Soccer field sidelines are filled with parents sharing their college expense stories and sometimes “nightmares” that can create misinformation circulating through the community. Depending on the listening parent’s effort to validate or debunk the information gleaned can determine how useful the shared experience will be in guiding their own children.
Here’s a few common myths:
- MYTH 1: “I won’t qualify for ANY financial aid.”
- FACT: There is more than one type of financial aid. “Need based aid” IS determined based on income and asset values, as reported in the FAFSA (Free Application for Federal Student Aid), which is usually the concern of middle-class-two-parent-income-home-owning-I’ve- saved-for-retirement-and-not-much-else families. “Merit based aid” is awarded based on the student’s GPA, test scores, possibly leadership–not connected to any financial need.
- MYTH 2: “Only 4.0 + GPA and perfect SAT scoring students qualify for merit aid.”
- Each college awards merit aid with different criteria. The admissions website or financial aid website often explains the exact criteria used to determine merit aid. Some colleges award merit aid based on a tiered scale, where as the GPA and test scores increase, more money is given.
- MYTH 3: “My student (and family) will be ‘penalized’ for saving for college, by not being awarded more financial aid.”
- The FAFSA calculates “Parent and Student Asset Protection Allowances”. So, 5.64% of savings with only the parents’ names are expected (by the FAFSA) to be contributed toward college expenses and 20% of savings with the students’ name (i.e. 529 plan or trust), even with the parents’ named as guardians, are expected to be contributed toward college.
Paying for a college degree is one of the bigger expenses in our lifetime–currently rivaling buying a house or starting a business. Regardless if a family pays for college expenses with current income, borrows on the promise of tomorrow’s income or a combination of both–paying for college is not simple; requiring planning and frank discussions over time.
