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Archive | February, 2011

Students Living on Nickels & Dimes (video/song)

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Farming Income On The FAFSA – It’s No FarmVille

Farming Income On The FAFSA – It’s No FarmVille

Unlike FarmVille, where everything is “make believe” and doesn’t impact your actual net worth or adjusted gross income, the FAFSA does like to take these sort of items into consideration.

A couple of weeks ago, we talked about how assets from family farms are not factored into the FAFSA when the family materially participates in the operation of the farm. Since that article, I have received a few inquiries about the income side of farming and how (or if) that is reported on the FAFSA.

The following represents a question I got from a family and my answer is just below it. I hope this helps to provide guidance for other families. I am always up for a good challenge, so if you have other FAFSA questions, please do not hesitate to drop me a line.

FAFSA FARMING INCOME QUESTION:

My husband is 40% owner in a small family farming business which is actively participating in the growing, harvesting, packing & shipping of onions.  Their business is incorporated.  Our 2010 income, between the W2 & K form, looks as if it was quite high since we had to show 40% of the total income of the company as our own income.  However, we did not pocket all of that money.  My husband & his partner take a set salary each month.  The amount above and beyond his normal salary remains in the company.  Because of the incorporation, it looks as if my husband earned 40% of a rather large amount of money in 2010.  But the reality is, the majority of it never entered our hands.  How do we fill out the income portion of the FAFSA?  Is the amount beyond our actual W2 income amount considered a deductible amount since it actually isn’t part of our personal gross income? And how would we figure out what our adjusted family gross income would be?

ANSWER:

Unfortunately, you have to report the income from the farm when you are filling out your FAFSA.There really is no way around it. However, you can always follow up (appeal) with each of the financial aid offices and utilize a process called “professional judgment”. They may make some sort of concession and adjust your FAFSA results (EFC) on the back end.  Unfortunately though, based upon my experience and discussions with financial aid professionals, 90% of the situations like yours usually don’t get an adjustment.. But it never hurts to ask right?

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Want Free College? San Francisco Has Just What You Need!

Want Free College? San Francisco Has Just What You Need!

One of the downsides of getting the college experience is that you usually have to pay for it. Depending on which school you go to, some may pay more than others. But what if the financial factor was removed from the educational equation and all you needed to do was show up and be passionate about learning (or teaching).

A new initiative is coming out of the heart of San Francisco (actually out of the basement of a local store) and it is being referred to as the Free University of San Francisco. Alan Kaufman is the brain-child of this new educational experience. He came up with the idea in December of 2010 and by February 5th the Free University opened its doors and started providing free lectures for all those in attendance.

For a number of years, colleges have shared their databases providing lectures, class notes, tests and assignments to self taught learners via the internet. What the Free University of San Francisco brings to the table that makes them a little different is the human element. Their classes are not taught via YouTube, they don’t have online chat rooms for discussion, and they don’t require a WIFI connection to participate. All you have to do is stop by the basement classroom of Viracocha and apparently you had better come early because space is limited and seats go fast to hear the lecture series provided by volunteer instructors.

Free University of San Francisco does have a commonality with most free colleges in that they are not accredited. So you won’t be getting a transcript for your completed coursework or an officially recognized diploma for the wall in your study. Fortunately though, you also won’t be accumulating a mountain load of education debt (unless you count the knickknacks you purchase from the store on your way down the stairs to class).

If you would like to learn more about the Free University of San Francisco, feel free to stop by their website. The next round of courses start in March and they are all held at 998 Valencia Street. The storefront might say Viracocha, but likened to a speakeasy, the basement serves a purpose far greater…

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Tuition Freeze is Thawing Out at MCAD

Tuition Freeze is Thawing Out at MCAD

You may remember that last year I wrote an article about how the Minneapolis College of Art and Design was implementing a tuition freeze for the first time in a number of years. President Jay Coogan stated that the tuition freeze would only be for a year and that a minimal increase was probable for the subsequent year.  Keeping true to his word, President Coogan just announced a tuition increase for the 2011-2012 academic year. One of our readers recently sent me a copy of the letter emailed to MCAD families this last week. You can read it in entirety below.

In response to the letter, I think that a 3% increase in tuition is pretty good given the double digit increases that we see popping up across the nation. I also like how they directly associated their increase to that of inflation for the past couple of years (1.5% each year).  Not many schools are quick to compare their tuition increases to the rate of inflation (probably because they exceed it every year). So, I give credit to Coogan and MCAD for their comparative analogy.

Request For Information
If you (or your student) go to a college or University that experienced a tuition increase (or decrease) that was historically significant, please don’t hesitate to pass the announcement letter or video onto me to share with our readers at CheapScholar.org. It could be great exposure for your college and it also helps to keep our readers in the loop of what is happening with tuition expenses in higher education.

MCAD Tuition Increase Letter

To all students:

I am writing to let you know that the Board of Trustees of the Minneapolis College of Art and Design has set tuition for 2011-12 academic year at $30,385; this is a 3% increase over the current year’s tuition of $29,500.

Over the past several years MCAD’s tuition increases have been among the lowest of art and design schools and private colleges in the country. Last year the Board took the unprecedented step of holding the tuition level from the previous year. When averaged out over two academic years, the 3% increase amounts to an annual increase of 1.5%; this is comparable with the nation’s overall rate of inflation.

In setting the amount for next year’s tuition we have kept two key objectives in mind:

1.     Keeping the increase as modest as possible so as to minimize the impact on MCAD students and families.

2.     Continuing to invest in the resources that help us maintain a high quality education. We believe this investment ensures the best possible programs and facilities to support our educational programs.

Members of the MCAD Board and I all understand the cost of attending a private art college creates a financial challenge for you and your families. Many of us faced similar challenges in attending college and all of us respect the sacrifices required. In order to help, MCAD is adding an additional $167,000 of institutional financial aid for the coming academic year.

Like all colleges, MCAD depends on fundraising to meet the financial needs of it students. The college has initiated the Students First Scholarship Challenge to provide currently enrolled students with additional financial aid. We are close to meeting this year’s goal of raising $100,000 from alumni, parents, and other donors in new and increased gifts—which will be matched by the Board for a total of $200,000 in increased scholarship funds. We hope to raise a similar amount of new funds this coming year.

MCAD is a place where creativity meets purpose. We are committed to spending your tuition dollars wisely in order to provide you with the best possible art and design education and help you achieve your goals as you transform your creative passions into meaningful careers and work in the world.

Sincerely,

Jay Coogan

President

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Wintertime is FAFSA time (video)

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Financial Aid Directors: We Are Here! We Are Here! We Are Here!

Financial Aid Directors: We Are Here! We Are Here! We Are Here!

One of the most important unclaimed, untapped and underutilized resource for college students is the financial aid director. These folks have spent years (some decades) doing what they do and are an amazing resource for families and students that are struggling with the financial aspect of their college experience.

Likened to the Whos found in Dr. Seuss’ fable of “Horton Hears A Who”, college financial aid directors are persistent in having their voices heard and sharing the “good news” of what the financial aid office can do for you. While they may not have an Eiffelberg Tower (found in Who-ville) in which they can perch to make their shouts heard, you can be assured that they are using every last resource, no matter how small, to prove that they can be the most helpful of all.

I recently had the opportunity to sit down with a financial aid professional to gain some insight about how they help families traverse the financial aid process and make college more accessible. I hope you find my interview with him to be informative and helpful.

Mr. Randy Green is the Director of Financial Aid at Wittenberg University (a private liberal arts school located in midwest Ohio). Mr. Green eats, sleeps, and breathes financial aid and has done so for over two decades. He was recently recognized by his peers at OASFAA for his service to the financial aid community.

(Q) Mr. Green, as a financial aid director, can you give families some advice on the best way to approach a financial aid office or director about questions that they have regarding financial aid packages, scholarships, or awards?. Do you and your counterparts prefer face to face meetings, emails, phone conversations, or all of the above? Can you give an example of how NOT to approach the financial aid office for help?

(A) My first bit of advice is to encourage families to contact their financial aid office if they have questions, regardless of how they do it. Some families may be reluctant to do so, but the more that the financial aid office knows about a family’s situation, the more likely they will be able to help.  Having said this, there are some general recommendations that I always offer: be nice (we’re on your side), be persistent (if you don’t understand the answer, ask again in a slightly different way or simply ask for clarification), use email (although not as personal, you may receive a more timely response and you will simultaneously have the correspondence documented). There are also a number of situations to avoid: if you’re angry about something, wait a bit until you cool down; if you have a question or request, ask it as soon as possible – there are some financial aid processes that take days or weeks to complete, so if you wait until the last minute to make the request, you may not like the response.

(Q) The economy has been slowly recovering and experts state that we are no longer in a recession. Given this outlook, have you witnessed a positive impact with the families and students in which you serve? When it comes to college costs, how have financial aid directors been able to help families through these uncertain economic times?

(A) While the recession may have technically ended in summer 2009, financial aid offices are certainly still seeing fallout from it.  Many of the resources we set aside at my institution to help families through difficult times have been fully committed, but we are constantly working with our university advancement colleagues (those nice folks who raise money for us) to save those students we can.  A few weeks ago one of our alums contacted me and asked if we could use an extra $2000 – I offered a resounding “Yes!”, he donated it through our website, and I allocated it to two young men in dire straits within two days. Working at a relatively small college allows me to know where the needs are and to respond quickly when opportunity presents itself. If these two families had not shared their situations with us, I would not have been able to assist them.

(Q) A good number of students are in the midst of their college search process and will hopefully be narrowing in on that perfect school. Do you have any insider tips or suggestions that you can provide to help them navigate the financial aspect of this journey?

(A) We are closing in on a crucial part of the college search process, when families will be receiving financial aid packages from the schools that are still on their lists.  My first suggestion, to every family, is to file the FAFSA form.  While designed to award federal aid, its results are also used by state, local, and university aid programs, so to cast as wide a financial aid net as possible, families really do need to file the FAFSA.  In addition to this very broad net, they might try a little fishing in the local pond – look at the list of scholarships won by last year’s graduates and approach those donors, because you know for certain that they awarded scholarships to students (probably) much like the students graduating this year.  Finally, make use of the scholarship search sites available on the Internet, but be careful not to provide certain information such as Social Security Number, etc.

(Q) FAFSA season is upon us. Do you have any helpful words of encouragement for families so that they can properly prepare for that magical moment?

(A) The federal government has worked very hard, and effectively, to make the FAFSA a simpler process. Although the questions one student has to answer may be different from the questions a different student has to answer, the best advice I can offer is to take the FAFSA one question at a time. The whole financial aid process can be daunting, but if it is examined step-by-step, it is eminently doable.

(Q) What is the most important piece of advice that you can give to students that are going to college and finding it difficult to cover the associated expense?

(A) I suppose I will cheat a little and offer two “most important” pieces of advice. 1) Keep your perspective: it is easy to fixate on one part of what is, most likely, the most important decision in your life thus far.  Every school you look at has something different to offer.  2) Keep moving: there are many steps to the college search process, starting with the initial data gathering through figuring out how you’re going to pay for it, and all the way to learning to live with a sloppy roommate, but to get to each new step you have to complete the previous one.  And remember, there are people at the university who will help you along your way.

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Having “The Talk” With Your College Bound Student

Having “The Talk” With Your College Bound Student

More than likely, you have already experienced a number of key “talks” with your child over the years. The first one probably had something to do with “Don’t Bite Your Friends” or “Stop Feeding The Dog Your Green Beans”. The talks that followed those basic fundamental lectures probably came at pivotal moments throughout their youth and well into the teen-age years. My guess is that some parents still have “talks” with their middle-aged children from time to time. 😉

Regardless of the who, when, where, or whys of those all important talks, one key conversation you want to have with your college bound student is that of basic financial knowledge. You have been paying your bills, saving for a rainy day and keeping groceries in the cupboard for a number of years. Now it is your turn to impart your financial “know-how” onto your child.

Mary Johnson is the Financial Literacy & Consumer Advocacy Manager at HigherOne and she suggests the following tips to help you broach the money talk with your college student.

  1. Clarify Expectations – Who Is paying for what? What do you plan to do if you are short on money? : While you may have already talked about this, it is a good idea to review how much college is going to cost each year and clarify what portion you are committed to paying for. Be sure to discuss all costs associated with going to school such as books, travel, cell phone charges, food and other miscellaneous living expenses. These are areas that students often overlook and you will want to be clear about how much of these costs, if any, you will be covering. If they are receiving Financial Aid, make sure they know the difference between grants and loans and who will be responsible for paying off those loans once they have graduated.
  2. Recommend Setting Up A Budget – How much money do you have and how will you make sure you have enough to last the semester/academic year? How much will you need each month to pay your bills and other expenses? What is the difference between a need and a want? : One of the major money pitfalls new college students fall into is spending too much on things like snacks and take-out. Creating a budget will help your student gain control and balance needs with wants. It doesn’t have to be complicated, just something that sets out a realistic picture of how much money they will have and/or earn; and how they plan to spend those funds over the course of the semester or year. You may want to suggest using a sample budget provided by the institution’s Financial Aid office to get an idea of how to estimate some costs like travel and food. Including a small cushion for unexpected expenses isn’t a bad idea either; it will help your student set priorities of what bills must be paid each month and what expenses may need to be reduced. If they are on a meal plan, for example, remind them to take full advantage of what they have already paid for instead of eating out. Also, warn them about the dangers of loaning money to other students or getting in the habit of treating friends when they go out.
  3. Explain How to Use a Bank Account – How do you plan to keep track of your banking transactions? Do you know how to balance your bank account? What happens if you overdraw your bank account?: Often, money management problems when starting college can be traced back to a student’s initial banking experiences. Students often pay unnecessary fees for things like overdrafts and returned checks because they don’t keep track of debit purchases and ATM withdrawals. It is really important to help your student understand how to use a bank account and how to keep and reconcile their own records. It is also important to remind them to use their own financial institution’s ATMs to avoid fees.
  4. Point Out The Differences in Payment Cards – What’s the difference between a debit card, prepaid card and credit card? What are your payment obligations when using a credit card? What is a credit score and how can being late on a payment affect it?: There are a number of ways to pay for things without using cash or a check. However, they are very different. A debit card is linked directly to a bank account so when a purchase is made by swiping the card, the student is using funds he or she already has. A prepaid card is preloaded, usually by parents. It contains a limited amount of money which can be reloaded when the funds run out. Using a credit card, however, means the student is borrowing money from whatever financial institution issued the card. If the balance isn’t paid off each month, interest charges will accrue and these can add up quickly.Missing or being late with credit card payments and other bills will damage a student’s credit score, something that may take years to repair. The federal CARD Act implemented in 2010, puts age limits on credit cards—you can’t get one if you’re under 21 unless you have a co-signer or can document that you have enough income to make the payments. If you do decide to co-sign, make sure the credit limit is set to an amount that allows the balance to be paid in full every month.
  5. Talk About Protecting Personal Information –  Do you know what identity theft is? What should you do if your debit or credit card is lost or stolen?: Identity theft is a fast-growing problem. Students should know how to safeguard payment cards and what to do if a card is lost. Most debit and credit card companies offer protection against fraudulent activity, however they must be notified right away. There are other ways that thieves can gain access to personal information such as using skimmers on card swiping machines, phishing via phone or email solicitations and computer hacking. Remind your student to carefully review bank and credit card statements, shred unwanted documents that contain personal information, lock-up personal records, use secure internet connections and never give out personal information unless the requesting source is truly legitimate.

If you would like a printable PDF version of the tips provided by Mary Johnson, you can download a copy here.

Hope you found this information helpful. If you think someone else could benefit from these tips, please feel free to utilize the “share tab” below to pass the information along.

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FAFSA FAQ (video)

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