The college financial aid application process can be tough for any family to manage on their own, but is it worth the money to bring in a professional?
Certified college aid planners and consultants promise to help families maximize their chances of securing financial aid. Since the recession, the National Institute of Certified College Planners, which offers a certificate in college aid planning to financial professionals, has doubled its membership, from 600 in 2006 to 1,300 this year, according to co-founder Ron Them.
Some of these pros play dual roles, counseling families through the college application and selection process, and then helping them handle financial aid applications afterward. Others are traditional wealth managers or accountants who have begun offering college aid planning as a bonus to their existing roster of clients.
“There’s generally a lot of concern right now about how families are going to be able to pay for college and I think folks know that there are a lot of different places that money can come from,” says Megan McClean, director of policy at the National Association of Student Financial Aid Administrators. “The process can seem overwhelming at the onset and perhaps that’s why people turn to these advisors, to gain some clarity.”
For middle-income families, the financial aid process is especially crucial. College costs have soared more than 1,000% in the last three decades, while middle class household income has remained frustratingly stagnant. And because the lion’s share of federal and institutional grant and scholarship aid typically go to low-income households, college can be much more expensive for middle-income families.
A growing need for middle-income families
Joseph Orsolini, a certified financial planner and founder of CollegeAidPlanning.com, says the recession drew many more upper-middle class clients through his door. His lowest-earning client earns $13,000 a year and his highest earns $600,000, with the median income falling just shy of $90,000.
“I’m dealing with clients who, pre-recession, wouldn’t have come in and even talked to me,” he says. “Wealthier families are starting to feel the bite even more.”
For Maureen Jankowski, who has three children close in age, the prospect of figuring out how to put them through college at the same time was daunting enough for her to seek outside help. Neither Maureen nor her husband, Jerry, who live in Batavia, Ill., had attended college or even seen a FAFSA, the Free Application for Federal Student Aid, before. The fact that they had incurred an unexpected $65,000 debt when health problems arose for one of their daughters in middle school further complicated matters.
“I did it for the peace of mind,” says Jankowski, who paid $100 to have each of her children’s FAFSAs completed. “[Our planner] explains things so easily in a way that we can understand them. Once you’ve found somebody you trust, it’s a good feeling.”
But is it worth it?
The primary job of any good college aid consultant is to help families ace their FAFSA. Completing that application is the only way to qualify for federal student aid. But with more than 100 questions — twice that of a typical income tax form — it can be intimidating for inexperienced parents. Errors aren’t uncommon, and a small mistake could mean thousands of dollars in lost student aid. The bulk of questions pertain to income and assets, like savings accounts, 529 plans and real estate holdings. Household income has the largest influence on aid eligibility. One of the most common mistakes Mark Kantrowitz, publisher of Edvisors.com, sees families make is with retirement plans. Assets from retirement plans don’t have to be included on a FAFSA, but some families add them in as part of their investment income, unnecessarily driving up their income and lowering their chances of getting aid.
Depending on the level of service, consultants can charge anywhere from $100 to file a FAFSA to thousands of dollars if they tack on help with scholarship and college applications.
“It’s a complicated form, but the FAFSA isn’t rocket science,” says Kantrowitz, a staunch supporter of legislation that would simplify the FAFSA. “I don’t know if I would pay thousands of dollars for that kind of handholding.”
As its name suggests, the FAFSA is free to file. So if you’re paying a professional just to fill in the boxes for you, you shouldn’t be paying more than $50 to $100, Kantrowitz says.
Planners like Orsolini, however, charge more. Families pay $75 for an initial consultation and a $750 flat fee for a basic college aid assistance package. But for that price, he does more than fill in the blanks on a form. He sets them up with a budget to control their expenses, helps weed out schools that are too costly, finds scholarship and grant opportunities, and offers guidance throughout the school year.
But the majority of his clients tend to have more complicated financial situations than most families. He estimates that 40% of his client base consist of divorced parents grappling with how to report income on their child’s FAFSA.
Get what you pay for
Unlike certifications to become a financial planner or a tax preparer, there is no nationally established college aid planning certification. In fact, traditional exams for financial planning don’t include a college aid section at all, Kantrowitz says.
The National Institute for Certified College Planners offers a Certified College Planning Specialist certification, which requires candidates to take an online exam and complete 16 hours of continuing education each year. All CCPs are licensed financial professionals that include CPAs, CFPs, investment advisors, and retirement planners.
There’s also the American Institute of Certified Educational Planners, whose work encompasses everything from college aid planning to college admissions counseling. Most CEPs are typically high school or college counselors already. If you’re looking for a college planner, the directories on these sites can be a good place to start.
Both of these organizations have boards in charge of fielding complaints from consumers about unethical practices by its members. But here are a few tips to be sure you’re getting what you pay for:
Make sure they sign your FAFSA. The same way that tax preparers have to list their professional ID with any tax returns they file, college aid planners have to sign your FAFSA form. This ensures that they can be held liable if any evidence of fraud is later found. If your FAFSA preparer refuses to sign your form, that’s a red flag.
Don’t trust anyone who says the FAFSA isn’t free. You should also never trust a planner who tells you they’re the only one qualified to complete a FAFSA. They should be upfront and tell you that it is available for free online. There are many websites that offer FAFSA guidance from independent advisors, usually by calling an 800 number. They should explicitly state on their website that they’re not affiliated with the government and that the FAFSA is a free document. If they suggest otherwise, they probably don’t have your best interests in mind.
Seek advice early. Kantrowitz recommends seeking college aid advice no later than your child’s junior year of high school. Since the FAFSA uses financial information from the prior tax year, some of the strategies planners use to maximize aid for their clients can’t be used if families show up a few months before high school graduation. For example, if you have a couple of years of lead time, they can find ways to offset investment gains with capital losses in order to reduce your income for the year and potentially help you qualify for more aid.
Take advantage of free resources first. Before you hire a pro, make sure you’re aware of other free options for financial aid counseling. There is no shortage of free advice available online or through high school counseling offices.
Kantrowitz has decades of experience in student aid counseling and recently published a book on how to file a FAFSA properly, which can be downloaded for free. Beginning in January, financial planners across the country will participate in College Goal Sunday, an initiative that sets families up with free college aid counseling.
“We’re really focused on making sure the public realizes that they can get this information without paying for it,” says McClean of the National Association of Student Financial Aid Administrators.
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