Families maximize their eligibility for financial aid

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When Caitlin Cannon received her college acceptance letter from Duquesne University four years ago, it was cause for celebration.

While her proud parents shared her excitement, they quietly agonized over how they were going to afford four years of college.

"When I received the first bill, I experienced a Fred Sanford heart-attack moment," said her father, Sean Cannon of Shaler. "I thought I was going to have the 'big one'."

Like many families, the Cannons were able to meet the challenge by applying for financial aid.

The most important part of that process required Caitlin and her parents to fill out a form called the Free Application for Federal Student Aid, or FAFSA, which asks detailed questions about a family's financial situation to determine how much money they have and need for college. The form must be completed each year that a student needs aid.

Even families with substantial incomes still should complete FAFSA to determine whether they qualify for aid, including Stafford Loans or Parent Loans for Undergraduate Students (PLUS). Some colleges also require FAFSA for a wide variety of scholarship programs.

"It's a free application and we encourage all families to do it," said Richard Esposito, financial aid director at Duquesne University. "If they do receive an award, at least it's there to consider."

In addition to the FAFSA, more than 600 schools and scholarship programs use the College Board's CSS/Financial Aid PROFILE, available at www.college.board.com. It has additional questions not included on the federal form. It costs $5 to register and $18 for each school to which it is sent.

The FAFSA can be filled out online at www.fafsa.ed.gov or on paper after Jan. 1 for fall 2007. Paper versions are available at high school guidance offices. Copies can be requested and questions answered at 1-800-433-3243.

With the online FAFSA, an estimate of how much a family is expected to contribute -- known as the Expected Family Contribution, or EFC -- appears on the confirmation page as soon as the form is completed. Official notice follows three to seven days later.

Colleges and universities use this information to create a financial aid award package that may include a combination of grants, loans and work-study, which requires the student to take a job, typically on campus.

Federal and state rules govern who can receive some types of aid. In some cases, the schools contribute their own money to a package.

Sometimes the package falls short of need, and students and their families are forced to take out higher priced loans, dig into savings or find other financing or lower-priced schools.

While it varies among schools, many do not include in the financial aid package the higher priced private loans, often taken out by parents, as part of the financial aid package. Some, though, have begun to offer them through partnerships with private lenders.

The federal formula counts some assets, such as certain savings and checking accounts, stocks and bonds, but not others, such as home equity and retirement accounts. The CSS/Financial Aid PROFILE form, however, counts a wider array of assets.

A rough estimate for the FAFSA -- from using a calculator on the Web site, www.finaid.com -- shows how the expected family contributions vary for a family of four with one child in college:

With annual income of $20,000, there is no expected contribution if assets are under $50,000. The contribution grows to $1,500 if assets total $100,000.

With annual income of $60,000 and no assets, the contribution is about $5,200. The contribution grows to $7,850 if assets total $100,000.

With annual income of $100,000 and no assets, the contribution is about $17,700. The contribution grows to $20,950 if assets total $100,000.

In these examples, income adds more to the contribution than assets.

If a family of four's income doubles from $40,000 to $80,000 without any assets, the contribution for one year grows from $1,550 to $11,450. But if its savings double from $50,000 to $100,000 and its income remains stable at $40,000, then its contribution grows from $1,700 to $3,050.

The federal formula figures that a bigger percentage of a student's assets will go to paying for college than a parent's assets.

Filling out the FAFSA application ranks high on most family's list of most dreaded tasks.

It's a tedious and in-depth form that asks for a great deal of personal and financial information, sometimes in ways that are not easily understood.

Answers are crucial. Stakes are high. Even innocent mistakes on the form could have serious consequences.

Incorrect answers to some questions might result in a lower grant award.

The penalties for lying on a financial aid application can include a fine of up to $20,000 and up to five years in jail. The federal government requires every school to verify at least 30 percent of the FAFSA applications it receives and many verify 100 percent.

College financial aid officers say the FAFSA should require an hour or two to complete. But that depends on the complexity of a family's finances and whether it has access to the necessary documents required to fill out the form.

The online form can't be done at the last second because a PIN must be received for the required electronic signature.

"I don't think you can find any more appropriate adjectives to describe the federal aid process than stressful and frustrating," said Mr. Cannon, whose daughter did enroll at Duquesne University for three years, but is now a senior English major at the University of Aberdeen in Scotland.

"The only thing more stressful by comparison is filling out my income taxes," he said. "There's plenty of money available, which is what we found out. But you've got to jump through a million hoops to get it."

Anyone attending college for the 2007-08 school year would complete the FAFSA application based on the 2006 tax year.

That's why the earliest the FAFSA can be filed out is Jan. 1 for fall 2007.

It can be filed before filing a federal tax return and updated later. Many recommend filing it as soon as possible to maximize aid prospects and certainly before individual deadline dates set by school, state and federal programs.

"Different schools have different deadline dates," Mr. Esposito said. "You don't want to miss a deadline, because you might miss certain aid and you want to get all that is available."

The financial-aid application deadline at Duquesne University is May 1, which also is the deadline for the state grants offered to Pennsylvania residents seeking undergraduate degrees. Some schools have deadlines months earlier.

The speed of response varies depending on the college.

"At Duquesne University, we process freshman packages as quickly as possible because they will be deciding on the school they attend based on the financial-aid package they receive," Mr. Esposito said. "Upperclassmen, we process in the summer."

Tim Grant can be reached at tgrant@post-gazette.com or 412-263-1591.


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