Paying for College, 2019 Edition: Everything You Need to Maximize Financial Aid and Afford College

417 Pages·2018·26.7 MB·English

by  Kalman Chany

Editorial
Robert Franek, Editor-in-Chief David Soto, Director of Content Development Danielle Correa,
Editor
Stephen Koch, Survey Manager
Penguin Random House Publishing Team
Tom Russell, VP, Publisher Alison Stoltzfus, Publishing Director Ellen L. Reed, Production
Manager Amanda Yee, Associate Managing Editor Suzanne Lee, Design
The Princeton Review 110 East 42nd Street, 7th Floor New York, NY 10017
E-mail: [email protected]
Copyright © 1993, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007,
2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018 by TPR Education IP
Holdings, LLC
All rights reserved. Published in the United States by Penguin Random House LLC, New York,
and in Canada by Random House of Canada, a division of Penguin Random House Ltd., Toronto.
This publication is designed to provide accurate information in regard to the subject matter
covered as of the date of publication. Since tax laws, financial aid regulations, and government
regulations change periodically, it is sold with the understanding that neither the publisher nor the
authors are engaged in rendering legal, accounting, or other professional service. If legal advice
or other expert assistance is required, the services of a competent professional person should be
sought.
The draft version of the 2019–2020 FAFSA that appears on this page is for informational
purposes only. It should not be submitted. The U.S. Department of Education did not review or
provide any of the other information contained in this publication.
Source: The EFC figures provided for the case studies on this page are courtesy of the College
Board. College Board, CSS Profile, CSS/Financial Aid PROFILE and the acorn logo are
trademarks of the College Board. All rights reserved.
Trade Paperback ISBN 9780525567554
Ebook ISBN 9780525567707
The Princeton Review is not affiliated with Princeton University.
Cover art by Zoonar GmbH / Alamy Stock Photo Cover design by Suzanne Lee v5.3.2
a
ACKNOWLEDGMENTS
Geoff Martz and I are most grateful to those who have helped with this and prior
editions of the book..
We would first like to thank Robert Franek and Danielle Correa at The
Princeton Review, Scott Harris and his production team at Best Content
Solutions, and Tom Russell and Alison Stoltzfus at Penguin Random House.
Special thanks to Jeanne Krier, who has served as our publicist for more than
twenty-five years. Her understanding of the many complex issues surrounding
financial aid and college funding as well as her keen suggestions for future
editions have been an ongoing source of help and support. Her skill as a public
relations expert and the high regard that many members of media have for her
professionalism have also contributed significantly to the success of this project.
We are also grateful to Victoria Malone, Michele Brown, Anita Gross, Daria
Adams, and Jeanne Saunders at the U.S. Department of Education as well as
Susan McCrackin and Cindy Shelberg at the College Board who have been a
tremendous source of help for many editions of this book.
I would also like to thank Isidore Matalon, my longtime friend and a constant
source of new ideas; Steven Levine of the accounting firm of Lederer & Levine
in Lyndhurst, New Jersey, for his helpful suggestions regarding tax law;
Catherine O’Connor, my associate at Campus Consultants without whom I could
never have managed; my friends Stuart Foisy and John Brubaker for their
assistance with the worksheets at the back of this book; the high school
counselors and independent college consultants who have entrusted students and
their parents to me over the years; and my own parents, who somehow managed
to pay for my college education without the benefit of having read a book like
this.
Last but not least, I would like to thank my clients who have provided me with
the opportunity to prove that financial aid planning really works.
—Kal Chany
1 Go to PrincetonReview.com/guidebooks.
2 Enter the following ISBN for your book: 9780525567707.
3 Answer a few simple questions to set up an exclusive Princeton
Review account. (If you already have one, you can just log in.) 4
Click the “Student Tools” button, also found under “My Account”
from the top toolbar. You’re all set to access your bonus content!
Once you’ve registered you can…
Take a full-length practice SAT.
Take a full-length practice ACT.
Get valuable advice about applying to college.
Need to report a technical issue?
Contact [email protected] and provide:
your full name
email address used to register the book
full book title and ISBN
computer OS (Mac/PC) and browser (Firefox, Safari, etc.)
CONTENTS
Cover
Title Page
Copyright
Acknowledgments
Get More (Free) Content
INTRODUCTION
PART ONE: UNDERSTANDING THE PROCESS
CHAPTER ONE: Overview
PART TWO: HOW TO TAKE CONTROL OF THE PROCESS
CHAPTER TWO: Long-Term Strategies for Paying for College
CHAPTER THREE: Short-Term Strategies for Receiving More Financial
Aid
CHAPTER FOUR: How to Pick Colleges
CHAPTER FIVE: What the Student Can Do
CHAPTER SIX: State Aid
PART THREE: FILLING OUT THE STANDARDIZED
FORMS
PART FOUR: THE OFFER & OTHER FINANCIAL
MATTERS
CHAPTER SEVEN: Innovative Payment Options
CHAPTER EIGHT: Managing Your Debt
CHAPTER NINE: Special Topics
CHAPTER TEN: Less Taxing Matters
CHAPTER ELEVEN: Looking for a Financial Aid Consulting Service
CHAPTER TWELVE: Looking Ahead
PART FIVE: WORKSHEETS AND FORMS
SAMPLE FORMS
GLOSSARY
INSTITUTIONAL METHODOLOGY COMMENTS AND CASE STUDIES
KEY THINGS TO KNOW ABOUT THE IRS DATA RETRIEVAL TOOL AND THE IRS
TRANSCRIPT VERIFICATION REQUIREMENT
ABOUT THE AUTHORS
INTRODUCTION
The college application process has been described as the closest thing America
has to a “savage puberty rite.” In fact, entire books have been written about the
traumatic effect the application process has on students. Much less attention has
been paid to another group of unsung heroes who are going through a similar
ordeal all their own: the parents who are supposed to pay for all this.
If This Is So Good for Me, Why Does It Feel So Bad?
The cost of a four-year private college education has passed the $250,000 mark
at some schools, which is enough to cause even the most affluent parent to want
to sit down and cry. The public Ivies—state schools with excellent reputations—
have been raising their tuition even faster than the privates. This year, an out-of-
state student will have to pay more than $61,000 to attend the University of
Michigan for one year.
Meanwhile, stagnating university endowments caused by the stock market
slump along with cuts to the education budgets of state governments have
combined to create a crisis in higher education. Some colleges have had to slash
their budgets, lay off professors, even consolidate with other schools. And even
when you factor in the new educational tax benefits, the financial aid available
per student has shrunk as rising tuition has forced more and more parents to
apply for assistance.
The Joy of Aid
If there is a bright side to all this it is that in spite of all the bad news, there is
still a great deal of financial aid available—and we are talking billions of dollars.
At these prices, almost every family now qualifies for some form of assistance.
Many parents don’t believe that a family that makes over $150,000 a year, owns
their own home, and holds substantial assets could possibly receive financial aid.
These days, that family—provided it is presented in the right light—almost
certainly does. Many parents who make $50,000, rent their home, and have no
assets, don’t believe they can afford to send their child to any type of college at
all. They almost certainly can—in fact, they may find to their surprise that with
the financial aid package some schools can put together for them, it may cost
less to attend an “expensive” private school than it would to go to a “cheap”
state school.
Who Gets the Most Financial Aid?
You might think that the families who receive the most financial aid would be
the families with the most need. In fact, this is not necessarily true. The people
who receive the most aid are the people who best understand the aid process.
Some years ago, we had a client who owned a $1 million apartment in New
York City and a stock portfolio with a value in excess of $2 million. Her
daughter attended college—with a $4,000-a-year need-based grant.
Is This Fair?
No. But lots of things in life aren’t fair. In that particular case, we were able to
take advantage of a financial aid loophole involving the way state aid is
computed in New York. There are lots of financial aid loopholes.
Is This Legal?
You bet. All of the strategies we are going to discuss in this book follow the law
to the letter.
Is This Ethical?
Let us put a hypothetical question to you: If your accountant showed you a legal
way to save $4,000 on your income tax this year, would you take it?
The parallels between taxes and financial aid are interesting. Both have
loopholes that regularly get exploited by the people who know about them. But
more important, both also involve adversarial relationships. In the case of your
taxes, the IRS wants as much money from you as it can get. You, in turn, want to
give the IRS as little as possible. This pas de deux is a time-honored tradition, a
system of checks and balances that everyone understands and accepts. And as
long as both sides stick to the rules, the system works as well as anyone can
expect.
In the case of college, it is the job of the financial aid officer (known in
college circles as the FAO) to get as much money from you as he can. In the
pursuit of this task, he will be much more invasive than the IRS ever is,
demanding not just your financial data but intimate details of your personal life
such as medical problems and marital status. He wants to protect the college’s