FAFSA= Free Money, Get in Line!

FAFSA= Free Money, Get in Line!

FAFSA is defined as the Free Application for Federal Student Aid.  October 1st, is when the FAFSA $$$$ floodgates just opened for 2022.   There is much confusion on FAFSA, what it is and how it works.  Sometimes, I think the colleges prefer it that way.  Let me shed some light on the subject. 

Reasons for your college bound student (and you) to complete their FAFSA this week:

  1. FAFSA is First Come First Serve: There is $150 Billion available RIGHT NOW while coffers are full!
  2. FAFSA is Mandatory: Your student cannot get money without it.  Since it is based on timing not need, why not move to the front of the line?
  3. FAFSA is an Application NOT Financial Aid Itself: Some FAFSA money is FREE money, some must be earned through work-study programs, and some must be repaid.

College planning can be rewarding AND stressful.  Ignorance with this can be financially devastating.  Over the years, I have seen how mistakes have cost families hundreds of thousands of dollars.  In addition, we have helped students obtain more than $10,000,000 of “FREE ENDOWMENT MONEY” over the years!

The best money to use for college tuition is “Other People’s Money!”  To explain this, endowment money needs to be defined.  I will do this by example.  My father, Robert Intelisano Sr. (aka The Padrini), attended Fordham University.  When he donates money back to the school, he cuts a check which goes into the Fordham Ram “Endowment Fund.”  This money gets pooled with other alumni donations.  Fordham does NOT have to pay taxes on the receipt, nor interest that this money earns; however, Fordham is required to disseminate a portion of their endowment each year to incoming freshman and current Fordham students. 

The trick is learning how to extract the FREE endowment money from the school of your choice, instead of relying on work-study and need based aid programs and loans, which must be paid back.  Some endowment money is merit-based and some is need-based. 

The need-based monies are based on what is called your EFC score.  EFC stands for Expected Family Contribution.  Basically, you complete the FAFSA, tell the government where your money is and how much, then they tell you what you can afford.  Your EFC score is based both on your income and where your assets are.  Anyone who has a student in college knows what I am talking about.  Your EFC is like golf, the lower the score the better.  If my father were applying to Fordham now, he would not be happy to see the annual tuition is over $52,000 per year, and all in, the cost of attendance (including room and board, books, food etc) is over $79,000/year.  If his EFC was $59,000, it would be difficult to get more than $20,000 of merit-based free money (the difference of his EFC score and the cost of attendance).

Unless you own your own business, it is not feasible to lower your income.  There are ways to lower your EFC by repositioning assets from FAFSA unfriendly assets (bank accounts, mutual funds, CD’s) to FAFSA friendly assets (ones you DO NOT need to mention on the application) such as annuities and cash-value life insurance products. 

My firm can help you lower your EFC.  EFC is an annual score so your student can qualify for $4 for every $1 you lower your EFC.

THE BIGGEST FAFSA MISTAKES TO AVOID ARE:

  1. To Assume You Will Not Qualify: There is a ton of BAD INFORMATION on this topic, and many college counselors are not knowledgeable.  Do NOT assume you make too much money and therefore not complete the application.
  2. Waiting Until 2022 to Apply: This is a BIG MISTAKE, as you will go to the back of the money-line!  It also gives you less time to “appeal,” as you can appeal and ask for additional FREE money later in the process.
  3. Not Visiting Schools AFTER You Are Accepted: More often than not, schools will give you MORE FREE ENDOWMENT MONEY AFTER you visit. 
  4. NOT Considering Speaking to a Professional: A pro can help you navigate these choppy waters. 

For the DIYers (Do it Yourself) I suggest buying the book by Elizabeth Wissner-Gross called “What High Schools Don’t Tell You” (and other parents don’t want you to know), or go to www.WhatHighSchoolsDontTellYou.com. 

For those who are looking for a program or coaching, I suggest Andy Lockwood and Lockwood College Prep.  Their website is www.LockwoodCollegePrep.com and you can see video’s, (short and good) get on their email list and consider hiring them.  For questions, Wave readers can reach out to me at Rob@InsuranceDoctor.us.

Remember, if your student is now a senior, these financial moves must be made by 12/31/2021, which is when you can NO LONGER make any financial changes so ACT NOW!