Present and prospective students of the University of California (UC) system received happy news that financial aid taps, after a period of slowing to almost a trickle, are once again flowing. "Students across the UC system could potentially receive more financial aid next academic year than ever before," reports an article appearing in the February 2, 2011 edition of The Daily Nexus, the student newspaper of UC Santa Barbara.
The article goes on to give the particulars of this development:
Although student fees will spike by eight percent during the 2011-12 academic year ... 33 percent of the funding accumulated from the tuition increases will be allotted to financial aid. In-state students whose families earn less than $120,000 will also receive a one-year fee deferral for next year’s $822 fee increase.
Constant fee increases, a sad reality in this age of cash-strapped state budgets, have eroded the value realized from the typical tuition dollar, forcing borrowing students to request larger amounts of aid to cover this expense. "Because more money is accumulated in the financial aid budget after each fee hike ... overall aid for the campus has grown gradually over the years," the article continues. "UCSB’s financial aid budget consisted of nearly $17 million in the early 2000s."
In a nutshell, Americans pursuing higher education are borrowing greater amounts than ever before, and are borrowing in greater numbers than ever before. Of course, with so much demand come opportunists smelling easy profit. "Every year, consumers lose more than $100 million to student financial aid scams, according to Finaid.org," the financial funsters at The Motley Fool inform readers in an article dated February 2, 2011. "It's not a stretch to see why. Finding money for college is rife with complexity and confusion.... With deadlines for applying for aid approaching, 'tis the season for student aid scams."
The article also alerts readers to "seven signs of college funding fraud." These are:
- Deceptive terms in the lending company's name or literature - "The words 'Foundation,' 'Federal,' 'National,' or 'Administration' ... don't mean that it's on the level or endorsed by any lawful entity," the article states.
- Fees demanded up front - on this point The Motley Fool article is emphatic: "Legitimate scholarships do not require applicants to pay up-front fees."
- Assorted fees charged for various services attending the loan - "Beware of anyone who asks for up-front 'processing/handling,' 'origination,' or 'advance-fee' fees for a low-interest loan," the article warns.
- Claims of privileged access to certain funds or demands for membership fees - "There is no secret vault with scholarship money, only accessible to the organization telling you about it," The Motley Fool article states. "And you definitely don't have to pay a membership fee to ensure that "only serious candidates apply" for access to these supposedly impossible-to-find scholarships."
- Pre-approval - "Your child is indeed special," the article admits. "But that solicitation from some outfit saying that your child has been preapproved or specially selected for a scholarship-matching service is only telling you that because they know it's what you want to hear."
- Requiring the purchase of a financial product - "It is against the law for a company to imply that you need to purchase a financial product (such as insurance or an annuity) to receive federal student aid," the article states.
- Money-back guarantees - On this point The Motley Fool article is also emphatic: "There are no 'guarantees' when it comes to getting scholarships -- money-back or otherwise."
The safest road to student aid remains the FAFSA, which, as dreary as it is to fill out, keeps financial predators at bay. The Motley Fool article presents handy advice to make completing the FAFSA as painless as humanly possible:
Given the un-fun-ness of filling out forms like FAFSA and combing the web for scholarship money, it's understandable if you want to reach out for help. Here are some guidelines to help you ace the process:
- Get familiar with college financing and financial aid options. FinAid.org offers a friendly overview of all the ways you can pay for college. The site has a robust collection of calculators and links to FinAid-vetted sites for more information on military student aid and fee-free scholarship search engines, as well as an "Ask the Aid Advisor" email service staffed by financial aid professionals.
- Start the search for aid (scholarships, grants, etc.) early, ideally when your child is a sophomore or junior in college. Start your search with local programs. (Your school's guidance counselor can offer contacts.) Your child has a better shot of standing out with local benefactors than with big national ones.
- Point your browser to FAFSA.gov and register. This is the official government website, and the one that will walk you through the entire process of applying for federal aid. Remember the ".gov" on the url. It's important.
- File your taxes ASAP. Your most recent tax return must be on file in order to apply for federal aid in the first place. Given that federal money is doled out on a first-come, first-served basis, you want to hop on this task right away.
- Fill out the FAFSA, even if you think you won't qualify for aid. The rules for needs-based financial aid change all time. Plus, if you have other children in college (or even private school), the FAFSA formula takes that into account. Also, FAFSA is a prerequisite for applying for federal Stafford and PLUS loans, state grants and college financial aid.
There are legitimate college aid counselors who ably usher families through the aid process by walking you through the application and essay portion. (Some are free through high schools; some charge an upfront fee (though they do not hit you up for ongoing payments).)
The Motley Fool article offers much wise advice concerning financial aid -- advice that can spare you from becoming Fortune's fool while potentially saving you a fortune in the bargain