College Counselor: Figuring out financial aid
Q: We live in a rental apartment in NYC, and own a home in another state. We had to move to New York for work. We rent the house that's out of state and the income helps to pay for our rent here. We fear that colleges will see the house we own as an investment property or vacation home rather than as a primary residence, which is usually exempt from financial aid calculations. Should we sell the home or take other measures to improve our financial aid standing?
A: College admission does not mean simply being admitted – it also means significant financial commitment. Yours is a complicated question, and actually one that is outside my area of expertise, as I am concerned with the academic aspects of admission. Still, I can point you in the right direction, as well as address the general issue of where to go for college-related financial advice.
But first -- and this is for everyone planning to apply for financial aid – file your FAFSA now, if you have not already done so. The acronym stands for Free Application for Federal Student Aid. It costs nothing to file this form. If you get anything in the mail or see anything on the Internet that charges you for financial aid information, toss or delete! This information is free. An important thing for all parents to remember is this: if a website ends in .gov or .org or .edu the information is free; if a website ends in .com there is cost involved. For FAFSA information, go to the government website: www.fafsa.ed.gov. Another good source: Insideschools and the Center for NYC Affairs published a FAFSA guide. Here's the link.
Most colleges that offer financial aid – whether in the form of scholarships, grants, loans, or work-study – expect applicants' families to file the FAFSA form. This and your tax-return information allow colleges to calculate what your EFC (Expected Family Contribution) might be. As the term implies, a student's family is expected to pay for some part of the cost of attending college. Some schools ask for the CSS Profile in addition to the FAFSA; there is a cost, but if a college requires it, you must submit it.
To get a clear idea of your financial status, speak to a specialist in college financial aid, or research information compiled by these experts. A very helpful book is Paying for College Without Going Broke, by Kal Chany. Mr. Chany updates his book every year, and the most recent edition has a forward by Bill Clinton. Another good source is the College Board's Getting Financial Aid, also revised annually.
For additional questions – such as yours about owning property in another state – you can go to www.finaid.org for expert advice. In fact, Insideschools contacted them about your situation. According to FinAid, your apartment in NYC would be considered your primary residence, not the out-of-state home. Your rental property is an asset -- although if you sold it, you would still have the asset of the equity (unless you put it into a tax-deferred site). Because the FAFSA form does not provide a place for families to explain special circumstances, you should contact the financial aid office of each college to which your child applies, in order to explain your family's situation. Different colleges may see things differently, which is why you might wish to consider going to an expert on educational financial aid.
Obtaining financial aid can be complicated and stressful, so doing careful research and speaking to experts in the field can be highly beneficial.
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