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Episode 32 - Essential Tips for Understanding College Financial Aid

In this episode of the Blue Money podcast, hosts Jim Donnelly and Kevin McGarry, along with guest Frank Pizzichillo, discuss navigating financial aid for college. They emphasize the importance of filling out the FAFSA form by the deadline and understanding the student aid index. Frank shares his personal experience with the FAFSA process, offering practical tips and resources. The episode aims to educate listeners on maximizing financial aid opportunities and planning for education costs.

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Student/Parent Account Creation Website:

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Episode 32 – Essential Tips for Understanding College Financial Aid

Jim Donnelly (00:00:21) – Everyone back to the Blue Money podcast. This your host, Jim Donnelly? I’m here with my co-host, Kevin McGarry. What’s up Jimmy? Not much Kev. We also have Frankie P back on the show. I’m back. So Frankie, thanks for doing it. I thought I thought Frankie should be on the show today because the topic is going to be about understanding financial aid. And Frankie just got done college a couple of years ago, so I thought Frank could have some insight what to look for and some things that helped him out. So first Kev one we’re going to hit upon that. The forms need to be fill out soon. They need to be filled out by June 30th. The Fafsa form.

Jim Donnelly (00:00:52) – What does that stand for, Kevin?

Kevin McGarry (00:00:53) – Federal application for Federal Student Aid.

Jim Donnelly (00:00:56) – And like we said, that needs to be filled out. By June 30th last year, 13 million students applied, and there’s about 120 billion in grants, work study and low interest loans from the US Department of Education. So you have to apply what you got on that, Kev.

Kevin McGarry (00:01:11) – When we’re doing our planning and you see the families that have kids going into college when they had to fill out the Fafsa, right? They don’t know where to go. They don’t they don’t understand how to do it. And you think about it, I mean, you just threw out some number 13 million kids filled it out. 2 million kids didn’t write that would have qualified for the Pell Grant. And 1.2 million of those students would have got the Max Pell Grant and didn’t even fill it out. And right now, we’re almost at the deadline, June 30th. So you really need to get this filled out. And I think the biggest, one of the biggest reasons why is you may get some money, number one.

Kevin McGarry (00:01:51) – Number two, if you don’t fill it out the next time, but you really should be filling it out right from the beginning, because what they see is those who fill it out in the first three months get almost double the triple amount of the financial aid money.

Jim Donnelly (00:02:05) – So it’s definitely worth filling it out. And like we were just talking about the federal Pell Grant and for the Max in 2024, it’s going to be 7395. And where that’s based on, they look at four things when you’re applying. It’s include your financial need, the cost of attendance at a college. When we go into your enrollment status, are you going to be full time, part time? And whether you attend a school for the full academic year or less? So the four things I look at, it’s also based off of the poverty line, the poverty line for 2020, for individuals a little under 15,000, and for a family of four, it’s about 30,000 a year. So that’s where it’s based at. And believe it or not, even incarcerated students qualify for it.

Jim Donnelly (00:02:44) – So any cops out there, you lock someone up and they decide to go back to school. They’re going to get the Pell Grant for free. So that’s yeah, to figure that one out.

Kevin McGarry (00:02:51) – I think, you know, the other thing is and bring Frankie into this, but how do we do it? The first thing you need to do is get an ID. You know, student parents need to go to get an FSA ID you get that going to fz, fsa to generate an ID and then you got to go to Fafsa dot Edgar gov the fill out the application. They do now have this simplified version of the Fafsa form which is a lot quicker. But also you can go and fill it out on an app. You can go to app or Google and the app is called My student I. So you’re going to go on there, you get your ID, you go fill out the Fafsa form. But I think the big thing, Frank, is really helped them. You know, what did they need.

Kevin McGarry (00:03:38) – You know what documentation, what paperwork. You know what assets. Walk us through that.

Frank Pizzichillo (00:03:44) – That’s a good question, because when I filled this out with my parents, I didn’t have anything. It took two weeks. It was awful. But if you have this information, it can definitely speed up the process. So I would just make sure you have your Social Security number and your student social security number. I did not have mine took about five days to find and my parents were not thrilled with me. But we found it and we submitted the application. So I would have your Social Security number, have your driver’s license number, and I would also have your form 1040. I am told now that you can link it right to the IRS or bring it over right from the IRS.

Kevin McGarry (00:04:21) – Yeah, Frank, not to cut you off, but that is called the IRS Direct Data Exchange, which is very useful.

Frank Pizzichillo (00:04:27) – So that makes it even easier because if you can sign into that, you won’t even need your 1040 in front of you.

Frank Pizzichillo (00:04:33) – But if you can’t sign into that, you’re going to need your 1040. Another interesting point that I’m going to make is some schools actually have their own financial aid application that you need to fill out. It’s very situational which schools have and which schools don’t. So make sure you look at your student’s school if they know where they’re going, and submit that application as well. That’s actually really important.

Kevin McGarry (00:05:00) – And just on top of that, with the Fafsa form, I think the other big thing is, and not every state is October 1st, right? When you can start or not, every state is June 30th. So some states are sooner, some states are later. You just got to figure out how your state works when filling out these forms.

Jim Donnelly (00:05:18) – Mostly starting October 1st. So in that beginning calendar year, most most states. But like Kev said, make sure you look. But it’s usually October 1st and needs to be handed in by June 30th.

Kevin McGarry (00:05:27) – And Jim, the other thing is other states are first come, first served.

Kevin McGarry (00:05:31) – They give out the money right away. So filling out the Fafsa form right away is repeat it. But it’s very prudent.

Jim Donnelly (00:05:37) – One thing that I definitely want to hit upon because it’s kind of new, it’s a student aid index. So if people are starting to see that the SSI, it replaces the expected. Family contribution, which people used to see, they used to apply for financial aid and what this is now. It’s basically the same formula. They just changed the name. But now you’re going to get a number. And that number is going to be from -1500 to 999,999. Why? They just couldn’t do it to a million I have no idea. But that’s the number. And what happens if you’re 0 or 2 in the -1500? That means you’re going to get max financial aid. You’re going to get the full Pell Grant and the max financial aid. Now your number is going to range. I mean, if you have 500,000 point score, you’re probably not going to get anything. So you can see these charts online.

Jim Donnelly (00:06:23) – You can just Google it about the student index because you have to see and there’s a calculator where you can actually type in right now, and it’s going to spit out where your number will be and see how high it is. And there’s basically a formula. So every year that will change. So just really know what your number is going to be. So that number is going to be really important for you. And right from the get go. And you do this calculator right now in line and you get that score, you’re going to kind of know what kind of financial aid you’re going to qualify for, right? Frankly, when you’re looking at assets and things like the protect, is there anything that people can do or what are they looking at?

Frank Pizzichillo (00:06:54) – So your assets range from the cash you have in the bank to your brokerage accounts to even your 529 accounts or Coverdell Education savings accounts. the Fafsa includes pretty much all in any assets. Now, the ones that are excludable are your 401 case, your IRAs, your simples, your Roth IRAs, and your Roth 401 case 403 BS.

Frank Pizzichillo (00:07:24) – Also, those plans are qualified so they’re not included in the Fafsa. Also, the home that you and your family live in is not included along with any personal possessions. You know, clothes, furniture, electronics, boats. those are all non reportable assets. So you want to pump those up as much as you can before. You fill out the Fafsa so that you don’t increase the amount of assets that are counted against you. It’s just a strategy that people use is pumping up those non reportable assets like your retirement accounts.

Jim Donnelly (00:08:02) – Thanks Frank. That’s some good information. So everyone can know what assets we’re looking at. What do you got Kev.

Kevin McGarry (00:08:07) – No I just think the most important thing here is fill it out as soon as possible. You know, like I said, go to FSA id dot Edgar gov. Get your ID, fill out the Fafsa as soon as possible. Helps you get more financial aid than waiting until the last minute based off the numbers. And continuously talk to people and plan. And there are like you said, there are calculators.

Kevin McGarry (00:08:30) – There’s also different tools out there that allow you to understand how much money you’re going to need to borrow from certain schools to get your student into that school, like the free MCAT tool. So there are tools out there to help. And if you don’t know if you’re struggling, you know, with the student aid, call your advisor, call us. But you can also call them at one 800 for federal aid, and they’ll help you as well.

Jim Donnelly (00:08:57) – And I think the thing that everyone has to understand, if you get back to financial aid and you realize your kid’s not going to get that much, don’t panic. Yet. There’s so many scholarships out there. Could be academic. It could be like, I remember I was talking to a lot of, high school teachers, and they were just telling me that they leave so much money on the table, these kids, because they don’t want to write the essays. They don’t want to do the paperwork to try to get these scholarships for college. So please, if you have a kid, get on there, even if you’re an adult and you’re you have no problem writing, as I say, help your kids out with them because there’s so much money out there that you could really get for your child out there.

Jim Donnelly (00:09:29) – And there’s a lot of work programs. Have you worked when you were in college? Right. I know you worked a lot that make some extra money. You had a regular job, but you also worked at temple like you were working. So that’s another aspect. So there’s there’s money out there. You can always figure out a way how to get your kid in there. So I just want to thank everyone for listening. And anyone else have anything to add before we close this up? Have anything? Yeah.

Kevin McGarry (00:09:49) – I just think it’s really important to plan education, planning, education cost a lot of money. I mean, I think personally there’s a bubble there financially, but you have to plan. And if you don’t plan, just like in retirement, you’re going to struggle paying for that bill to send your kids to to college.

Jim Donnelly (00:10:08) – So, Frank, what do you got?

Frank Pizzichillo (00:10:09) – If anyone’s interested, I have a short list of scholarships that we normally give out to clients, but if anybody wants to shoot me an email and I’m happy to share that list, we’ll put.

Jim Donnelly (00:10:21) – That on the show notes. That would be a good thing. All the scholarships that are out there that usually give the clients they should apply for. So with that, I’m going to wrap up this podcast. I want to thank everybody for listening. Be safe out there.

Kevin McGarry (00:10:32) – Be safe.

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