file for push to reach high school lockstep with the FAFSA financial aid nearly a year seniors. Now, it’s antici- and will also require the before their children head pated that schools will be use of two-year-old tax off to college, it’s expected making much more of returns and offer the ear- that schools will provide an effort to reach out to lier application start date admission and financial juniors in the spring. of Oct. 1. aid verdicts sooner. An With the new admis- The earlier avail- industry survey earlier sions calendar, students ability of the FAFSA and this year suggested that 90 and their families will PROFILE, along with the percent of families would need to start thinking use of two-year-old tax like their award letters about their college choices MORE WEALTH PLANNING: returns, is designed to earlier. earlier. This means that make filing for financial With speedier notifica- they shouldn’t wait until http://wealthmanagement aid easier, less stressful tion, families will have the fall of senior year to .com/wealth-planning and reduce errors. much longer to decide generate a college list. And here’s why: The which college to pick and In this time of tran- financial aid cycle and fully understand the cost sition, it’s critical that the IRS tax-year cycle and financial ramifica- families apply for financial have always been too tions of the choice. Under aid as close to Oct. 1 as much in sync. Right after the old system, families possible. Some schools the Christmas holidays, sometimes didn’t receive offer aid on a first-come, parents were traditionally their aid packages until a first-served basis and the faced with having to deal few weeks before they had funds may be depleted at with their taxes for the to make a final decision. some schools if families previous calendar year An industry survey of wait until next year. and applying for financial nearly 550 college profes- It’s also important for aid. Making this double sionals released in the families to check what burden more difficult spring revealed that 69 the admission and finan- was that the deadlines for percent of schools said cial aid deadlines are for some state financial aid they would be releas- schools. In a letter sent to programs and colleges ing financial aid verdicts thousands of college presi- were early in the year, earlier beginning with the dents in August, the U.S. which forced parents to current admission cycle or Department of Education rush to do their taxes. next year’s. urged colleges not to When parents couldn’t The same survey alter their admission and revealed that 80 percent financial aid deadlines this Lynn O’Shaughnessy get their taxes done is a nationally recognized higher-ed promptly, they were of administrators believed year due to the FAFSA speaker, journalist and author of The always free to estimate the that schools that did not changes. It also asked the College Solution. She shift their admission schools to make a push to writes about college taxes to complete the aid for CBS MoneyWatch forms, but that was prob- cycles earlier would be at a notify families about the and her own blog, lematic. If the estimated competitive disadvantage. aid changes. n TheCollegeSolution.com. WEALTH PLANNING 1. To qualify for any Twelve Things You federal college loan, a family must file the Free Application for Federal Need to Know About Student Aid (FAFSA). Many of your clients prob- ably assume that they College Loans won’t need to file for finan- cial aid, but that’s the only HOW TO EASE THE FINANCIAL PINCH. BY LYNN O’SHAUGHNESSY way to borrow through the federal government. 2. Some parents worry that if they file the FAFSA, even if it’s only to qualify As higher-education A growing number of for federal loans, that some prices continue to rise families have been turning schools (most notably steadily across the coun- to college loans to ease the highly selective private try, parents face the chal- financial pinch. institutions) will reject lenge of covering these Here are 12 things that their child’s application. costs as their kids head you should know about Private schools routinely to college. borrowing for college: favor high-income stu- dents, and a prime reason is because they don’t have the financial need that many applicants possess. A way to alleviate this con- cern is to file the FAFSA after the child has been accepted to the school. 3. Parents should not regard a late FAFSA fil- ing, however, as a way to qualify for need-based aid from a school. College admission officers get irri- tated if a child states on the admission application that he or she won’t be filing for financial aid and then switches positions after an acceptance in a bid to get need-based grants from an institution. It’s unlikely that a student, even if eligible, would receive need-based aid after pulling that trick. 4. The federal Direct Loan is widely considered the No. 1 loan among all the borrowing possibili- Images enisaksoy/Getty Illustration: WEALTH PLANNING ties. Only college students $50,000 cost of attendance 10. When looking at can borrow through the –$18,000 student grants private loans, your clients Federal lending Direct Loan. and Direct Loan need to be aware that these programs offer Students who are $32,000 = amount parent loans don’t provide the several repayment attending college at least could borrow protections that federal part-time can obtain the through a loans do. plans and loan Direct Loan, which offers PLUS Loan Private loans, for forgiveness options. a fixed interest rate of 3.76 instance, don’t offer Private loans do not. percent for the 2016–2017 7. Strangely enough, par- income-based repayment school year. The interest ents can’t be turned down plans, which are features rate is set annually based for a PLUS Loan even if of the federal lending pro- on the 10-year Treasury. they have no realistic abil- grams. Qualified students ity to repay the debt. with federal loans can 5. There is a limit on how Since the federal gov- make payments based on much students can borrow. ernment isn’t significantly a formula that calculates For most undergrads, here limiting parent borrowing, what they can pay based on are the limits: it’s critical for parents to their discretionary income. calculate how much is safe There are several federal Freshmen: $5,500 to borrow. They can do repayment plans, including Sophomores: $6,500 that by using the federal Pay As You Earn. Juniors: $7,500 loan repayment estimator The federal lend- Seniors: $7,500 at studentloans.gov. ing programs also offer $27,000 loan forgiveness options, 8. Parents with excellent including for borrowers If a child takes more credit histories may also who end up as teachers than four years to obtain a want to explore private and work in public service bachelor’s degree (and the college loans.