College Financial Aid: There’s o “Do-Overs”

You know, where you can bring in your former tax returns and they’ll give them a “second look”? The commercials give examples of folks who “thought they could do it themselves” or who got help from the wrong people (their brother, the “professional” who focuses on everything and therefore specializes in nothing, etc.) — and it ultimately ended up with them losing out on THOUSA DS of dollars. Essentially they ended up paying the government more in taxes than was absolutely necessary. Now, the good news when it comes to taxes, there is a possibility of a “do-over”. AND, college scholarships and financial aid are a lot like taxes in the following ways:
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there’s a form to file (just like taxes) you have to file the form every year your student is in college (just like you file your tax return, every year) there is a formula based on income and assets for calculating how much you’re expected to pay towards college (just like a formula is applied to your income to determine your tax bill) there are rules and loopholes that govern that formula (just like on your taxes there’s deductions and exemptions) there are strategies that can use the rules and loopholes available to families that can lower what they are expected to pay if they are implemented. (just like a good tax accountant or tax attorney can develop a plan for you to lower your tax bill)

But here is where taxes and financial aid differ: if you make a mistake, there’s O Do-Over! Every year thousands of families make mistakes that end up with them losing out on THOUSA DS of dollars in scholarships and financial aid. They are paying more for college than is absolutely necessary. Most never realize it — what they don’t know is hurting their wallets and their budget. They’re borrowing more money than they have to, they’re doing without a vacation or that new car they really need. Or their student is wracking up so much debt they’ll likely never pay it off and they’ll never get out from under it (student loan debt cannot be discharged in a bankruptcy). It’s not a pretty picture. But, let’s say, you make a huge mistake the first year and you find that mistake the second year. You can’t get a “do over” for the first year. Unlike taxes where you can file a corrected tax return and get money back, with college financial aid, you can’t file an amended form and say “Hey, Cost-a-lotta U., we made a mistake. We paid $7,000 more than we should have, can we get it back?” (well you could file the amended form but the college won’t give you money back).

ow you’re thinking — “Well at least if I find it the second year, then I can save that $7,000 for the second year, right.” Maybe. But I wouldn’t count on it. You see, there is no requirement for the college give you financial aid. And, once you’re committed to the college, they have even less motivation to help you (because you’re a “done deal” — you’re coming). You see, all too often, the college is willing to bet you’ll be coming back no matter what — after all, where would you go? You already have one year invested, you don’t yet have a degree so they’re willing to take the risk that you might leave because the odds are better that you’ll stay. o do-overs. The trick is not making the mistakes in the first place. After you commit to a college, you lose any leverage, negotiating-power — whatever you want to call it. Before you commit to one particular school is when you have the greatest leverage with a college (unless you make other mistakes but that’s for another time). You must be proactive if you want the best results possible. You cannot wait until the last minute or try to get help AFTER you’ve made mistakes. There’s little that can be done at that point. Jack* and his family learned this first hand. When Jack was a junior, they thought about getting help with the college selection, application and financing process. They knew there were things about it they didn’t know. But, they decided they could figure it out on their own since getting help would’ve cost them some money up front. Fast forward to the end of Jack’s freshman year, they were looking for help with a “doover”. Jack had just completed his freshman year and his parents now had $26,000 in loans that made it happen. And they were looking for help because they couldn’t do it again for his sophomore year. Jack and his family had made a lot of mistakes in their self-created college plan — he didn’t make the strongest case for himself, his parents let him accept an offer from a college that was lousy with financial aid and they got even less financial aid than they should have (from a school that was already not the best when it came to financial aid) because they had made at least 7 mistakes in completing their financial aid paperwork. They corrected those mistakes on the 2nd year paperwork: What they were expected to pay sophomore year came out to $8,500 LESS than what they had been told they should pay for freshman year. They had made an $8,500 mistake freshman year. Guess how much more in financial aid they were offered for Jack’s sophomore year. Zip. Nada. Nothing. They got the same amount of financial aid sophomore year as freshman year. The college was willing to bet he wouldn’t leave (and he wasn’t a strong enough student to motivate them to want to help him to stay). ow, what if they had invested in that money up front? Well, the $8,500 mistake they had made freshman year would not have been made. Additional colleges that would’ve offered more financial aid would’ve been recommended. Jack would’ve made a greater impression in the

admissions office so the college was motivated to give him the best offer possible in order to entice him to come to their campus. It might have been possible to negotiate with the colleges to get a better deal. Sure it would’ve cost them some money up front. But let’s just look at the $8,500 (never mind the additional monies in scholarship, etc.). After deducting what it cost to get the help to avoid that mistake in the first place, they still would’ve had AT LEAST $26,800 more in their pocket at the end of four years. That would’ve been $26,800 that would not have been borrowed; or could’ve been invested in their retirement fund; or been invested in Jake’s brother’s college fund. There was a lot of ways they could’ve used that money. They were penny-wise and dollar foolish. Unfortunately, there’s no do-over.

Jeanmarie Keller has helped thousands of students get into colleges they love while making sure their parents save a fortune on the bill. Jeanmarie is the creator of the Smart Plan For College System which teaches her client-families how to get noticed in the admissions office, get in at the colleges right for them and how to get the money they need to help pay the bill. To receive Jean's weekly email newsletter and Jean's free CD: How To Find Cash For College, subscribe today at http://www.JeanKeller.com

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