Tips on Paying for College Costs

Jonathan Hughes: Welcome to the MEFA podcast. My name is Jonathan Hughes and I'm the host of the MEFA podcast. And again, I'm joined by Julie Shields-Rutyna. Hello, Julie, today we're going to be speaking with MEFA Director of College Relations, Stephanie Wells about MEFA’s After the Acceptance series of webinars.
Students are receiving their acceptances and their financial aid offers around this time. And this is the webinars series that's designed to help them compare their offers. So we're going to hear about that later, but first Julie, this is where we usually talk about some news or some industry updates, but we thought, instead of doing that, we'd let folks know about some webinars that MEFA has coming up. So do you want to talk about the first one?
Julie Shields-Rutyna: Yeah. Um, you know, in this very challenging year, we're getting a lot of questions right now about from high school juniors in high school, uh, parents of high school juniors, you know, who are kind of beginning the admissions process during this time where their school year has looked different and all of that. So we're going to have a webinar and it's going to be on March 22nd at 6:30 PM. And it's really going to be a question and answer with admissions experts. So mostly for juniors and parents of juniors though, you know, sophomore families are welcome as well.
And we really have a great panel of guests for all different types of colleges, which I think is important when you're thinking about the admissions process. So we're, we have representatives from WPI, Worcester State University, Brandeis University, Olin College, and Quinsigamond Community College.
And really we encouraged families to come and ask your questions. We know some of the questions that are out there. We're getting them like what's happening with standardized testing. And how do I handle that? Now that I can't visit colleges. How am I supposed to figure out what colleges I like? Um, some others, like, do you know if I didn't get to know my teachers as well this year? Because I've been on zoom? Can I count on them writing good recommendations.
I mean, we, we just have a lot of questions. Um, what kinds of decisions are students making in this. During this time. So, um, we have some, we will ask of the experts, but please bring your own questions. And we really hope that this is a lively session and a lot of information will get communicated.
Jonathan Hughes:Yeah, it sounds great. It sounds like it will be. So hopefully everybody will check that out. We can include some links to, um, in the show notes about where you can go and click on that link and register for the event. If you wanted to do that. And we'll also include a link to the next presentation.
Once we're going to talk about the next webinar, uh, which is what Julie.
Julie Shields-Rutyna: Oh, yeah. And should I, should I say it out loud too, that it's, um, these webinars can be accessed at mefa.org/events. You can go in and register and, um, you know, then we'll send you a reminder too, and we also will, we record these sessions so that, and we can send them out to you afterwards, if you want to share them with your, with your friends.
Um, and the other one is a little bit more focused on the financing piece. So that's going to be on April 1st at 6:30 PM. And this is more for a high school seniors and their families who have applied to college, hopefully have applied for financial aid or receiving financial aid offers and trying to compare and make an affordable, um, decision.
But we know that. Lots of has changed this year and people are nervous about finances. One because maybe financial situations have changed. Um, and to, um, just because the future is a little bit more uncertain. And so this is a, uh, a webinar about appeals. And if you receive your financial aid offer and it doesn't seem like it's enough to be able for the student to attend, what, what can you do?
Is there anything. You can do, or can you, do you just have to say no, we can't go there. And so we're going to talk about, um, what, what you can appeal. What are the reasons for appeal, how different colleges handle appear, uh, appeals. And again, we have, um, a number of experts. So we're going to have Michelle from Quinsigamond Community College, Ryan from Worcester State University. Iris. Godes from Dean College, Gail Holt from Amherst College and Ebony Marsala from Northeastern University, Bill Smith from Stonehill College. So that is a, um, a great panel, um, who will talk, give you more specifics about making an appeal, um, and, and how to do that when it's an appeal that is more likely to be considered.
And what are some of the, um, Some of the things they aren't able to respond to help you think through all of that. So, yeah, we encourage you if either of these sound appealing too, really.
Jonathan Hughes: Yeah. And, you know, we did the, the appeals webinar, I think, was it for the first time last year, last year. And it was huge. Um, so we had to add a second one, I think. And so we know that there's a lot of people who are in this circumstance where they want to know how to go about doing this. So if you are in that position, you're not the only one, um, by any means.
So, um, As Julie said, you can go to mefa.org/events and look up those webinars. And we will include links in the show notes to that specifically where you can go and register. And, uh, now it's time to go to the MFA mailbag. So these are questions that have come in from customers over the past two weeks and answered by our college guidance experts.
If you have any questions, remember, please reach out to us. At collegeplanning@mefa.org or call us at 1-800-449-MEFA. You can also reach us on social media, on Facebook, under MEFA and Twitter at mefatweets. It's our Twitter handle at mefatweets. Um, and our first question is from Lindsay and it goes like this.
If a citizen whose parents do not live in this country applies for the FAFSA, how do they go about it? Are they entitled to any money from the government? So those are the questions that we get a lot.
Julie Shields-Rutyna: Sure. Yes. So a student who is a U.S. citizen or permanent [00:07:00] resident is eligible for federal financial aid and other financial aid and should apply.
Um, So absolutely the student is the financial aid recipient. The student is the applicant. So yes, apply using the FAFSA and any other forms that the college requires. Um, but the way that you would handle, we know we, uh, the FAFSA collects parental information for students. And so the way to handle that is if the parents are not us citizens or permanent residents, um, then. The parents can just put zeros in the social security number field, and then complete the FAFSA the same. They, they, they can do everything the same way they can put in there, their income, all of that.
And then the only place it differs is because the parents don't have a social security number. They can't electronically sign the form because they can't get what's called, uh, an FSA ID, a federal student aid ID without the social security. So the families can't sign the form. So all they need to do then is print the signature page, physically sign it, and then mail that to the address that's on that printed form. So that's the difference.
So, um, I know if, if student's parents live elsewhere, it might take some back and forth phone calls, zoom calls like this, to get all of that done. Um, but. It can, it can be done and the students should definitely file and apply for financial aid.
Jonathan Hughes: Thank you, Julie. And our second question is it, it tends to be these days is a U.Plan question. And, um, this comes from Becky and she writes, I had a question about investing in the U.Plan and about the cumulative percentages.
Uh, I'll talk about that. Um, what happens if our child chooses a school where he has over 100% of the tuition and mandatory fees? For example, he won't be in college until 2033 and we've been investing into the year 2035. And currently for the year, 2035, he's at 116% of the tuition and mandatory fees for Bridgewater University.
Uh, obviously we have 10 years to go at the keep investing. And so if he chooses one of those colleges and universities, where the percentage of given when you're over a hundred percent, what happens, but we ended up receiving money back. Could we move it to a year where he might not be at a hundred percent? Can we move it to another child?
Good question. So I'm going to have to explain the U.Plan a little bit again, and the way that U.Plan works is you put in a certain amount of money in one or more years that your child is going to be in college for. And those are your maturity or so in this example, um, Becky's.
It was going to be starting in the year 2033. So she's probably picking years, 2033, 34, 35, and 36. And so for the year 2035 has projected junior year. She has put in, uh, an amount of money. That means that she's purchased over a hundred percent of tuition and fees. Uh, and that year 116% at Bridgewater State University.
Now let's say he goes to Bridgewater State University. What happens to that extra 16% that you purchased? So what happens is we can only pay out to the college, a hundred percent of tuition. Uh, of tuition or mandatory fees. If you have money left over, then you have whatever percentage, you know, wherever the value of that percentage is at that college.
You can use it in the later year. If you wanted to do that, if you can't use it in a later year, if that's the latest year or, or you've still got money left after that, you can always cash out and get what you put in. Plus the interest back or you can transfer the funds over to another beneficiary. Uh, if that's an option, if there's a younger child there, um, you can transfer the funds over to that child now.
The child has to be within about six years of when the funds mature, because that's, we can only hold on to them for about six years after they mature, um, yeah, it's a good problem to have it. They have over a hundred percent of tuition and fees purchased. So if you do have over that amount, you have some extra money.
You can either transfer over to another beneficiary or you can cash out and you use it for things like, um, books or supplies or room and board that are not covered by the U.Plan. So, um, so again, uh, uh, a good situation to find yourself in and hopefully that, that makes sense. If you have any more questions about that U.Plan, you can reach out to us.
Uh, actually, if you have any questions about anything at all, you can reach out to us at, um, collegeplanning@mefa.org. And as I said before, there is a team of college guidance experts that are waiting to answer your calls. Let's go to my talk with our good friends, Stephanie Wells, Director of College Relations at MEFA, about the After the College Acceptance webinar series.
Stephanie Wells is MEFA’s Director of College Relations. And she's here to discuss MEFA’s After the College Acceptance campaign and annual program that she's been instrumental in developing and spearheading. And I could go on about it, but that's what you're here for Stephanie. So making her debut, very excited about this is my friend, Stephanie Wells.
Hello, Stephanie.
Stephanie Wells: Thank you, Jonathan. Happy to be here. This is my first podcast, so I'm pretty excited too. I hope I don't blow up on the internet and get too famous overnight, but I'm really excited to do my first podcast. You know, this stuff is very exciting. So, um, but yeah, we're here to talk about our After the College Acceptance program and that was created, uh, just about a little over 10, 12 years ago.
We got this idea from some colleges that we work with, who said, you know, you do, you guys do a really great job of helping people through the financial aid process. Then you help them pay their bill. But there's this little gap in between from when they apply for financial aid and have to pay the bill.
You know, families still need assistance during that time and understanding their award letters. So that's where the after the college acceptance program was created and we've gone on to grow the program and create some new tools. So I'm looking forward to talking about it today.
Jonathan Hughes: Yeah. And you mentioned, um, you know, comparing award letters and that's one of the things that I always think about first, when I think about the, after the college acceptance series is that, you know, we, we help people to, who might be looking at a bunch of different award letters to compare them. Um, what else do we expect people to be able to get out of this presentation?
Stephanie Wells: So. So we hope that there'll be able to understand their award letters or their award offers their financial aid award offers from colleges and be able to break those offers down and really understand the different components before they commit to a school.
So before the student commits to a school to really understand what they got from each school and most critically. Can they afford it and how are, what is their plan to pay so we can help them through that whole process before they even commit to a school. Now, of course, if a family comes to us and they've already committed, you know, in May or June, then we can help them out in much the same way.
But a big part of this program is, is really making sure that they have a plan before they make that deposit. Um, and it's, you know, it's a great time. You know, students are receiving their awards, they're receiving acceptances. So we're not dealing with hypotheticals anymore. You know, we work with a lot of families in the fall and in the winter before they've even applied maybe to schools or have heard back, but now they know where the student's gotten into.
We've narrowed that list down just by those acceptances. And in many cases over the next month and month and a half or so, they'll be getting financial aid offers from those schools. So we'll have real numbers to deal with and real numbers to help them out, help them understand. So it's not hypothetical.
We know what we're dealing with now. Now let's create a plan to pay that bill, you know, and make sure that it is an affordable option for the family.
Jonathan Hughes: Yeah, it's such an important time and it's such a good time to get that information. I know that, you know, back in non COVID years, we would be out at high schools during these presentations and would actually encourage people to bring their offers, uh, with them so that we could sort of go over them with us.
Of course, everything that we do now is, is virtual. In addition to offering these. Um, seminars virtually as webinars. We do have some, uh, tools on the, on the website to help, uh, families and students to make these decisions. I wonder if you could talk about some of those.
Stephanie Wells: Yeah, definitely. So one of the, one of my favorite tools on the MEFA site is what's called the college cost calculator.
So if you just type in college cost calculator in the search bar of mefa.org, you'll be able to find that. And it's basically an online spreadsheet, so to speak that helps families put in their award offers as well as the cost at each school and any money that they want to contribute, maybe from savings or payment plans.
To get a true bottom line number, the calculator breaks out the know granted the gift money, the good stuff, as well as you know, maybe student loans are loans that the college has put in an award letter to really help the students and families see side by side. So you can enter up to four colleges.
What does each cost for room board tuition fees, as well as who's giving me free money from the college. Who's, you know, packing on a lot of loans in there and really getting to that bottom number, the true costs at each school, uh, because sometimes it might look like a good offer at the bottom of that award letter.
But if it's filled with a lot of loans, then that's really not, that might not be the best offer. And, you know, the, the financial aid offers is not the only criteria families need to think about when deciding on where the student's going to go to school, of course, is academics and good fit, um, you know, location, things like that.
But the finance part is a very important piece of it. And, uh, you know, it is a big investment for families. They want to make sure they're getting a good return on their investment. So this tool can really help them. Even if, you know, a family has a lot of schools that they want to put on a spreadsheet that they can just use this calculator to create their own spreadsheet if they wanted to do that.
So we actually will help families one-on-one if they need help. One-on-one um, you know, in the past, like you mentioned, we'd be there in person. They could bring their more letters to a financial, to a, uh, after the college acceptance seminar. But they can email them to us too. And we can do one-on-one appointments through zoom, just like we're doing now.
And it's very easy. And we did a lot of that last spring we had to. It canceled all of our program, in-person programming and do everything online. And we had a lot of parents scheduled seminar schedule meetings, I should say. And we helped them through the process. So that's one, the college cost calculator, but we also have a great loan payment calculator because we know, you know, a good majority of families might need to borrow.
And it's just a, you know, unfortunate fact of paying for college these days. But we really want to make sure that borrowing is a last resort. We want to help families through the other portions of the financial aid award or letter looking at savings and maybe payment plans that are interest free before they borrow.
Then when they do need to borrow, we have a great calculator on our site where they can put in different amounts that they're thinking about borrowing based on the different schools or. Based on, you know, what they might want to put in for it, with savings or, you know, hold on to it. The calculator, it will show all the different repayment options that need for offers, which there's five of them.
And it will show the interest rates and monthly payments. And is. Very important, the total cost of that loan. So if they made the minimum payment for the full life of that loan, what does that total cost? Just like you would look at that bottom line number on a mortgage. I call it the big, scary number, but that's what you're paying.
So that's an important number to look at and not shy away from. And it is a great option to show, you know, how much a deferred loan. That might cost a lot more than maybe an immediate repayment option where you're paying, making payments while the students in school, you might even get a lower rate if you start making payments right away.
So I think it helps, um, open families, eyes to the different options and what the cost is for each option.
Jonathan Hughes: I wonder if you could just talk a little bit more about, um, how borrowing fits into the overall picture when it comes to paying for college that, you know, it's not necessarily the first thing that you should think of.
Stephanie Wells: Right. Right. I like to call past present and future income. So the first thing we want to look at is look at your past income in the form of savings. Do you have any savings? Has grandma grandpa's saved in a 529 plan, you know, really assess and take note of all those, you know, maybe old savings bonds that the student got when they went to their first communion or something like that, and figure out what you have.
And how you want to use it. Do you want to use it all up front or do you want to spread it out over four years? And you know, some families haven't been able to save and that's okay. Most families haven't been able to save the full amount and some families haven't been able to afford to save anything.
And that's okay. Uh, then you look at present income in the form of, you know, cash on hand, you know, taking money out of your paycheck each month, maybe on a monthly payment plan through the college. And once you've exhausted those resources. And you still owe money to the school, then you have to look at future income in the form of borrowing.
Uh, and that is, you know, unfortunately something that many families have to do. The great thing about working with us is that we really do our best to offer the absolute lowest rates possible. Being a non-profit and a state authority here in Massachusetts, we want to make sure that if families need to borrow that they're doing it responsibly.
And I think, you know, working with MEFA families, do you get that sense of, you know, um, Trusted, you know, trusted authority that they know they're getting good advice, good, solid advice. We're not trying to, you know, bog families down with loans. We really want them to look at every other option before they borrow.
Um, and then if they need to borrow, then you know that that's okay. Uh, but they also want to make sure that they're looking at that monthly payment, you know, especially if they're deferring the loan. That's another pitfall that folks fall into. And unfortunately, after they borrowed for four years, it might be too late.
You know, they, they have their monthly payments that are due and they can't afford them. Um, or they regret that they borrowed so much and students find themselves in this situation a lot and above and beyond the federal student loans, you really are looking at. Private loans such as loans through MEFA which often require a co-signer.
So, you know, maybe mom and dad are co-signing a loan for the student thinking, okay, well, Johnny or Sally, they’ll be able to pay this loan off when they get out of school, but they really want to put the pause button before they sign on the dotted line to make sure Johnny or Sally make those payments.
What kind of career they're getting into, will they be able to afford their federal student loans as well as. You know, these co-sign loans with mom and dad and maybe pay rent or buy a new car when they get out of school, there's going to be, you know, other commitments with their, um, you know, paychecks month to month.
So you really want to think ahead four years. Can I afford it in four years? Um, not just can I afford this one year.
Jonathan Hughes: Such a good point. I mean, one of the things they say and, you know, this is not just one year people have that, uh, financial aid offer in front of them. They have the balance. They think if they can just make it through this year to worry about next year when it comes.
But as I want to say next year is going to come. Um, and so one of the things we do say it's considered a four year strategy.
Stephanie Wells: The four year strategy is really just looking ahead. So. You know, not focusing only on year one. Can I, can I make the numbers work this year? It is an annual process. You don't have to apply for financial aid each year.
You still have to fill out that FAFSA every year, although it gets easier after year one. And if you do borrow, you're going to need, likely need to borrow for years, two, three, and four, if you have to borrow for year one. So it is an annual process. You can’t apply for all four years at once, but you do want to take that first year loan.
If you're thinking of borrowing, look at that monthly payment, multiply it by four. Just as an estimate is the first year is going to cost you $200 a month for $20,000 loan. Then you're probably going to be looking at for $20,000 loans for 80,000 about, you know, $80,000 payment for all four. Can you afford that?
So you really do have to look ahead and also looking even beyond those four years, is the student thinking about going to medical school or law school? Is that part of their plan? Because they're going to be borrowing likely for that as well. And that's an investment. So you really want to think about that monthly payment and, and look at the option for undergraduate school. Look at your different options at the student's been accepted to, um, I know it's hard when the student has their dream school in mind and typically that's always the most expensive one, or it seems like it when we're talking to families.
Um, unfortunately. But are there other great options, maybe at a public school or something that might be giving more financial aid? Sometimes the private schools that are, you know, have very big endowments are giving just as much aid as maybe a public school. So you really have to look at each school side-by-side, um, you know, maybe consider community college for a couple of years.
We're in a pandemic. A lot of students are commuting online to school anyway. So maybe for a year or two to save some money, get some credits under your belt, go to community college and then transfer. It's really, it's not necessarily where you start, it's where you end up. So there's lots of different ways to reduce that cost.
Uh, you know, really looking at that four year plan.
Jonathan Hughes: That's perfect. And I, and I think one of the things, and you did again, hit on it, but I want to emphasize it again to the parents in particular, is that, you know, the students already have their federal student loans as part of their Financial aid package.
So, and you said, you know, most students are gonna need a co-applicant or co-signer to be approved for private loans. Um, and, and I've heard over the years that I've worked here and I know you've heard it too. A lot of parents say I know I’m on the loan, but it's not really my loan. It's really in my student's loan.
Um, and you know, if, if you're a co-applicant on a loan, that's, that's, you're loan too. You're equally responsible. So when you're looking at monthly payments and how much you're going to have be having to pay back after school, that that repayment amount is going to make a big difference, not just to the students, but to whoever else is on that loan too.
So you want to make sure that's manageable for them. So, um, now, this is a time where I think we're, we're just starting to get, um, students are starting to receive their financial aid offers and their acceptances. Um, and, and this will go on for a little while. And what is the date that students have to make a decision by?
Stephanie Wells: Well, in, in, in typical years, it's going to be May 1st, historically, it's always been May 1st. That's a national deadline to deposit at one of the schools the student was accepted to. So if the student was wait-listed, you don't want to hold out, hope that you're going to get off the wait list. Cause you might not get off the wait list.
And even if you do get off the wait list, you might not get much financial aid, if any. So you really have to focus on the schools that the student was accepted to and commit to one typically by May 1st, last year, you know, because of the pandemic, a lot of schools extended that to June 1st or well into May.
I've heard of a few schools who have said May 3rd is going to be the decision deadline this year. I've heard, um, you know, a lot of colleges, some schools are delaying sending out financial aid awards a couple weeks later than typical. Um, I know a lot of Ivy leagues doing that to give students, you know, more time.
So look at the school's acceptance letter. That's going to tell you what the deadline is, where you'll have to deposit and accept your financial aid at the school, the students attending. So just go by that school's deadline, but typically it's around May 1st. Um, but I know, you know, schools are somewhat flexible.
But I can't speak for every school. So you do want to look at your individual school and make sure that you know what that deadline is at that particular school, but it's usually around May 1st.
Jonathan Hughes: Hmm. So you know, this being a special year puts me in mind of something that I know that you want us to talk about, um, on, on the show.
And that is special circumstances. And if a student has special circumstances that that weren't reflected in their financial aid forms, and that's not reflected in the offer. So can you maybe talk about what's what some specialists circumstances may be that students may be experiencing, or families may be may experience and what they can do, uh, to deal with those.
Stephanie Wells: Yeah, definitely. So of course, this last year, a lot of families have struggled, as we know, um, in any given year, families are struggling from time to time. Uh, but this past year has been particularly brutal for a lot of families because of the pandemic. And people have lost maybe even just part-time jobs or lost over time or lost their jobs completely.
And that's a huge special circumstance. And colleges are well versed in helping families through those special circumstances. Um, if you think about it, a lot of families may have applied for financial aid last November, November of 2020, for example, it's now, you know, March, it's going to be April soon, right?
Maybe somebody has lost their jobs since they applied for financial aid or, you know, maybe mom or dad has, you know, reduced their, their hours so that they can stay home with the kids who are homeschooling and whatever the circumstance might be. There's lots of them. Uh, so that's going to be the biggest one this year as it was last year, but there are other things that could pop up.
You know, we, we saw what our, you know, friends in Texas have gone through with, you know, the, the. The cold weather and how it really, you know, destroyed a lot of homes with burst pipes. And that's, that's a special circumstance. It's, it's, you know, natural disasters, hurricanes, things like that, that can really put your family in a financial constraint in some way, shape or form.
Um, you know, those are a couple of examples. But we really recommend anything that is not shown on your financial aid award letter that you think is going to impact your ability to pay whatever it might be. Get in touch with the college that the student wants to go to and see if it's something they would consider.
Oftentimes they'll have a form that you need to fill out online, um, or they might want you to send an email, be prepared to provide documentation, unemployment records, things like that to show the school what your current situation is and see if there's anything they can do to reevaluate your, um, your circumstances and go from there.
But definitely, you know, focus on the school. One or two schools that the student is hoping to enroll in and go through that process, would that school, because schools want to help these families, you know, they want the student to enroll. They want to do the best that they can to help them and make sure that they're taking everything into account.
Um, but they, if they don't know what's going on in your family, they can't, they can't help you. So you really need to raise your hand and say, I need help. It's okay to need help. Um, and it's okay to ask for it.
Jonathan Hughes: Right. No that's and that's, I think one of the things that we find ourselves saying over and over again, I mean, if it was just to call the financial aid office at the college where I did reach out to the financial aid office, don't be afraid to do that.
I think somebody even went so far as to say, find a friend in the financial aid office to talk to. So, um, it definitely something that you will hear, um, if you attend the, after the college acceptance webinar, if by the way, if you do want to attend, visit mefa.org/events.
Stephanie Wells: Yup.
Jonathan Hughes: Stephanie, I would never know that this was your first podcast appearance. You did very well.
Stephanie Wells: And the cat didn't bother us. So that was good.
Jonathan Hughes: Well, thank you so much for being on. It was a real pleasure.
Stephanie Wells: All right. Thanks Jonathan.
Jonathan Hughes: All right. Well that about does it for us.
Thanks for listening to the show, everyone. Remember if you liked the show, please subscribe on Spotify, Apple podcasts, or wherever you're hearing this. And if you could do us an extra favor and give us a five-star rating on Apple podcasts, that would be just fine. Julie, thank you for joining me today.
Always a pleasure until next time. Thanks everyone.