COMMONLY EXPRESSED MISCONCEPTIONS

1. “My child will get some type of merit scholarship”
   Reality: According to a survey by The Wall Street Journal, 92% of Financial Aid Counselors say that parents over estimate how much scholarship money their child will receive. According to the College Board only 1% of college students receive merit scholarship money based on their SAT and transcripts; 99% comes from completing the financial aid forms.
2. “My child will borrow the amount needed through low interest government loan”
   Reality: The Federal Government caps an undergraduate borrower at $27,000 over four years. The current interest rate for school year 2009-2010 is 6.8% for the Stafford Loan.
3. "Financial aid is only loan money."
   Reality: Between 60% - 70% of all financial aid packages will be free money in scholarships that does not have to be repaid.
4. My home equity is not an asset for financial aid eligibility.
   Reality: Yes and no, publicly funded universities using the FAFSA financial aid form do not include home equity in determining financial aid eligibility. Private Colleges using the CSS profile financial aid form or their own financial aid form does include home equity as an asset. Some schools cap the value based on income.
5. “We will get no Financial Aid!”
   Reality: 65% of parents incorrectly assume they will not receive financial aid, thus compromising the financial aid application.
6. “We will first exhaust our savings to pay for our children’s college!”
   Reality: You can borrow for college but not retirement.
7. “We will pay the tuition bill one year at a time!”
   Reality: For tuition bills in excess of $20,000 per year, and with multiple children to educate, this plan may put some parents on an “unplanned bankruptcy path”.
8. “With two children in college we will have to pay twice the amount!”
   Reality: The Federal Financial Aid formula calculates the expected contribution for the whole family. If the government says a family can afford $20,000 per year in tuition, it is $20,000 for one child in college or $10,000 each if there were two in school at the same time.
9. “If we send our children to an out of state public college we will have him or her become a resident of that state to qualify for in state tuition.
   Reality: Each state has the individual requirement; some, such as NH, restrict any change of residence by an undergraduate. Florida on the other hand will allow it after one year if the student meets their 11 point qualifying standard.
10. “We will have our children apply for financial aid as an independent student.
    Reality: The Federal Government regulations state an undergraduate needs to be 24 years old to file as an independent student.

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