Maybe that College Does not Work Right Now!
As parents we want the best for our children. I am fielding many calls in my office right now from concerned parents whose financial situations have changed since their child was accepted to a college, the FAFSA form was filled out and the aid package was accepted. Maybe you have been laid off. Maybe you were forced into an early retirement. Maybe you had to take a pay cut or a number of hours cut. Something has decreased the amount of your income.
First things first, call the financial aid office for the college where your child is about to go to school, either as an incoming freshman or as a returning student. While it may not be possible to change the amount of federal aid that your son or daughter is getting this year, it is possible that the school may have some private aid it can use to increase the financial aid package. They may have alumni who have set up a scholarship fund. There may be scholarships that were previously awarded and were not accepted because the student chose not to attend that school. There may be hardship money available for a semester or two.
Some schools will require you to complete a “special circumstances” form to have aid reconsidered. Certainly do this, but also make the human contact, it can mean a lot of difference for the financial aid officer to hear what is going on and realize the potential severity of the situation.
Second, have your child head out looking for scholarships. I do not recommend paying for a scholarship search, there are so many places they can find them for free. Consider fastweb, collegeboard, scholarshipsearch and Sallie Mae’s scholarship listings on Upromise.com. This can be a time consuming process, but it also can mean some dollars in your pocket. Watch the deadlines and make sure that the time for applying has not passed since many have already been awarded.
Third, consider whether or not it would be appropriate to remove some funds from a retirement plan to help pay tuition this year. You would have to pay tax on the distribution, but it would not be subject to the early distribution penalty if being used for education purposes. Consider this option carefully. If you remove this money, what does it do to your retirement? Will you still be able to retire when you want? Are you going to need this money potentially for living expenses if long term unemployment occurs? Is it really the right thing to do?
Fourth, it is probable that you will qualify for a Parent Plus loan. Parent Plus loans are the responsibility of the parent to pay back. You can borrow up the cost of education. Generally to qualify they are not looking at credit score, they are more concerned if there is a bankruptcy in your past. If there has been a bankruptcy within the last 6-12 months you generally will not qualify.
And last – consider does there need to be a change in plans? Many unemployed individuals are finding it takes a year or longer to find a job. If you are in that situation, can you afford to make a loan payment under the Parent Plus option? Can you afford to take a hit on your retirement especially if you are not going to be able to contribute for the next year or more? Do you need to have the student head to work to help support the family?
Do not keep your children in the dark. Let them know what you are experiencing and ask for their assistance. Maybe they go to the community college for a year while you get back on your feet. Maybe they delaying going for a semester or even a year. Maybe they go part-time and work more to help cover the expenses.
Most kids are not going to want to put their parents in a much worse financial position just so that they can attend a particular school. Keep them involved and let them help.
