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Helping Middle-Income Families Afford College

Guest Contributor

Counselors at public, private and charter high schools have a lot on their plates.

They assist students in finding and getting accepted at a right-fit college, and help parents (especially low-income ones) navigate the Free Application for Federal Student Aid (FAFSA) process to make sure students optimize all of the federal and state aid available to them.

It’s no wonder there’s little time left to help middle-income families figure out how to afford college.

Many families have little or no knowledge of the many income, asset, tax and borrowing strategies they can use to reduce the cost of college. They have no idea how to leverage the financial aid system to their benefit. And we are not talking about knowledge that can help them save a few hundred dollars per year. We are talking about tips that can save them several thousand dollars per year, depending on a family’s circumstances and financial profile.

For middle-income families, that can have a huge impact both on which college a student chooses and whether they and their family are able to get through college without being saddled with debt.

There are countless stories of middle-class families hurting from bad financial advice or lack of any advice at all. Take the case of one family earning $85,000 per year with four kids to send to college. Almost 90 percent of their savings over the last 18 years had been allocated to a small apartment building they owned. Their hard work and sacrifice made it a good investment for them. By the time they filled out the FAFSA, they had over $300,000 of equity in that building.

At a workshop they attended, they were correctly told to list the equity in their apartment building on their FAFSA as a personal investment. This investment, however, raised their Expected Family Contribution (EFC) by over $15,000 which, in turn, required them to take out a Parent PLUS Loan to pay for college.

What really cost this family is that they had to report this asset every year for all four kids. That likely added over a quarter of a million dollars to the cost of educating their children. What’s so frustrating about this example is that no one told the family at the FAFSA workshop they attended one key point — that they could have taken legal steps to convert that personal asset into a business asset with no requirement to list it on the FAFSA.

There are dozens of other examples that can cause the cost of college to skyrocket. The simple mistake of having college savings in the student’s name instead of the parents’ name, for example, can mean thousands of dollars in additional costs.

Roots of the Problem

Many high schools and colleges consider academics and finances to be two separate spheres, when in fact they are closely linked.

In “Why Admissions and Financial-Aid Professionals Should Work Together,” Chris George, then assistant vice chancellor for enrollment and director of financial aid at the University of Denver, argued that admissions and financial aid should not be separate and isolated parts of the application and admissions decision, with the offices having little knowledge of what was going on with the other side.

Instead, he encouraged his peers on both sides of the divide to educate themselves in the interest of doing a better job for their college families. George now serves as dean of admissions and financial aid at St. Olaf College in Minnesota.

For high schools, bridging the academic-financial divide could mean adding financial aid education in curriculums for those who will be helping families pay for college, or seeking partnerships with individuals and organizations that  can fill this important knowledge gap.

Battling Misinformation

Ignorance about federal loan strategies is common. Many people don't know the basics. Try asking parents or academic counselors about the Parent PLUS Loan, for example. Most know only that it carries a high interest rate and therefore they should avoid it. Few are aware of the steps they can take to ease the burden of sizable Parent PLUS Loan balances.

Part of the problem is that the federal government (which administers these loans) changed the rules for the Parent PLUS Loan Program in 2011 and then, in 2014, changed them again back to where they were before 2011. Because of that, parents who research the topic often land on erroneous or out-of-date information.

Similarly, when parents research repayment programs, they may find articles pointing out that there are no income-based payback programs or forgiveness programs for Parent PLUS Loans. Strictly speaking, that’s true. But if parents take the extra step of moving their Parent PLUS Loan balance into the Government Consolidation Program, they can take advantage of loan forgiveness programs. Unfortunately, that bit of information is missing from most high school discussions of the FAFSA.

Finally, there are unscrupulous private lenders that are using this confusion for their own benefit. They spotlight their lower interest rates, side-stepping the fact that a family’s special circumstances could make the Parent PLUS Loan a more favorable option.

All this combined with the complexity of our government loan programs speaks to the need to do more to help parents with this process. If we don't fill the financial aid knowledge gap, there will continue to be two prices for college for our middle-income families — one for the informed and another, much higher one, for the uninformed.

With that said, there are steps middle-income families can take to make college more affordable.
  • Remember that the tuition listed on a college’s website is not the price everyone is paying. Investigate what scholarships your student might qualify for at the schools they’re interested in attending. Some colleges make it easy by posting the GPA and test scores a student needs to receive specific scholarships. Others might require a hunt of message boards where parents and students share information on scholarships. Knowing this information can make it easy to determine which schools are actually more affordable.
  • Invest in a tutor to raise your student’s test score. Just raising a score by a point or two can result in thousands of extra dollars in scholarship money. Determine what schools your student wants to attend, investigate the scholarships those schools offer, and then weigh whether the extra scholarship money earned will outweigh the cost of a tutor.
  • Understand that financial awards are not always final. Consider appealing an award to make your student’s first-choice school more affordable. A change in a parent’s employment status, unanticipated medical bills or a higher financial aid offer from another similarly selective college are all legitimate reasons to appeal a financial aid award. Some schools have a formal process for making an appeal. Investigate the school’s requirements before asking for a larger award.
  • Start early. When your child is in middle school is not too early to start researching how best to structure your income to earn the most financial aid. Attend free financial aid workshops in your area and consult books on the subject. Make sure you understand how a grandparent’s contributions can affect your financial aid, how structuring a family business can impact your Expected Family Contribution, and the pros and cons of different loans.
  • Call in the experts. An accountant or financial planner you already work with may yield some advice, but remember that college financial aid is complicated and always changing. If you decide to seek professional help, it’s best to work with an expert in this area. Some advisors charge on a sliding scale, making their services manageable for those who need it most.

College is expensive, but families who do their homework can find ways to keep it from busting their budgets.

Jack Schacht is the founder of, a Naperville, Illinois based organization that brings together experts from both the academic and financial services communities who work in coordination to help families find the right college for the right price.
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