- MYTH: Parents should set savings aside for their child's education in an account under their child's name and report the funds as student savings rather than parents' savings when applying for aid because student assets are treated more lightly than parents' assets in the analysis of need.
REALITY CHECK: Actually the reverse is true. Because the analysis of need recognizes that parents need to set aside funds for retirement, a large portion of parent assets are protected in the analysis, and only a small percentage of any remaining amount is tapped for a contribution toward college expenses. On the other hand, typically none of the student's assets are protected, and a direct contribution is expected in the amount of 35% annually of all reported student assets toward meeting college costs.
Parents who save funds for their child's education should keep these funds under their own name (perhaps in a separate account) and include them as part of all cash and savings in the parental section of the aid applicaion. Of course, these funds would still be available for use to help pay college bills as part of the parent's normal contribution, but they would not then unfairly erode the student's eligibility for aid.
- MYTH: It is better to work and save for an education for a few years, and then use those savings to pay for the education when a sufficient amount is accumulated. In this way borrowing can be kept to a minimum.
REALITY CHECK: This will depend upon the student's eligibility for assistance at the starting point. Many students who choose to work for a few years and then attend school later simply discover that their savings greatly diminish their eligibility for aid when they finally hit the campus. If the student has grant eligibility to start with, they may well discover that the earnings they saved now cause them to lose much, if not all, of their grants. The savings can be used as intended, but the loss of grant eligibility seems a harsh way to treat someone who has worked to help themselves. A better way may be to not postpone the education and work part-time to augment the aid the student is eligible to receive.
If students have no initial eligibility for aid (presumably because of family financial strength), working for a few years may be the only way to offset the parents' unwillingness or inability to provide financial help. There is always the danger, however, that little will be saved and the college dream will fade. The old adage, "Never put off until tomorrow what you can do today," may apply.
- MYTH: Because a sibling was not eligible for aid last year, the same will hold true for the second child who attends college.
REALITY CHECK: This may or may not be true. Often there is an overlap when both siblings are in school at the same time, and this has the effect of almost dividing the assessed parental contribution in half for each -- thus each child has a better likelihood of being eligible for aid. This would also be true if a parent were now attending college (such as night classes). Other factors to consider have to do with any downward changes in family income. If the older sibling had a high income or considerable savings, that might have been the reason why no eligibility was revealed -- the younger sibling might not have this financial strength. It is always best for each sibling to apply for aid in order to see for sure what the eligibility is.
- MYTH: Parents who want to pay for their child's education should just bypass regular student aid and apply for a PLUS loan if they need temporary help meeting expenses.
REALITY CHECK: That may sound simple, but it is important not to overlook the advantages of alternative borrowing possibilities. PLUS loans carry a higher interest rate than unsubsidized Stafford student loans, so it would actually be less expensive for the student to take out the unsubsidized Stafford loan (the parent could still make payments to reduce this obligation for the student). Parents may also discover that borrowing a home equity loan would be cheaper when considering the income tax break involved. Another possibility would be to borrow against a whole life insurance policy, if one is available -- the interest rate in such policies can be impressively low. Of course, there is always the possibility that the student might have qualified for grant assistance had he or she troubled to apply for aid instead of just applying for the PLUS loan. Many colleges are now requiring PLUS borrowers to first apply for aid just to insure that no better aid is overlooked.
- MYTH: Parents can simply say that they will not cooperate in the aid application process because their child has reached the "age of maturity" and aid will be granted to the child as an "independent" student.
REALITY CHECK: This really won't accomplish anything because the determination of who can be considered independent of their parents is set in law. Unless the student is an orphan or ward of the state, 24 years of age, a veteran, married, has a dependent of his/her own, or is a graduate student, the student cannot be considered independent. Period. If the parents won't cooperate in the process, the child will have to overcome the parent uncooperativeness by covering the full cost without aid, if that is possible. Of course, after the age of 24, the child can apply as an independent student, but that's a long wait.
If the parents will just fill out the application forms, at least the child can then be awarded whatever eligibility dictates, and if the parents are unable to help by providing the amount that is expected of them, the child may be able to make up some, if not all, of the shortfall with personal earnings and unsubsidized Stafford loans. Because the loan amount is limited in the initial years ($2,626 freshman year), it can be difficult to meet all expenses going that route, but if the student plans ahead and saves significantly from part-time and summer high school earnings, it can usually be done.
- MYTH: If the published deadline or priority date for applying has already passed, it is useless to apply for aid -- there will be none left.
REALITY CHECK: There is always aid available for eligible students, even retroactively in the spring semester to go back and help meet fall semester costs. May deadlines are important, however, and you must be sure to complete the FAFSA well in advance of the May deadline to have your eligibility for Pell Grants and Stafford Loans determined before your enrollment for that academic period ends.
A word of advice, however, is that accounts not paid in full at the beginning of each term usually incur late charges. Early application for aid is the best assurance that such charges can be avoided.
- MYTH: Since the determination of financial aid eligibility is based based upon the prior calendar year income information, drastic changes in circumstances that reduce family income during the subsequent year will have no effect on the student's eligibility for additional aid.
REALITY CHECK: If a family does not communicate these appeal related circumstances, then the myth is true. A student/family should immediately contact the Financial Aid Office when there is a drastic change in the financial situation form one year to the next. In such cases, when sufficient documentation is presented, the aid officer can make a professional judgment to change the year of data upon which the FAFSA analysis is based from prior year income to projected year income. At SUNY Fredonia this is done via an Appeal Form that can be requested from the Financial Aid Office. On this form, parents and students will be able to demonstrate the loss of income from one year to the next. There are other types of extenuating circumstances not tied to a loss of income (medical expenses, divorce, death, private secondary tuition expenses, etc.) that can also be evaluated. To summarize, when a family's economic situation has changed from one year to the next they should contact the Financial Aid Office for guidance.
- MYTH: Changes in the applicant's family income which generate more need can only result in increased loan opportunities, never grant increases.
REALITY CHECK: A few years ago, it was true that professional judgments which improved a student's eligibility had no effect on the Pell Grant. However, that was changed, and now major family financial upsets can be met with increased Pell Grants as a result of documented professional judgments made by an aid officer.
- MYTH: It is better to turn down a need-based College Work Study Program job and work on regular non-need-based employment because more aid can be secured that way as regular employment can be ignored as a resource to meet the assessed college cost. The student can replace the work-study job with a loan and still work on another job, thus ending up with more money.
REALITY CHECK: On the surface it is true that the student will end up with more money in the year this is done than if he/she simply accepted and worked on the College Work Study Program job. Of course, taking more loans will mean more has to be repaid later! But the real reason it is normally not a good idea to do this is that earnings on the College Work Study Program do not have to be reported next year in the analysis of your need. Therefore earnings of this kind will not reduce your eligibility for aid (even grants) the next year, whereas earnings on any other non-need-based program do have to be reported and will impact your aid eligibility.
The analysis protects (ignores) about $2,200 of a single dependent student's after-tax income ($4,000 or more is protected for independent students, with the protected amount rising as the independent student's family size increases), so if all your non-need-based earnings in this calendar year fall under this amount, your next-year's aid will not be affected. If, however, your earnings will exceed this amount, you would be better off accepting the College Work Study Program job to avoid reducing your aid (and grant) eligibility next year.
- MYTH: If a student gets married, he or she will get better aid as an independent student.
REALITY CHECK: Once you have completed and submitted your financial aid application for a given year, marital status cannot be changed unless you are correcting the status for the date of the original submission. There is a particular regulation that forbids updating this information within the year. Aid won't be improved because of the marriage that year. If you had not applied earlier in the year, then you could submit an initial application as a married student and you would qualify to apply as an independent student on the basis of being married. Spouse financial information would be required instead of parental information.