COLLEGE PLANNING
“ In theory , the reason they changed the [ FAFSA ] form was to make it easier . And the actual form is easy . It should take less than an hour ,” Bogardus says . “ It just isn ’ t working .”
While students and parents wait for resolution , financial advisors can still play a large role in helping clients navigate the maelstrom . “ The first thing to tell them is , don ’ t panic . Everybody ’ s in this boat . It may be sinking , but everybody is in the same situation ,” Kantrowitz says . “ If there ’ s a problem with the FAFSA ID ,
contact the U . S . Department of Education , talk to your high school counselor and your college financial aid administrator . Tell the colleges that have admitted you that you have a problem . They might have suggestions .”
When The Aid Makes A Difference
While many clients of financial advisors will not qualify for financial aid , some will , and those families could make the mistake of committing to a school without knowing all the economic factors , especially if the school is putting pressure on them to sign . And many are .
“ Don ’ t commit until you have the numbers . And telling one school you don ’ t have all the numbers from other schools is OK ,” says Joe Messinger , a co-founder at Capstone Wealth Partners in Dublin , Ohio , who holds both a CFP and a ChFC . “ You need to know before you sign .”
Absent the aid allotment letter , advisors can help parents ballpark what part of the tab the school would pick up using the college ’ s net-price calculator , which also gives users a personalized estimate of their contribution .
According to Kantrowitz , students who don ’ t want to accept one offer on faith that they ’ ll be able to afford it when the aid package finally comes can put down deposits on multiple colleges to keep options open . “ Theoretically , you would lose the deposit on the schools you don ’ t
“ Don ’ t commit until you have the numbers . And telling one school you don ’ t have all the numbers from other schools is OK .”
— Joe Messinger Capstone Wealth Partners
go to , but I have a feeling if you ask them for a refund , they might very well give it to you because they don ’ t want to be seen as exploiting students and the uncertainty this year ,” he says .
Business As Usual For Borrowers
According to advisor House , most students whose parents have financial advisors won ’ t be eligible for financial aid , and those students can get on with making a decision . But she says it ’ s up to advisors to show clients the true cost of borrowing for each college that ’ s sent an acceptance letter .
“ I always tell the kids , ‘ This is your loan payment , this is your average income after tax on a monthly basis , and these are your three options depending on what school you choose : You could potentially move out after saving for two years after college ; you ’ re going to live in your parents ’ basement the rest of your life ; or your parents are going to live in your basement the rest of their lives ,’” she says .
Bogardus warns that borrowing is particularly tricky this year with a double whammy of sticky inflation and high interest rates — currently set at more than 8 % for parents ’ PLUS loans — that will hang around long after the FAFSA is fixed . “ It ’ s very emotional . I ’ ve had clients cry on the phone ,” he says of breaking the news to clients that they can ’ t afford a particular school . “ But as a fiduciary , you have to tell them .”
Students who borrow beyond their means could face big consequences , and not just financial ones . There are adult children who don ’ t talk to their parents anymore because their parents let them over-borrow for a “ dream school ,” Messinger says .
“ Literally , they don ’ t go home for the holidays , and they don ’ t talk to their parents because their parents weren ’ t parents . They didn ’ t help them really understand the money ,” he says .
But it doesn ’ t have to end up all disappointment if the student is willing to share the burden in a meaningful way that lowers the debt tab . For instance , a student could do something like take a position as a resident assistant at a college dormitory , he says , which would eliminate the cost of room and board and knock $ 45,000 or $ 50,000 off college money needs .
A Silver Lining For The 1 %
In an unexpected twist to the FAFSA fracas , there may be a silver lining for students who don ’ t qualify for federal aid , and it has to do with getting “ heads in beds .”
“ The needs-based folks , which is probably 60 % to 70 % of the population that go to a lot of schools , they ’ re not committing because they don ’ t have the financials yet ,” Messinger says . “ So if you have a scholarship offer , go back and say you need more . They ’ ll probably give you additional scholarship [ money ] because they ’ re not getting those other commitments . This is a unique year for non-financial aid candidates to leverage that .”
48 | FINANCIAL ADVISOR MAGAZINE | JUNE 2024 WWW . FA-MAG . COM