Nearly 70% of Families Worry about Paying for College

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With nearly all Americans suffering some form of financial strain, families of college-bound students suffer even greater stress…

How will they now pay for school?

Due to consequences arising out of the Pandemic of 2020, almost 70% of families now worry about covering their portion of the cost-of-attendance.

According to a survey by Discover, 53% of those surveyed stated their child’s education plans changed.  Students are moving to schools closer to home (reduced cost), delaying enrollment (financial pressures), and choosing a “less expensive” school (sticker price).

More than half (55%) of parents stated concern that their children weren’t receiving enough financial aid (a 14% jump).  Likewise, more than half (54%) will use retirement savings to help pay for the education (an 18% jump).  And, nearly 40% of families tapped their education funds to cover everyday living expenses.

There is no better time than now to contact us to help you determine the best way to move your college planning campaign forward financially.  We are here to assist you.

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The Burgeoning Financial Aid Gap

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Parents, students, families suffered economically during the Covid-19 worldwide freak-out.  Not only did they suffer from the downturn, so did colleges and universities.

Financial aid gaps that existed before the Pandemic of 2020 will be even greater now and for the foreseeable future.

Schools with small endowments, schools that offer lesser amounts of free money (scholarships, awards, and grants), schools overly dependent on foreign students who may not return, and schools heavily reliant on tuition to cover expenses, will find themselves in highly precarious financial situations.

Accordingly, the aid offered by these schools will be lower.  Lower aid offers result in even higher need on the part of families and students.

The traditional options to cover the gap will be the same as they were before the pandemic.  And those options typically will result in an even higher student debt load.

Let’s face facts – the traditional, conventional ways to pay for an education don’t serve the needs of the family and they haven’t for quite some time.  Traditional and conventional just doesn’t work any longer.

The financial coaches at Vivensure deal in the non-traditional and unconventional.  A college planning campaign designed and implemented with a Vivensure coach:

 ·         helps the family find the best school at the lowest possible out-of-pocket expense;

 ·         shows the family where to shelter their college savings so that it has no impact on financial aid;

 ·         establishes the process for repaying student debt in the shortest possible time; and,

 ·         much, much more…

We await your call…

A Vivensure Preferred Partner
Unleash a Better Life!!
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Athletic Scholarships: Myths and Misconceptions

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Athletic scholarships are rare.  “Full Rides” even more so.

Regardless of beliefs/misconceptions held by parents, even by the students themselves, only 4%-5% of high school athletes will ever play a sport in college.  Of those that play for their school, only D1 athletes will receive a “full ride” and those rides are limited to 6 sports – basketball and football for men, basketball, gymnastics, tennis, and volleyball for women. 

Those rides are further limited by the number of scholarships a school is permitted to award, as well as the scholarships that may be available in any given year.  All other collegiate athletes receive either partial or no athletic scholarship money.

So, let’s avoid those myths and misconceptions…

Myth 1: Every athletic scholarship is a full ride. 

The average athletic scholarship is less than the annual cost-of-attendance ($18,000).  All sports other than those mentioned above are considered “equivalency” sports.  This means the coach can divide available money among players, without restriction on who can receive how much.  Further, while D1 schools may provide multi-year scholarships, the vast majority are year-to-year and may not be renewed.

Myth 2: Scholarships are available only for Football, Basketball, and Baseball.

Not true.  Partial scholarships are available for a multitude of sports.  Families should weigh partial athletic scholarships against other financial aid offers.  Families may receive more in need-based financial aid then through an athletic scholarship.  An athletic scholarship may not be in the best financial interests of the family.

Myth 3: Scholarships are only available at the D1 level.

Also untrue.  Athletic scholarships are available at the D2, NAIA, and Junior College levels.  Even D3 makes merit-based, not-athletic scholarships available to prospective athletes.

Myth 4:  Good grades aren’t needed.

Good high school grades are a must.  Students signing a Letter of Intent face many stipulations, including the need to maintain a minimum GPA and to exhibit good conduct.  Let’s face it, the school is paying the student to play, providing education, food, room, board, etc.  Coaches won’t recruit athletes they believe may not do well in college and high school grades can be a good measurement of future success. 

Myth 5: College coaches will contact players.

They may, but more than likely they will not.  Coaches face a number of restrictions on how, when, and how often they may contact a player.  There is no limitation on how often a student or his high school/club/travel coach can contact the college coach.  A failure to communicate can be tied to a number of reasons, from looking at the wrong school for you, it’s the wrong program, or the coach is prohibited from making contact.  The burden is on the player to market themselves.

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Do Rich Students Get More Financial Aid?

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While every school has its own financial aid formula and offers aid based on a family’s estimated financial need, schools now tend to dole out more aid based on accomplishment.  A recent report suggests that schools spend more to attract wealthier students.

According to a 2019 National Center for Education Statistics report, students in the highest 25% income range received a greater amount of non-federal aid on average compared with all other income levels. 

This isn’t new to us or to our clients.  Schools usually award the best aid packages to those in the top 25% of any given incoming class; they done so for years, decades even.

Nevertheless, it seems that schools award more aid to the wealthy.  Why does it appear that way?

Schools actively pursue children of “wealthy” families, wealth being determined via the admissions office and desired demographics for the incoming class.  Non-need based aid is used to attract high-performing students of wealth.

Decisions are rooted in the desire for prestige.  Schools tend to choose students that will boost their rankings, whether it be the desire to attract students whose admission they’ll deny, thereby creating a higher statistical ranking in “prestigious” school reviews, or the desire to attract better-prepared students who are more likely to graduate and donate to the school as alumni.

Rankings are partially based on performance metrics.  Students from wealthy families tend to be better prepared for academic success, both high school GPA and high standardized test scores.

Moreover, schools compete for students.  The more attractive the student, the greater the award. 

Yet, financial aid budgets are limited.  There’s only so much money available in any given year.  Schools must make choices regarding how much is offered in aid to whom. 

Schools have different aid formulas and different budgets.  Families must choose those schools that will award them the most “free” money in the offered financial aid package.

It’s a game of leverage.  Do you know how your family can qualify for the most need-based aid possible?  Do you know how your child can make themselves an attractive candidate to schools?  Do you have the resources needed to help your student qualify for the most merit-based aid possible?  Do you know how to find the schools that will compete with each other? 

Most importantly, do you have the time needed to devote to your family’s college planning campaign(s)?

If you’re concerned and confused, please contact us to schedule a free, no-obligation consultation.  We are waiting to hear from you!

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Even High-Income Families can Qualify for Aid

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Most families believe that financial aid is need-based.  Thus, many families mistakenly believe they won’t qualify for financial aid, basing that belief on the fact that they make a ton of money or have quite a few assets.  Unfortunately, they fail to apply for aid.

As a result, they lose out on money for which they otherwise would qualify. 

They lose out on merit-based aid because they failed to file the Free Application for Federal Student Aid (FAFSA) and, where applicable, the College Scholarship Service Profile (CSS Profile) Application.  Merit-based aid includes athletic scholarships, art and music scholarships, STEM-based (science, technology, engineering, and mathematics) scholarships, community-service based scholarships, religious-affiliation scholarships, and more.

Even high-income families may qualify for need-based aid.  A school may not consider the non-custodial parent’s income and assets.  The actual cost-of-attendance may be higher than the Expected Family Contribution, allowing the family to qualify for need-based aid.  Likewise, the number of students a family has in college can result in qualifying for need-based aid.

File those financial aid forms.  If you fail to do so, it’s a sure bet you won’t receive the money that your qualified to receive.

Contact us for help in developing your college planning campaign.

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Avoid These Financial Aid Mistakes

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For families of high school Seniors, FAFSA time is almost here! 

October 1st marks the beginning of the Free Application for Federal Student Aid filing period for the 2020-2021 academic year.  The FAFSA is comprised of more than 100 questions.  Completing it will take some time.  And, yes, mistakes will be made.

Mistakes can be quite costly.  Here are a few to avoid…

Choosing not to Apply

Choosing not to apply may be the biggest and worst mistake you can make.  You may believe your family income renders your family ineligible for aid.  While that may be true for need-based aid, a family may qualify for merit-based aid. 

Before offering their own money, schools wait to see if a family first qualifies for federal or state aid.  A school won’t know whether your family so qualifies if there is no FAFSA on file.  Failure to file can leave money on the table.

Filing Late

If state aid is a possibility, filing late can result in no state-based financial aid.  State aid is limited and is awarded on a first-come, first-served basis.  Late filing could mean larger loan amounts are in the future.

Use of Incorrect Data

When completing the FAFSA, many families inadvertently include funds they consider assets but the FAFSA doesn’t.  Including such amounts generally results in a reduction in aid.  F

Furthermore, it’s possible to confuse the parent and student sections.  Doing so results in a reduction in aid, as parent’s assets and income are assessed differently than assets and income of the student. 

Surprisingly, sometimes applicants transpose numbers (e.g., incorrect social security number) or an incorrect name (e.g., nickname instead of legal name).  Doing so can delay the process, resulting in reduced or no financial aid.

If you’d like some assistance with your college planning campaign, contact our professional college planners to schedule a no-obligation meeting.  We look forward to your call!

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Evaluating a Financial Aid Offer

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Though most families don’t realize it, especially those whose first or only child is now beginning the undergraduate journey, the Financial Aid Award Letter can be highly misleading.

The award letter is merely an offer; not all aid listed will be awarded. Rather, the letter lists the aid for which you qualify. It’s up to you to review the offer and to accept or reject the aid listed.

Why can the award letter be confusing?

Schools use their own form letters and their own terminology. Understanding the offer as presented can be a pivotal point impacting your financial future not just for the next few years, but potentially for decades to come.

Before making a decision on which school’s offer to accept, as well as what aspects of the offer to accept, be sure you understand the following:

1. What will be the actual total cost, not just for the first year, but projected for the next four years? Look at the school’s project cost of attendance for the first year, then increase it by at least six percent for each subsequent year.

2. Is there free money and how much? Grants and scholarships are awards that need not be repaid. Each may have specific requirements that need be met in order to retain eligibility for the grant or award in future years.

3. What is your net out-of-pocket expense? This is the amount you will have to pay, whether from savings, retirement plans, or loans.

4. Is work-study included in the offer? While this may be included in the offer, it is not available to reduce expenses due at the beginning of an academic period. Rather, it will be paid to the student as earned, provided they can find campus employment, and usually serves as spending money.

5. Does the award include loans? Usually a letter includes a variety of loans. Loans must be repaid with interest. Some require that repayment begin immediately.

Understanding the award letter remains vital to your future, whether student or parent. Like it or not, loans have a place in funding the expense of an education. If managed properly, they are a worthwhile source of funding.

Contact us to learn more about loans as a source of funding, to learn how to manage them, and to learn how to pay them off at a much faster rate than expected (without sacrificing your standard of living).

We look forward to hearing from you!

 

 

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Odds of a Full Ride: Parental Reality check

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As college admissions inch closer with the speed of an incoming ballistic missile, parents dream of the full-ride scholarships for their gifted student, whether the gifts be academic, athletic, or both.

I’ve heard it from parent after parent – “I don’t need to save.” Their student’s gifts will pay off, there’ll be large sums of money handed out. After all, they’ve spent a ton of money of travel/club sports, lessons, hotels, food, training, etc. And, if it’s not athletic money, there’ll be academic awards galore…

Mom and Dad…

Get ready…

You’ll soon be shocked back to reality…

And, perhaps, quite a bit of debt.

Based on the 2015-16 National Postsecondary Student Aid study (NPSAS), the most recent data available (to my knowledge), only 0.2% of students received $25,000 or more in scholarships per year.

While $6.1 billion in scholarships were awarded, there were 1.58 million recipients (8.1% of the college student population). The average award per recipient – $3,852.

Guess what?

The odds are NOT in your child’s favor. You can’t afford not to save!

Don’t make the all-to-common mistake of over-estimating eligibility for aid, whether it be need-based or merit-based (academic or athletic). There are over 80,000 valedictorians and salutatorians each year. Couple that with rampant grade inflation and you’ll find a sea of qualified candidates.

A deeper dive into the data shows that:

• 1.5% of students in bachelor’s degree programs got enough scholarships and grants to cover 100% of the cost of attendance.

• 2.7% got enough to cover 90% of the cost of attendance.

• 5.9% got enough to cover 75% of the cost of attendance.

• 18.8% received enough to cover 50% of the cost of attendance.

Still counting on an athletic scholarship for your child?

Only 2.3% of students in 4-year programs received athletic scholarships at an average $11,914 per athlete. Sure, some will get more, some less.

What does that mean?

An athletically-gifted student is not guaranteed a full-ride. In fact, they’re not guaranteed any money. Roughly 4% of high school athletes will participate in a sport at the college level. And, not every athlete that participates has been awarded athletic money.

When it comes to athletic and/or academic scholarships and awards, aim high. But, have Plan B in place in the event the award is much lower than expected and much lower than the amount you need to cover the cost of the education.

We can help you plan accordingly and we are waiting to hear from you.

 

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Getting Real about College Funding

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Anywhere you look, you can find advice about saving for college.

And, if you’re trying to save for the full sticker price, not only is that advice depressing as hell, it also may be entirely inaccurate for your situation. This – by far – is not the proper strategy.

You’ll see a ton of information about 529s and how wonderful they are – and they can be in the absolute perfect circumstances. The fact most overlooked is that 529s are not savings vehicles; rather, they are investment vehicles. You could end up with less than the amount you actually contributed to the plan. Now, what kind of savings plan is that?!?

So, let’s get real…

• Conventional wisdom may be wholly inappropriate for your particular family situation;
• Actions taken should not favor eligibility for financial aid over the need to save; and,
• If you’re like most parents, you have absolutely no idea what you’re doing when it comes to a college planning campaign!

Where does that leave you?

It leaves you with the following points to consider and, most likely (and, yes, self-serving), with a dire need to engage the services of a professional college planner!

1. Schools expect a family to “pony up” much more than they can truly afford.

Now, who would have figured that one out?!?

The government and most schools base financial aid awards on the Free Application for Federal Student Aid (FAFSA), with which an Expected Family Contribution (EFC) is calculated. While the EFC may depend on a number of factors, the most prevalent factor is family income, closely followed by family assets.

The EFC expects a large chunk of income (22%-47%) to be used for college expenses. Family assets are assessed at just under 6%.

Maximizing financial aid is a horrible excuse for not saving, especially when you can do both at the same time. You just need to know how to do it.

< HINT – engage a professional college planner!!! >

2. Even if you qualify for a boatload of aid, schools may not be able to give it.

Less than 10% of schools meet 100% of financial need, while nearly half meet 60%-80%. Even those that meet your financial need may not meet it in ways you expect, as aid can vary widely from student to student.

3. Guess what? “Financial need met” DOES INCLUDE loans.

Depending on the school, loans (both student and parent) can be a significant part of the package. Even if a school meets your need, you could end up paying more than your EFC might suggest.

Don’t make the mistake of assuming that saving more will reduce financial aid and that you’ll pay more for school. That may not be the case.

< HINT – engage a professional college planner!!! >

4. Academic or athletic scholarships may not be part of the package.

A large number and variety of scholarships exist in the financial aid universe.

Every one of them may help, but most are relatively small.

And most scholarships, both merit and athletic, are NOT full rides. It doesn’t matter how talented your child may be, there will always be someone with equal or more talent.

As the saying goes, “don’t put all your eggs in one basket.” Have a Plan B in place.

5. Rely on realistic numbers, not hypothetical amounts.

< HINT – engage a professional college planner!!! >

We are waiting to hear from you!

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College Funding & Life Insurance

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With the current bull market roaring ahead, it’s vitally important to protect yourself from loss while your assets continue to grow. Seems intuitive, but difficult to implement without the proper financial tool.

According to the Allianz Life Insurance Company of North America, more than half of the respondents to their 2018 Life Insurance Needs Survey (Needs Survey) were unsure or didn’t believe that cash value from permanent life insurance can be used to assist with other financial needs.

That’s likely the biggest secret out there! Very few people are aware of the benefits to be had from a properly designed permanent life policy.

In fact, college funding can be one of those benefits.

It’s both amusing and quite sad that almost 70% of the respondents to the Needs Survey stated the belief that the ability to use funds to pay for college is a valuable feature to consider when purchasing a financial product.

Yet, those people and more “turn their noses up” at the very mention of life insurance, even when they know they are underinsured.

So, let’s answer some questions you may have (or, perhaps, never even considered)…

1. How can cash value (CV) life insurance be used to help fund college expenses?

While the main purpose of life insurance is to provide a death benefit (DB) to loved ones, the DB under a permanent life insurance policy properly designed to build the greatest cash balance possible is the minimum required by the IRS to ensure everything remains non-taxable.

Growth of the cash value is the primary benefit, the DB merely is an added benefit. The cash value can be accessed for any reason, such as college funding.

2. What are the benefits to using loans from CV life insurance for college funding?

Loans from CV are tax-free. Moreover, they are not considered income and, therefore, typically will not affect a family’s eligibility for financial aid.

3. I have 529 Plans. Why would I need CV life insurance?

The foremost advantage to using CV life insurance is that the government and the schools don’t see it as an available asset. It is not considered when calculating eligibility for financial aid.

529 Plan assets do count as an available asset and will affect eligibility for financial aid.

4. What if my child does not attend college?

Funds from a 529 plan must be used for qualified education expenses. Otherwise, if utilized for other expenses, the earnings portion will be considered part of the beneficiary’s income and will be subject to a 10% penalty.

Conversely, the CV life insurance can be used for any financial need, including debt elimination.

5. Can grandparents help?

Absolutely! There are many advantages to using CV life insurance to help fund a college education – no complex eligibility requirements, no qualified education costs, and no income limits. Furthermore, money received from a policy loan generally won’t impact eligibility for financial aid.

Now, bear in mind, life insurance does require health and financial underwriting. However, that’s a small price to pay for a financial vehicle that:

• Will be an important part of any properly designed and implemented college funding campaign;

• Can be used to eliminate all household debt much quicker than ever imagined; and,

• Can improve the retirement horizon for parents of college-bound children.

Contact us to learn how a properly designed cash value building, permanent life insurance policy can be the bulwark of your college planning campaign, while being used to eliminate household debt and improve one’s potential retirement scenario.

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