Key Tips

College = Great Investment

Families are often nervous about taking out loans to help pay for college. But when it comes to a college education, a small amount of loan debt should not be something to fear. Did you know that recent information estimates that college graduates will earn, on average, a million dollars more than high school graduates over the course of their lifetimes? And the average undergraduate student loan debt is about $20,000 (that's about the same - or less - than a new car!).

The Importance of Saving Regularly

Many families think they will never be able to save enough to cover the cost of college, so they don't even try. Wrong! Saving even just a few dollars every week will add up. Click here for a savings calculator, to see how quickly your savings can grow.

College Application Pointers

• Take the best overall schedule you are capable of handling, including a strong academic course load senior year.
• Take the SAT and ACT in the spring of the junior year and retake the test(s) as a senior to improve your scores.
• Get your teacher recommendation from someone who teaches a college prep class. Always be sure the people that you ask can be supportive of you.
• Give yourself sufficient time to write a well thought out essay, and plan on doing several drafts.
• Keep track of all your extracurricular activities and list them, along with special positions you held and honors you received, on your application.
• Find out if an interview is required and thoroughly prepare beforehand if you plan to have one.
• If you are really interested in a school, make that known. Talk to, and work with, the college(s) you would really like to attend.

Academic Reminders

• Take honors and AP classes when available and appropriate
• Aim for the most rigorous high school diploma option given the student's abilities and interests
• Keep in mind that courses and grades are the most important factors considered by colleges during the admission process
• Know that the State of Indiana ties the level of assistance under the State grant aid program to the type of diploma received by the student - in other words, students receiving more rigorous diplomas receive a higher percentage of their eligible state grant awards

FAFSA: Key to Grant Consideration

The only way to be considered for federal and state grants is to complete the Free Application for Federal Student Aid (FAFSA). In Indiana, certain steps in the FAFSA process must be taken by students early in the spring semester of the senior year of high school and each year after that until the student is finished. Without these steps, a student may not be considered for federal, state and institutional grants. Click here for more on the FAFSA process.

FAFSA: A Must for Need-Based Scholarships

Most colleges require that a student file the Free Application for Federal Student Aid (FAFSA)to be considered for need-based scholarships. Some also require that a student complete a second financial aid form (often the CSS Profile. Be sure to ask what forms are required by each of the colleges you consider. There are steps involved in the FAFSA process which every student must take. Click here for more on the FAFSA process. Click here for more on the CSS Profile.

FAFSA: Required for Federal Student Loans

To get a Perkins or Stafford loan, a student must file the Free Application for Federal Student Aid (FAFSA). There are steps involved in the FAFSA process which every student must take. Click here for more on the FAFSA process.

Federal Work Study Requires the FAFSA

To be considered the Federal Work Study Program a student must file the Free Application for Federal Student Aid (FAFSA) There are steps involved in the FAFSA process which every student must take. Click here for more on the FAFSA process.

Multiple Family Members in College

Many people will have more than one child in college at the same time, and this can impact financial aid eligibility. Each student that applies for financial aid must complete a Free Application for Federal Student Aid (FAFSA), and each student gets an EFC based on his/her reported information. When figuring the EFC for students who have brothers and sisters in college at the same time, the Parent Contribution is split among the children in college.

As a result, each student's individual EFC may be lower in years when multiple family members are in college. This can mean more need-based aid eligibility (because of the lower EFC). In some instances, it can mean thousands of additional dollars in need-based federal, state and institutional aid. Talk to the colleges you are considering if your family will be in this situation.

Student Income Can Affect Financial Aid Eligibility

The federal formula used to determine need based aid expects students who earn above a certain level of income to put that money toward college if they earn more than the formula allows. Under the formula for academic year 2007-2008, a student can protect $3,000 in net earnings (after taxes) - or roughly $3,300 in gross earnings - without "penalty". Beyond that, students can hurt eligibility for Pell Grants and other kinds of need-based financial aid because the formula will expect 50¢ of every $1 beyond the protected amount to be contributed by the student when calculating the student's Expected Family Contribution (EFC), regardless of whether the student saved the money or not. (As your EFC rises, you are eligible for less need-based aid.) The one exception to this rule is money earned through a Federal Work Study (FWS) job on campus. The dollars earned through FWS are excluded from a student's total income in calculating subsequent financial aid eligibility.

How You Save Can Affect Financial Aid Eligibility

In calculating the EFC, the federal formula expects a family to contribute 20% of any student assets toward the next academic year. This percentage will drop to 20% in academic year 2007-2008. The same money in a parent 's name might not be considered at all in figuring the EFC because parents get an "asset protection allowance". Certain assets in a parent's name, like retirement plans, life insurance and home equity in a primary residence are not considered under the federal formula. Even when parents' assets exceed their asset protection allowance, the "worst case" is about a 5.6% contribution. For more information on how different types of education savings plans are treated under the federal formula, click here.

When the Asset Rules Really Count

Remember this rule of thumb regarding the current treatment of assets under the federal formula for financial aid: For those families for which the EFC is likely to be greater than the cost of attendance at the student's college or university due to parent income and assets, the financial aid implications of how various assets are treated should not be a major concern. However, for those students who are likely to show financial need at the college or university of choice (meaning the EFC is likely to be less than the cost of attendance), you will want to carefully consider the financial aid consequences of holding various assets.

Searching For Scholarships

Start researching scholarship opportunities before the senior year if at all possible, and pay close attention to application deadlines and requirements. There are many places to search for scholarships. The high school guidance office at your school can be a first step. Another good idea is to look at a copy of the program handed out at high school honors night at the end of the school year. These usually list names of local scholarships that students have won. Ask the school counselor how to find additional information about these scholarships, or contact the person or agency that awarded a specific scholarship for more information.

 You should also check out these sources of possible scholarships:

•  Community resources (community foundations, civic associations, social and professional clubs, fraternal organizations {e.g., Elks, Moose, Kiwanis, Seton}, patriotic and veteran's organizations, local trust funds)

•  Parent's and student's employers

•  Faith-based organizations (churches, temples, mosques, etc.)

•  Extra-curricular organizations (4-H, Boy/Girl Scouts, musicians' organizations, civic theaters, etc.)

•  Volunteer and community service scholarships (nominated through schools or youth agencies)

•  Hospitals or other health service providers

There also are some FREE national scholarship searches to explore. Here are just a few:

Note: You may be required to provide personal information in order to complete these scholarship searches. Be sure you understand the privacy policies of each site and how your information will be used.

Scam Warning! There are many companies who offer to sell students their scholarship search services for $39, $89 or even hundreds of dollars. Some of these companies may be reputable, but many prey on students and parents worried about college costs. These companies can find scholarships for students, but students and parents can find the same scholarships on their own if they spend the time hunting through books and Web sites. Check out the Better Business Bureau at http://www.bbb.org and/or the U.S. government's scholarship scam alert site at http://www.ftc.gov/bcp/conline/edcams/scholarship/index.html before purchasing any of these types of services.

Three Ways Colleges Treat External Scholarships

Some students will receive scholarships from private sources in addition to those they may be awarded by the college they plan to attend. Common sources of such scholarships include local community foundations, employers, civic organizations and the like. If you anticipate you are a likely candidate for such an award, another important consideration to be aware of is how colleges will treat those "outside scholarships."

Many families are unaware that there are essentially three different ways in which colleges handle these awards:

•  The college reduces the student's unmet financial need or the amount of self-help (loans and/or work study) found in the student's aid award. In this scenario, the student directly benefits dollar for dollar from the scholarship award.

•  The college reduces the amount of assistance they otherwise would provide. In this scenario, the student does not get the benefit of this additional scholarship. Essentially, it replaces a scholarship or grant that otherwise would have been provided by the college.

•  The college employs a combination of the two strategies mentioned above, reducing some of the unmet financial need or self-help (loan and/or work study) the student otherwise would have faced while also reducing some of the free money they otherwise would have provided. Obviously in this scenario, the student gets some benefit from the external scholarship award, but not the full benefit.

It is important to find out ahead of time the approaches taken by the colleges you are considering. A quick call to the admission or financial aid office should be all it takes.

The Big Picture - Three Important Things to Keep in Mind

•  Very few students pay "sticker price" for college. Because of the way college funding works, very few students pay the price published by the colleges. Financial aid makes a big difference.

•  You don't have to do it alone. This is a complex process to get through, but there are many people and resources out there to help. This web site gives you a place to start. You will need advice from other people along the way, and many of the resources you need are listed here for you.

•  The payoff is worth the pain. We all know college can seem overwhelming - getting ready for it, paying for it, and getting through it can be challenging. However, some kind of educational training after high school is the key to competing for the jobs of today (and tomorrow) and to having options that will last a lifetime.

Important Steps You Can (and Should) Take

•  Pursue financial aid opportunities. Some people believe there is no reason to bother filing the Free Application for Federal Student Aid (FAFSA) or other financial aid forms because they are too complicated or someone told them it was a waste of time. Continue to explore all the options by filing key forms.

•  Start saving. Don't assume there will be enough financial aid to put your children through college. Most families will be responsible for some of the costs of college. Be sure to save wisely so that savings don't hinder potential financial aid eligibility. Click here for more information on savings & financial aid. Click here to get a better idea of how your savings can grow over time.

•  Remember that few students pay "sticker price" for college. Because of the way college funding works, the majority of students do not pay the price published by the college. Financial aid makes a big difference.

•  Understand the impact of having multiple children in college. Many families who don't make enough to pay the entire bill but do make too much to qualify for maximum need-based grants find that having more than one child in college at a time changes the amount of financial aid available to each student.

Important Steps For Those Without Need-Based Aid Eligibility

•  Explore merit-based aid opportunities. Merit-based scholarships are a very important mechanism to reduce the amount paid by the family. Find out where your student's merit-based opportunities are the greatest. Keep in mind some colleges may not offer any merit-based aid at all.

•  Keep saving for college. Don't assume "full ride" merit-based or athletic scholarships will completely cover the cost of your child's college education when the time comes. Most families will be responsible for some college costs. Be sure to save wisely so that you maximize the benefits of the tax code and your resources. Click here for more information on savings & financial aid.

•  Understand the impact of having multiple children in college. Some higher income families are surprised to find that having more than one child in college at a time changes the financial aid available to each student.