At Pillar6 College Planning We've created a simple acronym that I think you'll appreciate. PLAN are the four key steps you will need to remember as you go through during your child’s college planning journey.

“P” stands for Preparing. Now just like you would if you were taking a road trip, if you remember back in the day – well, not only when we took road trips but also when we had to prepare before we had navigation screens in our cars and on our phones - you know you take out a map and plan out the journey to get from where you are to where you'd like to be. Well, it's important to do it here and I'll mention the specific things that you have to do in future posts.

“L” stands for Look.  Looking for the right colleges. Now, a lot of families don't get this part right, unfortunately, because they let their kids drive this part of the process first. And this usually happens around in the spring of the kid's junior year in high school where they start talking to their friends or their college counselor at school and beginning to build a list of colleges that they want to go to as well. The problem is what teenagers look for in colleges may not always be the same thing that you as a parent would look for in a college and the finances is one of those areas. So, it's really important that the second stage that you and your students develop a really clear and shared vision of the ideal college that you're looking for and having a clear target to aim for exponentially increases the probability that you're actually going to hit it.

“A” stands for Apply. Now, everybody knows that you apply for admission by submitting one set of forms and then you submit a second set of forms for financial aid. Well, the challenge in this step is that everyone generally focuses most of their attention on the application - on the admission applications - and the financial aid application(s) almost is an afterthought. It's something that they get to when they're done with everything else, and that's a big mistake.

“N” stands for Negotiate. Negotiation is not the word that colleges want us to use. The technical term is the financial aid appeal or special circumstances appeal, but you know what, let's call it what it is. It's a negotiation. When you submit your financial aid forms and the admission forms and you get the acceptance letter, usually within a couple of weeks you will receive your financial aid award packet, and a lot of families by then are so excited that their kids got into the schools that again they don't pay as close attention to the financial aid award. Oftentimes, even if they do pay close attention to the financial aid award, they don't realize that the first offer is not set in stone and you can go back and ask for more money especially if they didn't give you the right amount of money, which happens all the time, right. I mean colleges despite how wonderful they might be as institutions, they're still a business and their goal is to sell as many seats as they can at the highest possible price. And so if you don't know how to negotiate with them, you're leaving money on the table.

So, folks, these are the four key money steps and we're going to break them down into the subcomponent parts during future posts, so stay tuned.  I'll give you some actionable things that you can take away from this to implement in each one of these key steps.  You can also hear me talk about these four steps at www.4moneysteps.com.

Roman Polnar

What we want to teach parents is to play the piano with both hands. You want to spend just as much time, energy, and attention on the admission side of your child’s college application process as you do on the financial aid side because of these three things.

1. Financial aid is awarded on a first-come, first-served basis. So, as soon as the good money is gone, it's gone, no matter how eligible you may be as a family. Somebody else might have the use of the money that you could have had. So applying at the right time is important.
2. Applying in the right way is important and a lot of families make the same mistakes year after year in part because these financial aid forms aren't very clear. They don't give you a lot of instruction and not knowing exactly how to answer questions is what leads to a lot of financial aid that is lost and left on the table.
3. You have to fill out the right forms. A lot of people know the FAFSA which is the Free Application for Federal Student Aid, but some colleges require that you submit additional forms, and if you're not sure how to complete those forms or what those forms even mean or that they even exist, again it leaves money that you could have had on the table.

For more information like this you can check out www.FAFSAdoneright.com

Roman Polnar

Over Reporting, this is something I see far too often as families complete the FAFSA. I Can't tell you how often this happens and effectively increases the amount that colleges think you can pay for college.

Before I talk about each one of these mistakes, this is just a bit of a humorous image but something that I want you to have on the back of your mind. Don't be this person. This is not the time to brag.

It's also not the time to hide anything. You have to be honest and truthful, but you have to know the rules of the road. The FAFSA has about a hundred questions, but behind the FAFSA, there's close to 1,100 other pages that talk about the rules and what you're supposed to do that obviously most parents never read.

Below are the four most important things for you to remember when completing the FAFSA.

1. Report net values which means subtract all expenses associated with converting some asset into cash.
2. if you have an asset that's harder to sell, not like an investment where you can just click a button and it's done - things like real estate - check with your local realtor to see how much of a discount would you have to give a buyer in order to make sure that your home would sell in 30 days or less. The same would apply if you own a second home or investment property. How much of a discount would you have to give in order to make sure that those sell within 30 days. Know that you want to subtract that as well including taxes, realtor fees, any transaction costs that you would incur and you only report the net value
3. If you own a business that employs less than 100 employees, don't put a value down. If you own a business that employs more than a hundred people, then go through the same exact calculation that I described above.
4. This is a huge planning opportunity for divorced families that is almost always missed. Remember the 50/50 plus one-day rule. So, if you have 50/50 custody of your children, the question often comes up, 'Well, who reports their financial information on the FAFSA,' and the answer is the person with whom the child spent fifty percent of the time plus one extra day.

I hope this has been helpful for you.  If you want more information related to the FAFSA check out one of our Online Programs which can be found at https://www.pillar6college.com/courseguide

Roman Polnar

As we approach October (when the FAFSA opens up) and you will need to calculate your Estimated Family Contribution (EFC) there some things you need to watch for….

The main two reasons that EFC ends up coming up higher than you anticipated.

First, input error.  Oftentimes, when you're completing these forms, a parent may inadvertently hit an extra digit and increase the value of their assets or maybe they put some asset in the wrong column. So the student aid report aside from having the EFC will have all the questions and all of your answers listed as well so you can double check your inputs to make sure it's done correctly.

The second reason errors occur is because of the IRS making a mistake. If you were not aware, the FAFSA is going to pull your tax returns from two years prior. This is done electronically directly from the IRS and it on some occasions, it happens that when your values get reported to the FAFSA, something gets done or reported incorrectly. Now, we had this happen almost every single year. At least one or two families come back to us and say, "Something doesn't make sense. We can't figure it out. We've looked at our student aid report. All the values that we put in are accurate." But the EFC is coming up tremendously high and the most recent example that I'm thinking of what happened two years prior is that the father switched companies, and in the process, he rolled over his 401k. Well, when the IRS reported those figures to the FAFSA, some lines got crossed and that rollover amount appeared as income and his EFC skyrocketed. So, that's okay. It happens and that's why you verify.

If you find a mistake that you can easily fix because of user error, you just log back into the FAFSA, make the change, and resubmit. If it's an error that you cannot find or you cannot fix because it's coming from the IRS, contact the school. Let them know and they will work with you to find a solution. 

I hope this has been helpful for you.  If you want more information related to the FAFSA check out one of our Online Programs which can be found at https://www.pillar6college.com/courseguide

Roman Polnar

Often, I receive questions about which parent should fill out the FAFSA in the case where the parents of a college bound student are divorced.  I thought about the best way to convey this message and I felt an example was the best way to share with you how you should look at the FAFSA in the case of a divorced family.

This is a '50/50 plus 1-day rule.' If you're not familiar with it, this is valuable and applies specifically to divorced families. Now for the story.  This family, mom and dad were divorced but were working together to help their kids go through college and this particular case the son was already a sophomore. They completed financial aid forms, and here was their situation. So, they both had joint custody, 50/50. They both provided equal support to their son and dad claimed his son as a dependent on his taxes because dad had higher income and so both agreed that this would help dad pay less in taxes. They also assumed (incorrectly I will add) that it was going to be dad who would have to report on the FAFSA and fill out the form.

Well, that was wrong. There is a rule called a 50/50 plus 1-day rule and what it says is in a divorced family where you have joint custody and you provide equal support to the student, the person whose information gets recorded on the FAFSA is the person with whom the student spends more time, and in this case, because they had 50/50 custody and because they provided equal support, interestingly enough, the son spent more time with mom just because she was closer to the school and we had mom complete the FAFSA, because her Estimated Family Contribution (EFC) was a lot lower than dad's. She had lower income. In the end the mom became the custodial parent for the purposes of the FAFSA. Dad still claimed his son as a dependent on the tax return. Those systems are completely separate, and as a result of mom filling out the FAFSA, they got $17,000 in financial aid that they did not get in the first year because they didn't realize that this 50/50 plus 1-day rule existed.

It is important to remember here that just because one parent in a divorced family claims a child for the purposes of taxes, that does not immediately translate to them having to also be the parent that completes the FAFSA.

For more information like this you can check out www.FAFSAdoneright.com OR www.4moneysteps.com

Roman Polnar

For more information like this you can check out www.FAFSAdoneright.com OR www.4moneysteps.com

Roman Polnar