Guidance Counselor’s Advice to Parents
Corrections or additions?
These articles were prepared for the July 4, 2001 edition of U.S.
1 Newspaper. All rights reserved.
Financial Aid: What the CPAs Say
Applying for college financial aid can be daunting —
not only for parents and their children, but financial professionals
as well. More and more parents are looking for professional advice
to navigate the pitfalls of educational tax laws and financial aid
rules to maximize possible benefits. Meanwhile, CPAs and financial
planners are looking to educate themselves about college funding as
a way to earn premium fees for providing comprehensive advice to their
clients.
College finance expert Rick Darvis is a CPA who works with other
professionals
to help them take advantage of the growing market for financial aid
planning. “Have you ever wished that you could have bought a
boatload
of Microsoft stock back in the early ’80s? If you did, life would
be pretty easy today,” says Darvis in an invitation to
professionals
to attend his conference. “If you’re in the financial services
industry, a similar opportunity is staring you right in the face.”
Darvis speaks on “College Financial Aid: Planning at Any Income
Level” on Wednesday, July 11, at 8 a.m. at Mayfair Farms in West
Orange. The seminar, aimed at finance professionals, is sponsored
by the New Jersey Society of CPAs. Cost: $245. Call 973-226-4494.
The principal of a Plentywood, Montana-based accounting firm that
bears his name, Darvis gives seminars nation-wide in conjunction with
College Funding Incorporated (CFI), also based in Montana. He is the
author of “College Financial Aid — the Best Kept Secret in
America,” “College SOLUTION,” and “Financial Aid
Alert.”
He is also the developer of College Procedures Software, and the
co-developer
of College QuickPlan Software.
Darvis has been giving seminars for about five years, and finds that
many of the professionals come for information on their own children
and then realize it’s something they can help their clients out with
as well. “There’s a lot of seminars out there, like estate and
retirement planning. Those others are a dime a dozen. This is an
untapped
area. Especially in Northeast where you can’t get a private school
education for less than $30,000. People are desperate for help.”
Darvis says he went to college at a time when costs were much less
and the need for financial aid was not as pressing. He attended
Montana
State University for two years and the University of Montana for three
years, graduating in 1974 with a bachelor’s degree accounting.
“Back
then it cost much less to go to college,” says Darvis. “In
my first two years, I took out a $15,000 student loan and had money
left in the bank.”
Darvis says the demand for college financial planning has grown
progressively.
On the CFI web site, Darvis tells professionals: “The very topic
of college will help you start up conversations and develop
relationships
with clients who might totally ignore your sales pitch for
investments.
Few people can ignore an opportunity to find out how to reduce today’s
high cost of college.”
The so-called “grandparent market” is another area to be
explored.
“More grandparents than ever are providing assistance in the
funding
of their grandchildren’s education,” Darvis says on the CFI Web
site. “Do you know how to help them make these gifts and reduce
their income and estate taxes, without jeopardizing the student’s
opportunity to receive grants, scholarships and tuition discounts?
The grandparent market is a financial advisor’s dream, because it’s
the grandparents who hold the majority of wealth in this country
today.”
According to Darvis, there are two types of clients who can benefit
from financial aid planning — the financial aid market and the
affluent market.
The financial aid market consists of families with incomesunder $70,000 — perfect for fee-based tax accountants andfee-basededucation consultants. “Tax accountants are more adapted tostandardizedform filing,” Darvis explains. “Their bread and butterbusinessis providing a commodity service. Their `perfect’ client is the W-2wage-earning family with a standard IRS 1040 schedule. Accountantscan build their financial aid service and fees into their taxbusiness.”The affluent market encompasses families with incomesover $70,000 and assets over $200,000. This group, Darvis says, fitsthe financial planning and investment services field best becausetheir livelihood depends on developing relationships with clientswho have assets. “The average financial aid client has few assets,which is the reason they are desperately searching for financial aid.When you deal with clients who do not qualify for financial aid, yourprobability of success in the financial planning and investmentservicesindustry increases dramatically.” He adds that if the client isin the 50 percent tax bracket (federal, state, and Social Security),every additional $1,000 in tax write-offs equates to a $500 increasein cash flow for college, which is comparable to a $500 scholarship.”Although there are limited financial aid opportunities for theaffluent family, there are many little-known tax strategies that wehave specifically designed for education, which can provide theaffluentfamily with additional cash flow for college expenses,” he says.He says his seminar works to dispel many of the college financialaid myths, such as: “I earn too much income to qualify,””Ican’t afford to send my child to an expensive private college,””Scholarships are only for the good students,” and”Financialaid is only loans and work-study.”Top Of PageGuidance Counselor’s Advice to ParentsFor families not interested in the services of a financeprofessional such as Rick Darvis, profiled in the story above, thereare other options. One is as easy as making a phone call to thehometownschool district’s guidance department.The West Windsor-Plainsboro School District, where 95 percent of thegraduating seniors go on to higher education, conducts a seminarfeaturinga financial expert every January. One of the tools offered to parentsis a financial aid handbook assembled by David Prutow, directorof guidance at WW-P High School North. The handbook details variouscollege financial aid options.Prutow, 47, holds a bachelor’s in social studies education from theUniversity of Delaware and a master’s in counseling psychology fromRider. Prutow funded his education through a combination of limitedfinancial aid, loans obtained by his parents, student loans, andincomefrom a part-time job. “I was like most kids, who lean on theirparents and are naive about the process,” he says. “But backthen, it was less complicated. The process now has just gone off thecharts.””We need to be on the cutting edge with the type of knowledgewe provide,” Prutow adds. “The college admissions game changesevery year and, you really have to keep your hands on the pulse ofthings.”Prutow’s handbook begins with a list of tips for parents pursuingfunding and also explains financial aid eligibility and the typesof aid available, including grants, local awards, scholarships, loans,and work study. Also outlined are the steps of the financial aidprocessand major financial aid programs. Tips offered by Prutow include:Get your application in early . The Free Application forFederal Student Aid (FAFSA) should be sent in as soon as possibleafter Jan. 1 of the year the student is entering college.Accuracy counts . Make sure you do not make any errorswhen filling out your financial aid form.Keep an close eye on where funds reside . Make sure yourhigh school senior does not have any savings in his or her name. Theformula that determines need expects a student to spend 35 percenton a year at college, but takes only 12 percent of parent’s assets.No direct gifts from grandma and grandpa . Money fromgrandparentsshould be paid in the student’s name directly to the college. Thisavoids gift tax liability.Income doesn’t matter . Apply for financial aid no matterwhat your income is. You never know when your family’s financialsituationmight change (job loss, death in family). You must have a FAFSA onfile if you need to have aid eligibility reconsidered. Also, beingrejected for federal aid is sometimes a prerequisite for privateawards.Everyone should apply. Any student can qualify for aid— at a minimum, an unsubsidized Stafford loan.Apply everywhere . Don’t be afraid to apply to expensiveschools — many students do not pay full price.Housing value may not matter . Home equity is not a factorwhen state and federal aid are considered. It may be an issue whenprivate institutional aid is sought.Less money will come out of savings . Colleges expect youto spend 5 percent of your savings on tuition, but the percentageis larger for salaries. A rough estimate — expect to spend 10to 20 percent of annual salary on tuition and fees.”No” is not always final . Decisions of financialaid officers can be appealed, especially if your financial need haschanged.Private schools may have different requirements . Someprivate institutions use a form called the CSS Financial Aid Profile.File the “profile” form as soon as possible, even if onlyone school requires it.It doesn’t matter where the child lives or on whose taxreturnhe or she is a dependent. For government aid programs, only thecustodial parent must report income and assets. Some colleges willinsist that both divorced parents report their incomes.Don’t dodge the draft . If you are applying for a son,be sure that he has registered for the Selective Service since hewill not be eligible for any federal aid programs if he has not doneso by the age of 18.”If you are not afraid of doing the grunt work, there ismuch untapped aid available,” says Prutow. “Check variousscholarship publications and Internet search services. Utilize schoolresources (counselors, publications, computer fund finders andfinancialplanners). Periodically check for local scholarship information.”Prutow also says that the Internet continues to develop new andvaluableinformation opportunities including scholarship search services.Resourcesinclude the New Jersey Education Assistance Authority atwww.hesaa.org,and a directory of colleges at www.allaboutcollege.comPrevious StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
