THCC Episode 129 – Need-Based Financial Aid and How It Works

Brad Baldridge
Welcome to Taming the High Cost of College. Today we're going to cover need-based financial aid.

Presenter
You have kids. They grow up, and before you know it, it's time to plan for college. Where do you start? How much is it going to cost? Will you qualify for financial aid? Should you be looking into scholarships? When will you be able to retire? What about student loans? The list of questions is never ending. The good news is all the answers are right here. Welcome to the Taming the High Cost of College Podcast. Here is your host Certified Financial Planner, Brad Baldridge.

Brad Baldridge
Welcome to Taming the High Cost of College. I'm your host Brad Baldridge. Today, Chuck and I are going to talk all about need-based financial aid, we're talking about how the EFC is calculated, and how the process generally works. You'll get a lot of great information on perhaps planning and understanding if you can improve your need based situation. And of course wants to talk a little bit about what happens if you don't qualify for need based aid at all, and what you can do if that's your situation. And then after the interview. In Brad Recommends, I'm going to talk about our free 'college money report.' It's a great report that I think all families should download and take a look at, it'll help you understand how your student is going to stack up and give some ideas of what it's actually going to cost at three schools of your choice. So you can choose the schools, you can put information about your student and family into the program. And it'll generate a report that will show you approximately what those colleges may cost and explain the difference in aid that you may receive from those schools. And it's a great place for a lot of families to get a start understanding how financial aid is going to turn out for them. Alright, let's go ahead and jump into the interview. All right, welcome back, Chuck.

Chuck Erickson
Thanks, Brad. Glad to be here.

Brad Baldridge
All right, we're gonna do our final one in the series. Today we're gonna talk about need based aid. This is our tenth topic plus the introduction. So we've got covered a lot of stuff. And again, if this is new for you, you can go back and listen to all the 10 different topics, I would encourage that. So today we're gonna talk about need-based aid. What do you see when it comes to need based aid out there as far as what people are confused by, or what questions do you often get?

Chuck Erickson
I see a lot of confusion, a lot of headaches people. This is really what scares the heck out of people. And I think there's a misnomer about what it is and how it works. But of course, the most common question that every family asks, 'How much money do I need to make?' Or 'How much money do I not need to make in order to receive financial aid?' Because everyone thinks that there's this magic number that once you earn that amount of money in a year, no college will ever give you financial aid, right?

Brad Baldridge
So that's always a great question, my answer to that question would be a million dollars or more. And you can pretty confidently say you're not going to qualify for need based aid. But anything other than that, it's very much a moving target. So to put off a frame of reference around it, I've seen families earning 75,000 not qualify for need based aid. And I've seen families earning 400,000 plus qualify. So it's a very much a moving target, it's a case by case and school by school basis.

Chuck Erickson
Uh-huh

Brad Baldridge
I think that's where a lot of people get confused, is at a low-cost school. And again, one of the big factors around need based aid is how much the school cost to begin with. So if you're looking at a low cost state school that costs 20,000. That's a big difference compared to a very expensive, say, University of Chicago at 80,000, or Harvard at 78,000, or whatever the numbers are today were.

Chuck Erickson
Right.

Brad Baldridge
Much bigger numbers, you're much more likely to have a need. Alright, so let's talk a little bit about I guess, let's back up one step. And let's explain what need based aid is to begin with. Do you have any idea when this started, I guess it's been around for as long as I've been involved with, since I went to college and long ago, but I think this started in the 50s or 60s.

Chuck Erickson
Yeah, from my understanding from higher education history is this was created in reaction to the wars to really help make it more affordable for families to be able to attend college, so as people were returning from the wars, and America was starting a new adventure, the government wanted to make sure that families could be able to go to college, regardless of their income. So they created this formula to basically use tax dollars to offset the cost of college enable families to go.

Brad Baldridge
Right. And again, they said, 'Well, we don't want to give money to everybody.' So they tried to figure out a way to give it to the families that need it, versus the families that don't need it. So that's where the whole formula, how to figure out who needs it. They have made relatively complex formula, and there's a lot of inputs into it. But essentially, the very basics of it are cost of attendance minus your EFC equals your need. Now, that's all jargon. So cost of attendance is the total cost of a typical college. And again, these numbers are published. And cost of attendance is like an official number out there. So you can go look up cost of attendance at any school. So if you Googled cost of attendance of Rice University, it would probably take you to the Rice University webpage where they would have their cost of attendance. And cost of attendance would include tuition, room and board, books, fees, travel, personal expenses. So there's five different categories there. And all of those added together are cost of attendance.

Chuck Erickson
Right? The thing that families need to be aware of, though, is that different colleges may factor in different elements into cost of attendance based off of their situation. So if the college does not require families to live on campus, or it doesn't require students to live on campus, excuse me, they may not include room in their cost of attendance calculation. So you want to try and make sure that you understand what is included in the cost of attendance for each college, and then try and compare schools apples to apples as much as you can.

Brad Baldridge
Right? Absolutely, yeah, the cost of attendance comparison. And again, I think colleges also manipulate their cost of attendance in some regards, where they intentionally may make, as an example, travel numbers can be wildly different at some schools and other schools. And personal expenses can be wildly different. And again, some schools want to make that number large, so that students have access to financial aid to pay those numbers. Other schools don't want those numbers to be so large, because it makes their price bigger, and they don't want to be publishing a higher price. So

Chuck Erickson
Exactly.

Brad Baldridge
But again, they're the official numbers that we have to work with it when we start talking about need-based aid. So going back to the formula, again, cost of attendance, which we just explained minus your EFC equals your need, well, EFC, or expected family contribution, that number is a number that is essentially calculated. That's why we fill out our financial aid forms, we put all the data in the financial aid form, they plug it into a complex formula, and it spits out your EFC. And once you have the EFC, that explains how much need you have. So a typical upper middle income EFC, let's say is 25,000. If you're going to a school that costs 25,000, obviously, you're not going to show a need because the cost of the school is 25,000 minus 25,000 equals zero. Now that same family says, 'No, I'd rather go to a more expensive private school.' And they find a school that costs 50,000. Well, now 50,000 minus 25,000, means you need 25,000. So just by changing the school, from one to the other, and maybe in state state school to a private school that can drastically change your need.

Chuck Erickson
Yeah, however, it's still, the expected family contribution still is remaining the same for each college so that 25,000 that the federal government has figured out that they think that you can pay every year, that is staying the same, it's just whether you are getting assistance from the college based off of their cost of attendance or not. And a lot of families understand is who calculates this expected family contribution? I said, 'Well, it was written by a bunch of elected officials in DC and calculated in DC. So if you ever have complaints about how this thing works, please talk to your elected officials because they're the ones that have direct influence on it.'

Brad Baldridge
Right? So they're actually changing the formulas, Originally, it was gonna be for 2023. Now, probably 2024. And they're doing away with the term expected family contribution. Again, because it sounds like that's how much parents have to pay, and they shouldn't have to pay more. And then a lot of cases, when the math is all done, parents do pay more than their EFC. So another political thing going on, where they're changing it to some sort of student index, I believe, and I can't remember the exact title of it, but they're doing away with the word EFC, which is great, because it has been very confusing of, why do we do this? So when we actually do the calculations, what confuses a lot of people too, is because when you fill out the FAFSA, there's 40 or 50, different blanks and all kinds of data put in there. One of those things actually have an impact on the results of your calculation. And it really boils down into five factors that have the biggest impact. One is the parents income or income, both parent and student. And then there's assets both the parent and the student. And then the final factor would be the number of students that the parents are supporting. So if you have multiple kids in college simultaneously, that helps your lower your EFC for each student. Now, we talk about income and assets of the student for the typical student that's rolling out of high school and going directly to college. Well, their income and assets are zero or nearly zero, so often their numbers go away as well. So now we're just really talking about parents income and assets. And the number of students the parents are supporting as being the critical items on the list.

Chuck Erickson
Right, I do want to jump in and say, though, that if a student is working, a student has to work considerable amount before it actually really impacts the FAFSA. So I don't want people to think like, 'Well, my student shouldn't work, and therefore that will help our FAFSA.' Student input and assets or student income and assets doesn't make a huge impact on FAFSA. So yes, if your kid wants to work, that's great. I encourage that. So I just don't want families to think about, 'Well, we can't have them working, because that will impact financially too much.' No, let them work, it will be fine.

Brad Baldridge
Right? Exactly. So it's about 6800. And they index it for inflation. So I don't know where the number is exactly at 6840, or something like that the last time I looked that a student can earn like 6800 and has zero impact. And then after that the income will have some impact. Again, I guess that leads us to the whole idea of need based aid planning, should we try and manipulate our income and our assets in order to qualify for more aid? And the answer is a resounding maybe. Again, a lot of times where we're working with families, you can, again, it's income and assets. Well, for a lot of families, you don't have a lot of control over your income. And, and if it's not perfectly obvious, it almost never makes sense to give up income in order to qualify for more aid. I quit my job, or my second job, or whatever it is, I took a pay cut, whatever it might be, my income went down $10,000. And that helped me qualify for another $1,000 of aid. Well, you'd have been better off taking the 10,000 and spending it on college, and you'd have been much further ahead. So it almost never makes sense to give up income.

Chuck Erickson
Yeah, that's a great example, Brad, because I have a lot of families that asked me about, 'Okay, so what if I take a pay decrease? Will that give me more financial aid?' And technically, yes, it will. But it is only a percentage of your income. I think people believe that every dollar that they earn is then calculated towards going towards college. And the formula really says a certain percentage of your income could be used towards helping your kid go to college, but it's not your entire income. So the example you gave that was great that the $10,000 change in your income that might give you a 1000 more in financial aid, which doesn't offset the 10,000 difference.

Brad Baldridge
Right, exactly. Now, I have seen situations where it made sense to not work. But it was more along the lines of, 'I'm working too much. And I've got to scale back.' I had a situation where both mom and dad were working and dad was working a second part time job on the weekends. And he was really trying to figure out, what is the real benefit of this job? And what we figured out is if he earned $100, then like 20, some of those dollars would go towards taxes and another $10 loss of aid. So he wasn't earning quite as much as he thought he was after taxes and impact on aid and all that other stuff. Plus he was exhausted. So you really wanted to quit and we're just trying to justify it. But again, it's almost never. Another thing you could do to reduce your income, so to speak, is give money to charity, that would reduce your taxable income. And again, same situation, right? If I give away $1,000, I only get $100, back and aid. Now if you're going to be charitable anyway, well then it makes sense to do it properly so that you get the benefit of the charitable contribution, but it's not a reason to do it in and of itself. Now on the flip side, if you can adjust things and say, 'Well, I'm going to take this income in this year instead of that year.' So I'm not giving up the income, I'm just choosing what year it's gonna land in. That may make sense for families where they say, 'Well in these particular years, we've got multiple kids in school and in those particulars, it makes sense perhaps to have lower income.' And if you operate your own business, or whatever it might be where you can say, 'I'm gonna slow down my invoicing so that most of the income from these particular jobs don't land in this year, they're gonna land in next year.' So this year's income will be lower. At the exchange of next year's income being higher, that type of planning often makes sense. We're not giving up the income, we're just placing it in the proper year to help us run the numbers. Another common situation is, again, we mentioned it's income and assets. So let's switch over to the asset side, because I think assets for a lot of families, you have much more control over.

Chuck Erickson
Yep.

Brad Baldridge
As in if I have $50,000 in the bank, is that good or bad? Or if I have $50,000, in a IRA Is that good or bad? Those kinds of decisions often can have an impact. And I always warn people, though, that you can make changes, again, let's go back to the original formula. So if your EFC, let's say is $50,000, and you're going to school that cost 25. Well, 25 minus 50 is zero, you don't qualify, right? You move stuff around, you work really hard, and you do all kinds of planning and your EFC goes from 50, down to 40. The school costs 25. And yes, you made it better. But there was no result of that because 25 minus 40, is still zero. So I think that's where a lot of people don't really understand what's going on. So in that example, I've had parents say things like, 'Well, if I have $10,000 in the bank, it's going to count against me for financial aid.' And I always am reminding them, it doesn't matter. Your $300,000 of income disqualifies you from financial aid at the state school, no matter what you do.

Chuck Erickson
Right.

Brad Baldridge
So we don't care where your assets are. Yes, it will count against you for financial aid, but you're not getting any financial aid as far as on the need based side. So don't worry about where the money is. And again, I've had another great situation, though is student assets and student incom, once you cross the lines are more heavily assessed. So I had a situation where a student has a generous grandfather who gave him some stock when he was relatively young. And it was worth about $20,000. And not only was Grampa generous, but he was a good stock picker. So that particular stock grew to 75,000, by the time college was coming around. Well, having $75,000 in this student's name hurt. So we needed to sell that stock and spend it on some of the private high school that the student was attending and do other things with it, so that it would be gone when by the time college rolled around. And of course, we had out of the frying pan into the fire problems as well, because once we sell the stock that generates income on the student's tax return, so the year we sold the stock, it looked like the student earned $55,000. And that would be bad as well. Now luckily, we were able to do all this shifting around while the student was a sophomore. And we were able to avoid reporting it to the colleges because it was in a tax year that the colleges don't learn about. But that's another important thing to realize is there might be some unintended consequences of moving money around or shifting things that may not provide a benefit. So often when we're working with families, we have to say, 'Well, let's figure out what schools we're going to first to figure out, if planning for need based aid makes sense. Because these types of schools, maybe you won't qualify, but those types, you might.' Or

Chuck Erickson
And that's one thing that I don't think families understand is that when families are applying for financial aid, if your student is going off to college this fall, you actually used your tax information from two years prior. So it's called prior prior. So they're not looking at your literal current situation, they're looking at some past tax information that way. So if you're going to make some financial changes are trying to do some financial planning, you do actually have to do it in advance in order for it to make an impact on your application for FAFSA and other financial aid when you go through the college process. So this is a long term kind of planning as well. You can't just say, 'Well, I'm gonna make these changes today. And it's going to affect my aid for this fall.' It may, but it probably won't, because they look at different years.

Brad Baldridge
Exactly, right. And the challenge there, again, another complexity, they look back quite a ways for income, but for assets, it's the day you sign the form. So again, sometimes the taxes have been filed a long time ago, and those numbers are solid, we can't change them anymore. But we can still shift the assets potentially. And again, not always. And it's always important to say, 'Well, what are the costs for what we're doing as well?'

Chuck Erickson
Right.

Brad Baldridge
Sometimes, 'Well, if we do this stuff, there's going to be transaction fees, and then we're going to pay some taxes and show maybe cost $5,000 to do all this stuff.' And then you look on the other side and say, 'And I'll get $1,000 of aid for doing it.' Well, that doesn't make a lot of sense to pay 5000 in taxes and fees in order to gain $1,000 in aid. And of course, on the flip side, if we look at some of the winds, I have seen situations where moving things around help families qualify for another 3000 or 5000. And occasionally, we get that big win where, each year over four years, so now we're talking about a $60,000 shift. But that's relatively rare, maybe that's 5 or 10% of the people out there that have a shot of making a real impact

Chuck Erickson
Right.

Brad Baldridge
Of substantial dollars. And then for many, many families, though, the planning might be, 'Well, if we do it this way, instead of that way, we'll save 3000 a year.' Well, still $3,000 a year, it's worth the trouble is just not going to solve all your problems, there's going to be one little piece of, 'Well, we do this, we save 3000.' But on top of that, we're going to have to look at all the other stuff we've talked about in other episodes and stuff like scholarships, and saving and investing and all the other things that we could do on top of need based aid planning, to supplement and I think that's where a lot of people are confused is need based aid is gonna be one piece of the puzzle for some, and for many families need based aid is not going to be even an option. But it's not going to be the only piece that we need to work with, it's going to have to work well with all the other pieces around that student's income the student's loans, the parents saving and investing, the parent loans, the parent distributing out at a cash flow, etc, etc.

Chuck Erickson
And even the student's academic profile will factor into this for part of it as well, because one thing that colleges also look at when giving out aid is how desirable is this student? So if the student is barely admissible, like just squeaked across the line and, 'Yep, we'll admit you.' The college may not offer that student a huge amount of aid because they're not as desirable on their campus, whereas a student who is an amazing profile for that particular college, and it really depends upon the college, the college may provide way more aid than actually the student qualifies for, because they really want that student on their campus. So that's the other part. So you're playing the numbers game of trying to help them apply for the need based aid, but I'm also playing the numbers game trying to find the right colleges that are going to offer the great scholarship offers as well.

Brad Baldridge
Right? Absolutely. And it's a combination of need-based aid and merit aid that we're talking about is, and for some families, that's going to be all need-based, or some families would be all merit. And for many families, it's gonna be a combination of both need and merit. But that's one of the challenges is you really need to dive in and understand both systems, or work with someone that can help you through it. Because I think that's the challenge. Now, let's talk a little bit about who provides this aid. So we fill out the FAFSA, or the Free Application for Federal Student Aid. Then once it's all done, what happens to it? Where does it go? And can you tell people about that process?

Chuck Erickson
Yeah, so the Free Application for Federal Student Aid, the FAFSA and the keyword there's 'free,' you should never have a website that charges you to fill out the FAFSA. So if you're going to that it's probably a fake website, don't do it. Go to fafsa.ed.gov and fill out your FAFSA that way and it goes to the Department of Education and the Department of Education will look over the numbers and they will come up with that expected family contribution. Also, when you submit your FAFSA, you list up to 10 colleges where you would like your FAFSA information to be reported. You can change this list over time, but usually 10 slots is plenty for families to do that. Make sure you have the right colleges on there. Some colleges have different FAFSA codes based off of whether you're applying as an undergraduate student or you're applying to a grad program. So just make sure you have the right FAFSA numbers on your FAFSA for what colleges your information should go to your FAFSA is complete the money goes off to the colleges, it typically is received by the financial aid office and the financial aid office will take a look at your FAFSA and then determine, 'Okay, the federal government says you need this much. We are going to look at some other factors because we're the colleges and we get to make those choices. And we are going to determine that your aid and your need is going to be this much and it could be a little bit different.' And then the financial aid office is going to figure out, 'okay, how do we come up with what to provide whether it is federal money, state money, institutional money directly from the college or university.' And then they also look to admissions to see if the student has been awarded any scholarships as well. So all of that gets factored into their financial aid package and that's typically what it's called as a financial aid package or financial aid award. This is typically sent directly to the student and not to the parents. So parents, if you're wondering where the financial aid offer is, after you've sent it off to FAFSA and put the colleges that it receives on there, the colleges will send the financial aid award to the student, it will typically be emailed to the student, or it will show up on their admissions portal website area. So if you have not seen the financial aid package for college, check with your student because it is probably in your students' email or on their admission portal.

Brad Baldridge
Absolutely. Right. So I think it's important that people understand that the federal government and the most states, although they have the money, they don't do all the work, they've pushed that on to the colleges, the colleges' financial aid office, they understand the federal rules and the state rules for your state, typically, and it's their job to do all the paperwork and forms and figure it all out and awarded to you. And essentially, then they're the ones that can answer the questions around, it's really hard to talk to somebody who thrives in the federal government, about federal aid, all the help, and the questions and answers all need to be directed at the financial aid office, they can help you with you both figuring out if you qualify for it, and then helping you actually receive it. The federal governor just pushed all that work on to the colleges, and the colleges now have staff there that their job to help you understand the federal programs. Alright, so let's throw another wrench into it. Let's talk a little bit about the CSS Profile.

Chuck Erickson
Oh, boy.

Brad Baldridge
What's the CSS Profile?

Chuck Erickson
Well, the CSS Profile is something that was created by the College Board, we've heard from them. They're also the creators of the SAT. What happened was is colleges were saying the FAFSA is nice, but it is not as accurate as what we would like because the FAFSA does really look at a very broad picture of your financial stability and what financial resources you have as a household. It is not super, super specific, because it doesn't include things like home equity and other numbers in it. So some of the colleges got together with college board and said, 'We need a tool to have a better picture of families' finances, we want more accuracy.' So the CSS Profile was created. Here's the twist. So you pay to use the CSS Profile. That's one little trick. FAFSA is free. CSS Profile, there is a fee to use it. Here's the nice part, though, is less than 200 colleges actually require the CSS Profile. And it is mostly the more selective institutions that require it. So if you're thinking I've never heard of the CSS Profile, that is probably true, because the vast majority of students do not have to fill out the CSS Profile, everyone should fill out the FAFSA almost... CSS profile.

Brad Baldridge
Right? So the CSS Profile is typically the, the more prestigious schools, schools that are generally more expensive, and the schools that tend to be a little more generous. But again, if you're a school that's handing out 20, 30, 40, 50,000 thousand per year scholarships, in a lot of cases, what they're saying is we need a little more information to make sure that we're doing it well.

Chuck Erickson
Right.

Brad Baldridge
And the FAFSA, the government has tried to make the FAFSA easier and easier. So you put less and less information on it. And then the college is saying, 'Well, we're not getting any information about the families that we're handing this money to. So we do want to know what's in your retirement plans, we do want to know what your home equity is about, we do want to know, all the investments that you have.' And then some colleges are really digging even deeper. And they're asking questions likem 'Tell us about what kind of cars you drive, and what years they are.' Or other data. And again, because especially at the very high end, right, the wealthy that are sending their kids to Harvard and Yale, they may have some attorneys or lawyers that are helping them manipulate the system. And I'll just want to catch that. So they require the CSS Profile where they get a lot more detail. So it makes it much more difficult for the family to just say, 'Well, a good accountant could just position things such that I'll get a whole bunch of aid at Harvard.' Harvard doesn't like that.

Chuck Erickson
Right.

Brad Baldridge
So they've said, 'Let's do the CSS Profile. Let's gather more data. Let's make sure we are in fact giving it to the students that deserve it.' Again, because we're talking about much more money in a lot of cases as far as the dollar amount.

Chuck Erickson
Yeah, and I think it is a useful tool. It probably needs some updates, but it is a useful tool. I've actually seen an instance I used to work at a college that required the CSS Profile, and I saw an instance where a family for the FAFSA, there are ways that you can hit what's called 'automatic zero,' which means there are certain family situations and they're pretty catastrophic situations that have to happen. And then the families deemed what's called an 'EFC zero family,' but I've actually seen a family where they were technically an EFC zero Because of a catastrophic event, but when we got their CSS Profile, the family owned several homes and had home equity in excess of a million dollars. So they weren't actually poor. It's just the way the calculation happened with FAFSA is that it thought that they report where they actually had a huge amount of home equity. So that's what the CSS Profile helps colleges see, they help see bigger details, better details. So the colleges can give their money out to families as equitably as possible, and not just giving it out to families who have fudged the numbers.

Brad Baldridge
Right. And of course, the downside of it is the CSS Profile is more complicated, and there's a lot more blanks on it than the typical FAFSA. So FAFSA might have 75, and the CSS Profile is closer to two or 300 data points that they're collecting. And it gets even more complicated in, like a divorce situation where potentially you might have to do the CSS Profile, or both parents instead of one parent. So again, it's out there, be aware of it. So I have many, many families say, 'Well, all this sounds well and good. But do we really have to fill out the FAFSA?' How do you answer that question?

Chuck Erickson
I always say if it is your first student going off to college from your household, yes, fill out the FAFSA. Why? Because some colleges require it in order for the student to be able to do work study or campus employment. Some colleges have other departmental scholarships that require that the FAFSA be on file in order to be considered for those scholarships. I know that there's this hesitation of I don't want the colleges to see all my financial numbers. But as we've said, FAFSA is looking at a broad view of your finances. So just please fill it out. Now there's also the 'internet tax retrieval tool.' So if you have filed your taxes through a 10-40, or a 10-40, EZ, many times when you fill out FAFSA, you can just pull that tax information right from the IRS, right into your FAFSA, which makes it way faster to complete. So there really isn't excuse why families should why families are not completing the FAFSA. Everyone should complete the FAFSA.

Brad Baldridge
Right? And I agree with that. And I mean, if you're a multi millionaire, and you just don't care, and you're happy to pay full price, well, then yeah, you don't have to fill out the FAFSA. You can just pay the big bills, and keep everything private. But for the rest of us, sometimes filling out the FAFSA will not gain you anything. But to be absolutely certain that there is nothing to gain, you really need to understand how the whole system works. Because I've seen a lot of families that come to me and say, 'Well, we're just not going to qualify for aid.' And I'm like, 'Are you sure?' And we start running the numbers, and it turns out at some colleges, they will qualify. So if that family said, 'Well, I'm not going to bother because I know we're not going to qualify,' well, they were wrong, they would have qualified and they certainly need to go through the motions because you want to just verify that. So but if you're absolutely confident again and you're willing to pay full price, well, then maybe you don't need to do it. But for everybody else, it's not that hard. Just do it. It's, again, for most families, maybe an hour, hour and a half at the top, once you have all the data in one spot.

Chuck Erickson
Yeah. And there are people there to help you with the FAFSA as well. So you can contact people like Brad, there are some free programs to high schools and to the federal government to help you with your FAFSA. And you can even talk to the college financial officers as well if you have questions about the FAFSA. So there are resources out there to help you. But yeah, there's no excuse to why you don't fill it out, especially for your first kid. I understand that if you have a multi student household that you once you filled it out for the first one, you go, 'Nope, there's no way we're way above, we're never going to get any type of aid.' As long as the other students tend to go to similar types of colleges, that might continue to be true. But if you have end up having multiple kids in college, then you may need to do the FAFSA again, so that you can see if you can get some aid then. So yeah.

Brad Baldridge
Exactly, right. Again, that was one of the factors, right, if you have multiple kids in college, you're more likely to qualify for aid. So I've seen a lot of situations where they've got some overlap. So a family with a lot of kids, the first two years that we have got one in school, we don't qualify. And then we've got two years of overlap, and we've got two in school and now we do qualify, and then one graduates, and then we only have one school again, and we don't qualify, and then the twins go and now we have three in school and we definitely qualify. So it's relatively complicated, and you just need to work it out. There is no simple, 'Just tell me what I need to do and I'll just do it.' Well, what you need to do is understand the system or work with someone that does so that you're looking under every rock and you're doing it the best that can be done.

Chuck Erickson
Yep.

Brad Baldridge
All right. Well, that ends this episode, I think. We'll wrap things up and I say also ends our 10 episode series. I really appreciate you putting in the time and effort with me, Chuck, to get all this information out. Again, if you want to learn more about working with Chuck, please reach out to him. He's got information on his website, his contact information is that in the show notes of every page, so thanks a lot, Chuck.

Chuck Erickson
I really appreciate it, Brad. This has been a great, great 10 episode series plus the intro. And I really hope that this has helped students and families understand the college search application, financial aid, and scholarship process just a little bit better. But yeah, of course, I only work with certain types of students as well. So if you need financial help, make sure you reach out to Brad and of course, you can find his contact information all over his website and everything else you've been paying attention to here on the podcast. So thank you so much for having me, Brad. I really enjoyed this experience.

Brad Baldridge
All right, we'll stay in touch.

All right, I hope you enjoyed the discussion about need-based aid. Don't forget, you can always subscribe to these podcasts. If you don't understand how to subscribe, well,talk to your teenager, I'm sure they can help you work with your iPhone or whatever in order to actually subscribe so you get all the episodes directly to your phone. Alright, let's stick around. We're going to jump into Brad Recommends and we're going to talk about the free 'college money report.'

Presenter
The latest tips, tricks and tools you can use today. This is Brad Recommends on Taming the High Cost of College.

Brad Baldridge
Today I'm recommending our College Money Report. Our College Money Report is a report that's generated at our website. And it's based on a bunch of information that you would give us. So you answer about 20 questions on things like your income, your assets, the academic profile of your student, how many are in your family and some of those things. And then with that information, the college money report will figure out how much need-based aid you be eligible for to actually calculate your EFC and give you that, but it'll also take that EFC and apply it to some colleges. In addition, it will take your student profile, because you're going to give it some grades, test scores if you have them and some of that type of information. And we'll also estimate merit aid. Now of course, we know the cost of all the colleges that's available to us as well. So we have the tuition, room and board, books and personal expenses and travel for all the colleges. And then what we're going to do is we're going to take both your need-based aid and your merit based aid estimate. And we're going to deduct that from the total cost. And we'll get an estimate for your net cost of college. Now this is again an educated guess based on your statistics. So it's going to be different for each person depending on your student's academic profile, and your family's financial profile. But this will give you some inkling of what college may cost. For you to access this report, of course, go to tamingthehighcostofcollege.com/129. And they're in the show notes, there will be information on how to get to the report. Now once you've done this, there's a couple of different ways you could use this. If you're just starting out, just take your local state school or your flagship state school, and pick a couple other schools that you might be interested in, pick your alma mater or something like that. And just put that in for your student and see how things would go just to give you an idea of a starting point. Now if you're a little further along in the process, and your student actually has colleges that you're visiting, and considering, well, then you could put that information in as well. It also might be useful just before you go and visit a school, you could put in the data for that particular school and put in your financial information, get a copy of the report and take it with you and you go to the school and talk to them about if these estimates are based at all in reality and whether or not it's likely that you would receive this type of aid. So there's lots of ways to do it. It's a great report, it summarizes things. It also provides additional information on how this calculations work. It will calculate your EFC both in the federal method as well as the institutional methods, so you get a lot of good building blocks as well. Alright, so go ahead and download the report so that you have more information and you can use it for your college planning. That's all we have for today. We appreciate you coming out listening. As always, we appreciate reviews in Apple and iTunes and wherever else you may be getting your podcast. That's all for this week. We'll see you next week.

Presenter
Thank you for listening to the Taming the High Cost of College Podcast. Now it's time for you to take action. Head to tamingthehighcostofcollege.com for show notes, bonus content and to leave feedback for Brad. The next step on your college journey starts now.

Brad Baldridge is a registered representative of Cambridge Investment Research and an investment advisor representative of Cambridge Investment Research Advisors, our registered investment advisor. Securities are offered through Cambridge Investment Research Incorporated, our broker dealer and member of FINRA and SIPC. Brad owns two companies: Baldridge Wealth Management and Baldridge College Solutions. The Baldrige companies are not affiliated with Cambridge Investment Research.

Transcribed by https://otter.ai