It’s hard keeping track of what matters when in the prior-prior year world of the FAFSA and CSS Profile. Here is a table summarizing tax year and asset dates for the next few college years:
|FAFSA/ PROFILE Income Tax Year
|Assets As Of Oct*
|AOTC Tax Year**
To summarize based on where you are in high school:
Sophomores, this year is your first FAFSA income year. This year is your base year for EFC purposes. All future years will be compared to 2020.
Juniors (and seniors), 2020 income will also count for you for FAFSA purposes, but not until your second year of college. Families of juniors should think about what retirement contributions they can make this year and what to do with student summer job earnings to remove assets from the calculation come fall.
* Assets are as of the filing date, which may be as early as October or into the following year depending on the school’s filing date.
** Remember that the AOTC can only be claimed for four tax years, so families should decide whether the fall of freshman year is better than spring of senior year for claiming. With the income limit of $160,000 (married filing joint) or $80,000 (single), some families might not be eligible every year.
Parents may find that different strategies are needed during different years. For example, a family with a student beginning college in fall of 2022 might reduce pre-tax retirement contributions this year (to increase taxes, which are deducted from income on the FAFSA and therefore reduce EFC) and then maximize contributions beginning in 2022 to reduce AGI for AOTC claiming purposes.
If your student came home for the holidays unenthusiastic about their school and considering transferring, your first impulse might be to tell them to tough it out for the year and reconsider come summer. While that’s probably good parenting advice, it might not be good financial advice. In fact, students who are thinking of transferring are usually best off making the decision sooner rather than later.
Why? Because most schools offer substantially larger financial aid packages to incoming freshmen than to transfer students, and only those with less than a set number of post-high school credits qualify as incoming freshmen. Furthermore, once students have accumulated a certain number of college credits, their transfer application is based on their college GPA, not high school. A student who did well in high school but then underperformed in college will probably want their high school GPA to be the basis of an admissions decision.
The differences can be huge. For example, the highest merit award for incoming freshmen at the University of Oregon is $15,000 annually (a student receiving the Summit and Presidential award), and those scholarships renew automatically for four years. Transfer students, on the other hand, are eligible for a maximum of $3,000 in merit aid and must reapply every year. Similarly, the University of Florida offers up to $10,000 in merit aid to freshmen; as for transfer students, “While the Office of Admissions does not offer scholarship opportunities for transfer students, there are two scholarships offered by the Office of Undergraduate Affairs dedicated to Florida College Transfers.” These are a maximum of $4,000 and offered to a total of 12 students, with only two receiving the maximum $4,000 award.
If your student is thinking of transferring, they should research transfer vs freshman requirements and financial aid eligibility at the school they’d like to transfer to ASAP because this is one instance where a quick decision is often the best decision.
It’s probably a good thing that today’s students, unlike their parents, are more likely to be handed a free t-shirt than a new credit card as they walk across campus. For students graduating in the 1980s and 1990s, credit card debt was a more likely millstone than student loans. Rules that went into effect in 2010 drastically reduced students’ access to credit cards. Continue reading Establishing Credit for Your Student
Cost increases across the higher education landscape averaged 2.5% for the fiscal year ended June 2019, according to the Higher Education Price Index or HEPI. This is slightly lower than the previous two years: 2018’s inflation was 2.9% and 2017’s, 3.4%. Continue reading Higher Ed Inflation
Who knew we’d be a week away from the end of the year at this point? Kidding of course. If you’re among the many who want a year-end to do list, here goes! Continue reading What to do now?
Among the apples-to-grapefruit aspects of planning for college costs is the substantial differences in what’s included in Cost of Attendance at different schools. All schools will quote costs for tuition and fees, room and board, books and supplies and personal expenses. But often, those are just a starting point. Continue reading Cost of Attendance: What’s Included?
Perhaps the most frequently asked question we get is how to balance saving for retirement and college. And I can’t answer that in a blog post because the right way to balance depends on your specific circumstances. We have told clients to pause retirement savings to meet college years cash flow needs, we have told clients to stop funding college and focus exclusively on retirement, and everything in between. What I can do is help you to understand how retirement savings impact college. Continue reading Retirement Contributions and College
Last month, the Department of Education announced the release of earnings and debt levels by major and school. This is a fantastic level of transparency when a career path is already in mind. The data is available on College Scorecard. Continue reading Earnings and Debt by Major
What do Harvard, Yale, MIT, Princeton, University of Connecticut, University of Oklahoma, Ohio State, Washington & Lee, Notre Dame and Michigan State have in common? Each had a student selected as one of this year’s Rhodes Scholars. The Rhodes Scholarship is arguably the most prestigious and competitive scholarship available to American students, and the size and diversity of the applicant pool– over 2,900 students endorsed by 298 different colleges and universities– speaks to the academic and leadership excellence of the 32 selected students.
It’s also testimony to the fact that you do not need to attend an expensive or reach school to compete at this level: 1/4 of these scholars attend public universities that admit more than 50% of applicants, according to College Navigator.
Most people would assume that we have the most expensive higher education system in the world. And it’s true that the world’s most expensive universities are all in the US. However, that doesn’t mean that the US is the most expensive country in which to get a college education. According to the OECD’s Education at a Glance 2019 report, that “honor” belongs to the UK. Here is their chart showing public university costs by country: Continue reading Do Americans Pay More for College?