How To Pay For College Without Going Broke
Contrary to popular belief, much of that anticipated debt can be legally eliminated, and before it's too late. While so many families stress out over the prospect of how much they and their student(s) will incur during the college years, there are a number of strategies, all legal, to make any college affordable.
Sadly, most families are not aware of the fact that in the financial aid formulas, students have no asset protection allowance. For college year 2007-2008, they will lose 20% of every dollar they have in: cash, savings accounts, stocks, bonds, savings bonds, mutual funds, UGMA, UTMA accounts, a farm, a business, mortgages held and the net value of any real estate owned. However, if the student is about to enter college and is unfortunate enough to have a hefty bank balance or brokerage account, it already cost them 25% or 35%, depending on the college!
Parent assets are subject to a different formula, and it also depends on which school the student will attend. For eligibility purposes, there are 2 categories of schools. Category 1 includes a few state colleges plus approximately 220 elite private schools. In addition to the FAFSA (Free Application For Federal Student Aid), they also require the CSS Financial Aid Profile. If you thought the FAFSA was difficult, this form is a nightmare, and pity the poor family that's divorced, separated, owns a business or a farm! These colleges take into account all of the above plus home equity, Education IRA's, and 529 Savings Plans. Category 2 schools (all the rest) only require the FAFSA and exclude the value of the primary residence and a farm, if the family lives on it.
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When is comes to assessments, parents are more fortunate; they only lose 5.6% over their allowance, which increases with age. The asset protection allowance for a 2 parent family, older parent 48 is $45,000; a single parent age 45 has only $19,700.
All that may appear depressing, but here's the good news: with proper planning students and/or parents can legally become penniless in the blink of an eye, and all their money can be repositioned into financial vehicles that are not included in the formulas. The result can often get families with students about to enter college more money for the 2nd semester, but if that tactic fails, then surely for the sophomore and ensuing years. What a relief to know that!
Numerous other strategies exist which have literally saved families millions of dollars over the years, and they include: the ambiguous non-custodial parent strategy, which has reduced the cost of college in some cases by as much as 90%; the winter clothing allowance for students from the South attending college in the frigid North netted one student an additional $2,600; the "no work" work-study award has been worth as much as $8,000 by graduation, and for virtually any student, even those with no need whatsoever, appealing an unappealing offer and negotiating for the best possible "deal" has produced incredible results. It's just like buying a new car - you don't have to pay the sticker price. One other strategy few families are aware of is Professional Judgment. This comes into play when there has been a significant change in family income, assets, marital status or health.
Reecy Aresty, a financial advisor since 1977, is the author of Getting Into College And Paying For It, an indispensable parent/student manual, the only book of its kind available in Spanish. For the past 25 years he's helped thousands of families send their kids to the college of their choice for less than they ever dreamed possible. His book is guaranteed to give students that all-important edge in admissions, and for parents there are numerous legal strategies to drastically cut the cost of college. Go to www.paylessforcollege.com for a free report, The College Funding Timeline, and learn what parents, students, and the media are saying about Reecy and his book for all seasons.
