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Author: yargtac Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8138  
Subject: manipulating the FAFSA system Date: 3/7/2001 7:30 PM
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As a wily veteran of the financial aid scramble, I have a bit of advice for both students and parents who want to maximize their free financial aid. 1) Hide your money. Nope, there's nothing illegal about this; just a bit of common sense. If you're a student who made a decent sum of cash over the summer, put some of it in an IRA or if you're conservative, a savings bond. The financial aid people expect students to contribute what they have in cash to their education; this way, you can keep your money, invest it and get the feds, the states and/or the universities to give you more of their money. And they have a lot more than you.
2) Have the maximum of people in your family possible taking classes. My mother (bless her heart) figured this one out. To increase my aid, she enrolled at a community college (which she wanted to do anyway) and took a class or two. The financial aid folks take into account how many people in your immediate family are in school when they assign the offered aid. The more in school, the more you get.
3) Apply early, make friends with your school's financial aid counselers and don't miss deadlines. It's amazing how many students don't bother to send their acceptance forms on time. In many cases, the school will then redistribute that money to needy students (that means you). I picked up an extra $1300 bucks one summer for courses because of unclaimed money.
4) Get a job! This one may not help you get more aid, but it does bring more money. Go to any unversity campus, and who do you see manning the info desks, running special events and playing the office gofer in admin? Students! That should be you. Universities, especially big state ones, have hundreds of student employees who do everything from work in the computer labs to managing the unions at night. Not only can you pick up some dough, but you meet new people, make friends (very useful in the freshman year when you know nobody) and even pick up job skills. And the universities are very understanding about mid-terms and term papers- far more than most employers.
With a little initiative and luck, you too can avoid stunning amounts of debt (unless you really want that Dartmouth B.S.; then, you're doomed anyway).
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Author: NellieD Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3554 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/8/2001 2:03 PM
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1) Hide your money. Nope, there's nothing illegal about this; just a bit of common sense. If you're a student who made a decent sum of cash over the summer, put some of it in an IRA or if you're conservative, a savings bond. The financial aid people expect students to contribute what they have in cash to their education; this way, you can keep your money, invest it

You should not be "hiding" money--which is the same as "hiding" money from the IRS--it is illegal and unethical.

Putting money in an IRA is not "hiding" money and it is completely supported and allowed by the financial aid rules. Financial aid does not want you to cash in your retirement funds to pay for college. It is fine to put money in retirement accounts to keep them out of the formula.

However, savings bonds are an asset that must be reported on the FAFSA. The financial aid formula not only expects the student to contribute a portion of their income towards their education, the formula expects 35% of the students assets per year be contributed to education.

Here's the instructions on assets that must be reported on the FAFSA:
"Investments also include trust funds, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, Education IRAs in your parents' names, installment and land sale contracts (including mortgages held), commodities, etc. Do not include the value of life insurance and retirement plans (pension funds, annuities, non-Education IRAs, Keogh plans, etc.)."

2) Have the maximum of people in your family possible taking classes. My mother (bless her heart) figured this one out. To increase my aid, she enrolled at a community college (which she wanted to do anyway) and took a class or two. The financial aid folks take into account how many people in your immediate family are in school when they assign the offered aid. The more in school, the more you get.

This is not true any longer. People taking advantage of this loophole forced the feds to change the rules to stop this from happening. Check out the new instructions (bold type is their emphasis, not mine):

"85. Number of college students in household. This question asks about the number of household members who, in 2001-02, are or will be enrolled in a postsecondary school. Count yourself as a college student. Do not include your parents. Include others only if they will be attending at least half time in a program that leads to a degree or certificate at a postsecondary school eligible to participate in any of the SFA programs."

In addition, the EFC is no longer automatically reduced by number in college as it once was.

Your advice about applying early, making friends with your financial aid officer and getting a job are all good.

But everyone needs to realize, people taking advantage of these programs is what makes the rules get tighter and tighter. Now, some one whose parents are really in college full time and may really need the assistance will not able to get it because others have exploited the system.

NellieD

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Author: cfbandit One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3555 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/8/2001 3:13 PM
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Hi!

I think you're missing a crucial point here: unless you qualify for work study you can't get a lot of these jobs. And why should I want to work for someone for $5.15 an hour when I can do the same job somewhere else for at least 7?

I think that people really try to oversimplify the aid process.

AND They also don't realize the huge amounts of money that they are going to have to borrow b/c of the government not taking into account ALL of the parent's AND student's financial obligations.

For instance, b/c of my parent's income, I AM NOT GETTING ANYTHING BUT AN UNSUBSIDIZED LOAN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The cost of my school is $16,000. The EFC for my family is $24,900. The ONLY WAY FOR THE GOVT TO GIVE ME AID IS IF I WENT TO A HUGELY MORE EXPENSIVE SCHOOL.

Just some angry thoughts,

CFBandit





4) Get a job! This one may not help you get more aid, but it does bring more money. Go to any unversity campus, and who do you see manning the info desks, running special events and playing the office gofer in admin? Students! That should be you. Universities, especially big state ones, have hundreds of student employees who do everything from work in the computer labs to managing the unions at night. Not only can you pick up some dough, but you meet new people, make friends (very useful in the freshman year when you know nobody) and even pick up job skills. And the universities are very understanding about mid-terms and term papers- far more than most employers.




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Author: NellieD Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3556 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/8/2001 3:27 PM
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For instance, b/c of my parent's income, I AM NOT GETTING ANYTHING BUT AN UNSUBSIDIZED LOAN

Yes. Because of your parent's income, they can afford to help you with your education. There are many people who need the assistance much more than you do.
An EFC of $25K is substantial. You don't have this high of an EFC if the money isn't there. If your family chooses to spend their money elsewhere, that is their choice. Don't blame the government because you and/or your parents want to spend money on other things.

The cost of my school is $16,000. The EFC for my family is $24,900. The ONLY WAY FOR THE GOVT TO GIVE ME AID IS IF I WENT TO A HUGELY MORE EXPENSIVE SCHOOL.

All you would get at a more expensive school is more loans. With an EFC of $25K you are not considered to have any "unmet" need. Even if the COA were $30K, you would only get loans.

Don't be so angry. You're getting an education. Many people are not so fortunate.

NellieD







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Author: katinga Big funky green star, 20000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3574 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/16/2001 11:14 PM
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With that humongous EFC, there's probably not much you can do. However, if you've had a lot of stock market losses, you could update your SAR by marking your investments to market.

I checked this out by both calling FAFSA and seeing a financial aid counselor under contract from FAFSA. Both said, you can write down your "current" investments amount in an amended SAR. "Current" is the operative word on the lines where you state your and your parents' assets.

Also, be sure your parents haven't included their retirement savings in the investments line. A colleague of mine did just that, and he's a PhD engineer!

Finally, if you have any special circumstances (high medical, loss of job, divorce/death, and the magic 'other'), ask for a special circumstances form from your college's financial aid office. You'll need to document everything.

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Author: WEBstudent Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3578 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/18/2001 11:17 AM
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Very funny- I recommended your post only because I think its a joke and not a reliable source of info. Sort of like reading "the onion".

I wont put the story of my life in a post. I do suggest that folks stop whining about how much they are paying for school and begin appreciating the opportunity we have to educate ourselves.

In regards to the work-study program, although the wages are sad it doesnt take more than rolling out of bed and throwing on a pair of jeans and showing up for work. Or would we rather pay for car insurance with the extra $2 an hour that we make off campus?

Oh the joys of becoming a full time student again. I look forward to it.

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Author: JakeP21 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3582 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/19/2001 9:57 PM
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This information is not correct. You can't update financial information such as cash, etc.

"I checked this out by both calling FAFSA and seeing a financial aid counselor under contract from FAFSA. Both said, you can write down your "current" investments amount in an amended SAR. "Current" is the operative word on the lines where you state your and your parents' assets."

You are, however, supposed to report the amount from the ORIGINAL date the FAFSA was signed. This is the same as the "Are you married?" question. This is to be used as a snapshot of your financial situation the day the FAFSA was originally filled out. If it was filled out incorrectly, it can be changed. Corrections are allowed, updates are NOT!

As always, check with each schools financial aid office...some might help you out in some way, others might not.

Just my $0.02.

Jake

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Author: katinga Big funky green star, 20000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3583 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/20/2001 10:20 AM
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Thanks for the warning, Jake. You wrote:

You are, however, supposed to report the amount from the ORIGINAL date the FAFSA was signed. This is the same as the "Are you married?" question. This is to be used as a snapshot of your financial situation the day the FAFSA was originally filled out. If it was filled out incorrectly, it can be changed. Corrections are allowed, updates are NOT!

I just called FAFSA again (8004333243), got the name of the person I was calling, explained on the basis of your post that I might have done something wrong, that I changed the value of investments because of the stock market downtrend. The FAFSA person said that it is always a good thing to update your information, because the result is that you could reduce the EFC.

If you take this route, I would call FAFSA, ask my question, and take the name of the person called.

So far I have asked this question 3 times, and have gotten the same response every time. That of course doesn't mean that the counselors were correct.

I guess I'll stand by my original post until a legal eagle out there corrects me with the actual wording of the applicable law.

BTW, I do not support 'manipulating' the system. However, as with the IRS, I believe in doing everything possible and clearly legal to get the EFC lowered.

Regards,

K

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Author: NellieD Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3584 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/20/2001 2:50 PM
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The FAQs at the FAFSA site say:

When should I correct/update my FAFSA data?

You can make changes to any application information you have submitted, except for your Social Security Number and Date of Birth.

You can correct errors, update information, and add or remove schools. When you file an application, you provide a "snapshot" of your family's financial situation as of the date you signed the original application. If the information on your Student Aid Report (SAR) doesn't accurately show the situation as of the signature date, then corrections may be needed.

Be sure to consult your Financial Aid Administrator (FAA) for guidelines.


I suspect the counselors you spoke to either thought you had reported incorrect information or that you are filing a "Renewal FAFSA" and were asking whether you should update your asset information (from the previous year's) to reflect the lowered value.

If you call the FAFSA counselors and say, "I reported everything accurately as of the day that I filed the application, but the value of my assets has decreased since then", I believe they would tell you to talk to your financial aid administrator. The school's financial aid administrator may choose to exercise their "professional judgement" and override things in the FAFSA based on "special circumstances". This is very different than making corrections to your FAFSA.

Making changes to the financial information does increase the likelihhood of your application being selected for "Verification" where you will have to prove all of the information on the FAFSA. If you get selected for Verification and don't have the paperwork to backup the figures, you will have to submit another round of corrections. The process can get long and ugly.

NellieD



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Author: katinga Big funky green star, 20000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3587 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/21/2001 9:24 AM
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I was already verified the first time around, due to the unusual state of our finances, having lived overseas for a decade (and thereby put most savings in after-tax accounts). My finance officer at work says that verification is routine for people in my organization who have been overseas.

I also gave the FAFSA counselors something pretty close to what you suggest.

So if I could rant for a second, the process is so complicated that no one really understands it, including FAFSA counselors and contractors. Sort of like the IRS giving wrong answers when you call them.

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Author: NellieD Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3589 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/21/2001 1:48 PM
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So if I could rant for a second, the process is so complicated that no one really understands it, including FAFSA counselors and contractors. Sort of like the IRS giving wrong answers when you call them.

Yup, and pretty much for the same reasons.

Like the tax code, financial aid rules are constantly changing. Financial aid officers get literally hundreds of pages of new rules and regulations, interpretations of new rules, and requests for comments about upcoming rules every week.

And like additions to the tax code, the new rules are generally created to please a particular constituency (most of the recent financial aid rules have been to benefit the middle class) or to stop fraud and abuse.

Sounds like with your unique circumstances, you've had to jump through a few more financial aid hoops than most people. Hope it all works out for you.

NellieD



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Author: katinga Big funky green star, 20000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3590 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/21/2001 4:19 PM
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Example of how the system is skewed.

I lived overseas doing development-type work. I put savings in after-tax investments for retirement. You don't pay US income tax while overseas because of form 2555 excluding overseas earned income, so IRAs, etc, don't make much sense.

Now FAFSA looks at all my savings, and says give the college 5.6%, please, of all investments not officially in the category of retirement, toward the EFC. So the EFC currently equals a third of our W-2 income (still in the development organization, we're just outside of EIC range, but will be in it this year).

So we're filing a Special Circumstances form, but I don't know how far that will go. We'll see. At least the school in focus has a lot of experience with folks like us.

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Author: NellieD Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3591 of 8138
Subject: Re: manipulating the FAFSA system Date: 3/21/2001 9:08 PM
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Example of how the system is skewed.

Sorry, but that is not a system that is skewed.

The system, like all systems, is designed to accomodate "most" of the people and "most" circumstances.

Yours is a unique circumstance. The system is not designed for unique circumstances that only apply to a very limited number of people. Otherwise the FAFSA would be like 100 pages long.

That's why they have "Special Circumstances" exceptions. You are the exception to the rule. Rules, like systems, are written for the common occurances, not the exceptions. And yet, the Department of Ed still accomodates people with special situations with special forms and rules just for them.

The system works and it works the way it is designed to.

NellieD

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