Report: Financial Aid Process Is Too Confusing

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<p>That is an easy one. There is no way – none – that the IRS could allow electronic download of its information without guaranteeing it will be hacked. And of course, the folks sophisticated enough to use TurboTax (and its competitors) are not the ones missing out on Pell Grant money.</p>

<p>Turbo Tax isn’t pulling this data from the IRS – it is getting it from Fidelity, from Bank of America, from Paychex, from Charles Schwab,…</p>

<p>No reason FAFSA couldn’t do the same.</p>

<p>kelsmom, So people input incorrect data on the FAFSA – easy enough. But are you saying that when they send in copies of their tax returns, they also falsify those? </p>

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<p>People enter incorrect amounts by mistake. That I understand. What I refer to is the fact that some people flat out put an amount that does not exist in reality. When they are selected for verification, they do submit the correct forms. The thing is, the tax returns have a whole lot more income than the FAFSA sometimes … I think some people believe they can fool the system, but verification catches them (I will give them points for being honest in submitting the real information for verification). I do feel that verification remains an important tool in keeping folks honest. If no one ever looked, I can only wonder how many more might fudge their numbers.</p>

<p>One thing I would really like to see is a better way of communicating to non tax filers that you do NOT have to file a tax return to get financial aid (you just have to file one if you are required to file one!!). I keep seeing posts on CC that show me that many students & parents think not having a tax return means they are out of luck for financial aid. I hear that from students I help in real life, too. If the goal is to help very poor students, this would be an important thing to do.</p>

<p>And I just answered another question on this very topic!</p>

<p>Here’s one…and I’d love to know how this can be avoided. Person files a tax return in February with one set of numbers on it (lower income etc)…and signs and submits that return. Prints it out (so they can sign it when the colleges ask for it). Then they submit their FAFSA using those numbers from THAT return.</p>

<p>AH…but then somewhere later in the year, perhaps even AFTER the student has received their financial aid award and even money…the family “realizes” that some “errors” were made on tax return #1 and they do an amended return that now reflects higher whatever (perhaps the first time they neglected to include something like self employed second income or a capital gain or some kind of high dividend or interest income). </p>

<p>Tecnically the individual HAS corrected their tax return and changed the “mistakes”. </p>

<p>I don’t think I’ve ever seen a requirement that amended tax returns and corrected FAFSA be filed in this case.</p>

<p>I think the forms are challenging. It also irks me that the colleges are all “your kid is 18 and an adult, so all the medical/grade stuff goes to him” but then they turn around and say “For billing, your kid is a dependent until age 24, so cough up.” If the kid is an adult, then lets look at HIS resources for paying (not mine). </p>

<p>My heart breaks every time a kid posts here who wants to go to college but has parents who won’t or can’t fill out the paperwork. </p>

<p>I also have a beef with the phrase “Financial Aid” because people do think that is “Scholarships” – not “loans.” </p>

<p>Lastly, I have a beef with how easy it is to sign here and here and get the loans. Sure, there is a few minutes of “counseling” but there is not a correlation between degree and payment realities. I’d love for the counseling to require a computer model exercise that says some thing like "You are borrowing $20,000 for your freshman year. Your major is listed as English. According to our data, you will likely borrow a total of $82,000 for your four year degree and will pay $XXXX a month for XX years on a typical English teacher’s salary of $XX,XXX. Last year’s graduates in English had a Y% employment rate at 3 months after graduation. " That would be sobering stuff.</p>

<p>Several comments to clarify–put some minds at rest–move the discussion along. I work as a college applications counselor in an inner city HS. 90% of the students I deal with have an EFC of Zero. I have done the first 30 out of over 100 FAFSAs I will do with students. I have to say that the FAFSA actually IS easier this year–all the talk about simplification, actually seems to have gotten thru to somewhere. No more questions about Black Lung (or whatever it was), the form almost always completely skips the student’s assets, many questions have really been pruned away. But there are still vocabulary problems, working with this population. What is an asset? What is adjusted gross income? What is an exemption? Students, and even parents, often do not know the difference between the amount withheld and refunded to them, and the amount of taxes they have Paid. </p>

<p>And do not even get me started on the fees charged to these working class people by tax preparers!! Yes, ANYONE earning under $58,000 or so, can do their taxes FREE thru the IRS website and Freefile, just choosing their own online company. I do this as well with students if asked (hey, it’s part of the whole process, if they get Verified they are going to need those papers). I actually like HR BL**k’s free file program, but even that one asks a few questions that involve vocabulary that is not often familiar.</p>

<p>Of course the CSS Profile is another issue entirely. Try doing that one with parents in the Caribbean who have citizen children they have sent to live with relatives stateside, but have never arranged for legal guardianship or whatever. Or with anyone who has no idea about their pension (do most of us, reading this, really know?), or any of the rest of the vocabularly. But as I tell students, these institutions have their own money, you want their money, so they can ask you any questions they want, and if you want their money, you have to answer the questions. (I REFUSE to let paperwork be an impediment to any of this school’s students going on to college!)</p>

<p>So I think some progress has been made, some, on lowering the intimidation level of FA. Here are a few of my peeves though: Schools’ financial aid award letters are often written in cuneiform, or SOME language (and vocabulary) that no neophyte can understand (I make a handout chart, easier than the CBoard one, so that students can do apples to apples comparison of FA packages), schools say additional paperwork (budget sheets, non-tax filer’s forms) are required, available online and then the links don’t work (state schools a lot), schools want this done early but they have not posted up-to-date information yet for next year, and, finally…</p>

<p>THE FINANCIAL AID DEADLINES ARE OFTEN WICKED HARD TO FIND! Why is that so hard?! (I think I know, sadly). I just looked up 40 of them for my students on a snow day, and it was beyond frustrating. It is NOT hard to put a deadline on a website. Why would that not occur to a school?</p>

<p>Rad, kudos for helping the kids.</p>

<p>Thanks. It’s sooooo much fun!! And of all the problems in the world, this one is solvable!</p>

<p>Radimom, great post! I agree that it can be maddening to find specific information on college websites - not just deadlines and other FA requirements, but also things like estimated COA, which is supposed to be accessible! Some schools make it very easy but, for others, it won’t come up even when using every possible variation of search terms on their sites! In those instances, I use College Board’s info for quick answers on deadlines and COA, until I get an email reply from the school…unfortunately, I have found CB’s info can sometimes be outdated or just plain wrong. I also think that every school should have their Common Data Set posted since that is often illuminating as well…although probably not for parents/kids who have language barriers. </p>

<p>And why is it that schools can manage to keep their websites up to date on nearly every topic other than FA?! I can’t tell you how many I’ve seen this year that are still referring to 2009 and received an email from a FA office yesterday thanking me for reminding them to update their posted information (which listed incorrect COA, among other things)…huh?! Hard to believe that it’s January '11 and I’m the first person to question this…guess some folks are going to have some head-scratching moments in the near future!</p>

<p>Also agree about the award letters…so many people who don’t understand the differences between scholarships, grants, work-study, and loans. Some of them just add up everything in the list and think they have a great package when, in reality, a hefty percentage is self-help aid. I would prefer that schools be asked to use a standardized format for award letters which clearly listed both the estimated COA/budget, the EFC that the awards are based on, and the awards grouped in properly labelled categories.</p>

<p>Standardized format for awards, yes! Btw, D1’s school told me yesterday, they haven’t set 2011-12 tuition/RB yet.</p>

<p>LF, lots of schools haven’t set next year’s rates yet…very annoying, but I often look at the pattern of increase over the last 2-5 years and estimate accordingly (except for state schools, where that can be dicey in this economy!).</p>

<p>*My “aid” package from Babson was 7700. It was all loans, and a bit of work study. Yeah right no way I’m going there unless I can get one of their scholarships. *</p>

<p>I hear you. </p>

<p>But, maybe this is part of the problem. Colleges are expensive and who is supposed to pay for them? Wouldn’t it stand to reason that the person who is going (or his family) should be the primary payers? There simply isn’t enough money for every student “with need” to get aid/scholarships to pay for their education.</p>

<p>Back in the 70s (the stone age, when I went to college), most students just commuted to their local state school. Only the more affluent went “away” to college. While it can be argued that kids benefit in some way by “going away” (and they probably do), I can easily look at many very successful people that I know that never went “away” to college…they just commuted to their local state school - paid for with student loans and part-time jobs. I don’t think the benefits of “going away” can be justified by arguing that tax-payers should cover those costs…especially since many taxpayers are having a hard enough time paying for their own housing/food costs.</p>

<p>It also irks me that the colleges are all “your kid is 18 and an adult, so all the medical/grade stuff goes to him” but then they turn around and say “For billing, your kid is a dependent until age 24, so cough up.” If the kid is an adult, then lets look at HIS resources for paying (not mine).</p>

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<p>Thank the Family Rights and Privacy in Education Act (FERPA) for the first, and the underlying assumption of federal financial aid (the family bears the responsibility first & foremost for the cost of a child’s education). It’s easy to solve the first issue … search the school’s website for FERPA Release, have the kids fill it out, and send it to the school. You will then be allowed the access you desire (if your kid desires it, as well).</p>

<p>As for the second … if that was not the expectation, what a mad rush there would be to say the parents just can’t or won’t help.</p>

<p>Radiimom, good points. I agree that the FAFSA is simpler this year. I just helped 5 students complete theirs yesterday, and I was surprised at how much better the skip logic is this year.</p>

<p>I think award letters should be broken down even further. COA is too confusing. I think that COA should be broken down into “estimated direct costs,” which would ONLY be estimated charges for tuition/fees/and room & board if on campus (minus room & board off campus) and “estimated other costs,” which would include miscellaneous personal costs, estimated book costs, transportation costs, estimated housing costs (for students living away from home but not on campus). Financial aid should be broken down into “Scholarships and Grants: Do not require repayment,” “Student Loans: Require repayment,” “Federal Work Study: Cannot be subtracted from bill; job not guaranteed; securing job is student’s responsibility and wages are earned in the form of a regular paycheck,” “Parent PLUS Loan: Offered as an option for parents who may need assistance in paying the balance not covered by scholarships, grants, and student loans; not guaranteed, as a credit check is required.” In addition, it is very important that it be clearly noted that grants are prorated when enrollment is less than X credits (and the proration formula for each type of grant), scholarships are subject to the terms of each specific scholarship, loans require half time status of at least X credits.</p>

<p>I also detest many e-bills, as not all colleges are very good at explaining that these are a snapshot in time … and where to look for CURRENT information.</p>

<p>Count your blessings with the skip logic on the FAFSA now. We always had to fill out the WHOLE thing.</p>

<p>Re: standard awards…there is such a thing for the Pell grant. If your EFC is below a certain amount, you are guaranteed a certain amount of the Pell. We already have that.</p>

<p>The truth is, the only thing that is standard is the Pell. Even Stafford loans are not guaranteed, since total aid cannot exceed COA … so scholarships can actually negate the ability to borrow even an unsub loan for a lucky student. Only Pell is awarded in excess of COA (when all other aid is non need based). Because there are so many variables involved, nothing else could be considered standard.</p>

<p>In regard to post #51-- costs for 2011- Last night I worked on a spreadsheet I have that compares all the costs and aid for my D’s 9 college applications. I was very surprised that one only had information on the 2011-2012 costs. Even one college–Simmons, that D has been accepted to-- sent a list of the tuition, fees etc. that were listed for 2010-2011.</p>

<p>How are we to compare COA if we don’t even know what each school is charging??? It’s such a scam!</p>

<p>The board of governors often set tuition rates at the JULY meetings!! I have seen this with both public & private U’s. Schools often hope it will be done sooner, then finally just do an estimate when it is time to actually package aid for the year (which is usually early spring for incoming freshmen - sometimes much later for returning students - many wait until spring grades post).</p>

<p>Two replies to some random points (not the main topic)</p>

<p>1) It’s not true that you can’t efile for free if you have a higher income as far as taxes. You can’t use the tax software for free which is provided for lower income people, but you can use fillable forms and efile free. I’v done it the past three years.</p>

<p>2) FERPA does not prevent communication to parents of dependent children. If your kid is listed as a dependent on your tax forms, you have a right to see their college records.</p>

<p>garland, not quite accurate. FERPA says a school MAY give over records to a parent if their child is dependent, but it does not say they have to. And many schools elect not to.</p>

<p>I agree that financial aid is a very daunting process, especially if you are uneducated about tax forms and the like. Radiimom made some excellent points. I can say that without the help of folks on CC, my mom and I could never have figured out where to apply and how to fill out fafsa/css/etc. And I couldn’t have gone to school without some of those dreaded loans.</p>

<p>But to everyone saying that clarity is what’s needed…I have to say it’s not the whole answer. While seeing evidence of how long these loans take to pay off is pretty rough, it almost never stops people from taking them out. Ask any 22 year old with a credit card balance. On every statement there is a chart that says how long the card will take to pay off if you only pay the minimum each month. Does that stop most people from using their credit card and paying the minimum? Not really. Should it? Absolutely, but money one only has to pay in the future is a very hard concept to wrap one’s head around, especially as a young student who hasn’t had a full time job/monthly bills/real financial responsibility. The same thing goes for student loans. Look at the situation with law schools now. There have been a number of recent studies investigating whether students who were aware of their slim job prospects coming out of law school would still elect to go. THe answer was an overwhelming yes. Everyone is going to think he is the exception to the rule; he’s going to get the high paying job and pay off those loans within a matter of years. Sadly, we’re blind to our dimming future.</p>

<p>I think in most cases, taking out student loans isn’t the problem. I’d say the majority of students taking out loans are taking out a manageable amount and aren’t making poor decisions about their future (for-profit university students may be the exception). What I would like to see is colleges taking a real step in teaching students about financial responsibility. Teach us how to save our money and invest it, teach us how to fill out our taxes and fin aid forms. And don’t give us more loans than we need. I was an RA and had a full scholarship my last 2 years of college and was still offered and extra $10,000 in loans. Undergrad students shouldn’t be offered that much to live on…if you can’t afford anything beyond tuition and room and board, you should get a job. If I’ve learned anything over my last 4 years at school, it’s that everyone’s familial financial situations are very different, so I don’t really think there are any broad changes that can be made. I do know that when you’ve grown up having very little money, it’s very hard to learn how to manage it when you’re offered it and then need to pay it back. We should work on that first.</p>