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
College finance expert Rick Darvis is a CPA who works with other
to help them take advantage of the growing market for financial aid
planning. "Have you ever wished that you could have bought a
of Microsoft stock back in the early ’80s? If you did, life would
be pretty easy today," says Darvis in an invitation to
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
He is also the developer of College Procedures Software, and the
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
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
State University for two years and the University of Montana for three
years, graduating in 1974 with a bachelor’s degree accounting.
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
On the CFI web site, Darvis tells professionals: "The very topic
of college will help you start up conversations and develop
with clients who might totally ignore your sales pitch for
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
"More grandparents than ever are providing assistance in the
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
According to Darvis, there are two types of clients who can benefit
from financial aid planning — the financial aid market and the
under $70,000 — perfect for fee-based tax accountants and
education consultants. "Tax accountants are more adapted to
form filing," Darvis explains. "Their bread and butter
is providing a commodity service. Their `perfect’ client is the W-2
wage-earning family with a standard IRS 1040 schedule. Accountants
can build their financial aid service and fees into their tax
over $70,000 and assets over $200,000. This group, Darvis says, fits
the financial planning and investment services field best because
their livelihood depends on developing relationships with clients
who 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, your
probability of success in the financial planning and investment
industry increases dramatically." He adds that if the client is
in the 50 percent tax bracket (federal, state, and Social Security),
every additional $1,000 in tax write-offs equates to a $500 increase
in cash flow for college, which is comparable to a $500 scholarship.
"Although there are limited financial aid opportunities for the
affluent family, there are many little-known tax strategies that we
have specifically designed for education, which can provide the
family with additional cash flow for college expenses," he says.
He says his seminar works to dispel many of the college financial
aid myths, such as: "I earn too much income to qualify,"
can’t afford to send my child to an expensive private college,"
"Scholarships are only for the good students," and
aid is only loans and work-study."
For families not interested in the services of a finance
professional such as Rick Darvis, profiled in the story above, there
are other options. One is as easy as making a phone call to the
school district’s guidance department.
The West Windsor-Plainsboro School District, where 95 percent of the
graduating seniors go on to higher education, conducts a seminar
a financial expert every January. One of the tools offered to parents
is a financial aid handbook assembled by
of guidance at WW-P High School North. The handbook details various
college financial aid options.
Prutow, 47, holds a bachelor’s in social studies education from the
University of Delaware and a master’s in counseling psychology from
Rider. Prutow funded his education through a combination of limited
financial aid, loans obtained by his parents, student loans, and
from a part-time job. "I was like most kids, who lean on their
parents and are naive about the process," he says. "But back
then, it was less complicated. The process now has just gone off the
"We need to be on the cutting edge with the type of knowledge
we provide," Prutow adds. "The college admissions game changes
every year and, you really have to keep your hands on the pulse of
Prutow’s handbook begins with a list of tips for parents pursuing
funding and also explains financial aid eligibility and the types
of aid available, including grants, local awards, scholarships, loans,
and work study. Also outlined are the steps of the financial aid
and major financial aid programs. Tips offered by Prutow include:
Federal Student Aid (FAFSA) should be sent in as soon as possible
after Jan. 1 of the year the student is entering college.
when filling out your financial aid form.
high school senior does not have any savings in his or her name. The
formula that determines need expects a student to spend 35 percent
on a year at college, but takes only 12 percent of parent’s assets.
should be paid in the student’s name directly to the college. This
avoids gift tax liability.
what your income is. You never know when your family’s financial
might change (job loss, death in family). You must have a FAFSA on
file if you need to have aid eligibility reconsidered. Also, being
rejected for federal aid is sometimes a prerequisite for private
— at a minimum, an unsubsidized Stafford loan.
schools — many students do not pay full price.
when state and federal aid are considered. It may be an issue when
private institutional aid is sought.
to spend 5 percent of your savings on tuition, but the percentage
is larger for salaries. A rough estimate — expect to spend 10
to 20 percent of annual salary on tuition and fees.
aid officers can be appealed, especially if your financial need has
private institutions use a form called the CSS Financial Aid Profile.
File the "profile" form as soon as possible, even if only
one school requires it.
he or she is a dependent. For government aid programs, only the
custodial parent must report income and assets. Some colleges will
insist that both divorced parents report their incomes.
be sure that he has registered for the Selective Service since he
will not be eligible for any federal aid programs if he has not done
so by the age of 18.
much untapped aid available," says Prutow. "Check various
scholarship publications and Internet search services. Utilize school
resources (counselors, publications, computer fund finders and
planners). Periodically check for local scholarship information."
Prutow also says that the Internet continues to develop new and
information opportunities including scholarship search services.
include the New Jersey Education Assistance Authority at
and a directory of colleges at www.allaboutcollege.com
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