Simplifying the Complex World of FAFSA and Student Loans

Prepare to navigate through the labyrinth of college planning and savings with us, your hosts Jessica Magnuson and advisor Josh Oller. We guarantee you'll be fully equipped with knowledge on how to utilize grants, scholarships, cash flow, and loans. With our practical tips on understanding and completing the FAFSA, you'll be ready to maximize this free federal aid. Warning: do not mistake student loans for grants! We'll guide you on how to reach out to schools for aid information - the right preparation can bring surprising results.

Josh Oller joined Summit Wealth Group in July of 2019 working alongside Chris Wells as a Financial Advisor in Summit's Ridgeland, MS branch office.  Josh completed the CFP® certification in October of 2021. He spends time with Chris in an advisory role and is also part of Summit's financial planning department.

Josh is a graduate of Mississippi State University where he obtained both a Bachelor’s and Master’s degree in Business Administration all while competing for the MSU golf team.  Josh began his career in the banking industry in 2012, and eventually found his niche in the credit department of the bank where he became the VP of Credit Administration.  In this role, Josh was able to learn the many aspects of corporate finance, taxation, and business cash flow. 

Josh later realized that his real passion was working with people.  He wanted a career that helped people reach their goals and is excited to help our team assist clients with navigating the bumpy road to the lifestyle they seek.  

Josh currently resides in Jackson, MS, with his wife, Mollie, daughter, Betts, their cat, Lady Grey, and their dog, Rory. Josh and Mollie love outdoor activities and anything that revolves around food! They often joke that their vacations are focused mainly on what places have the best local restaurants. Josh still has a strong passion for golf and regularly competes at various tournaments throughout the state.

Securities and Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.

Thanks for listening! Make sure to follow us on all the socials at @summitwealthgroup, so you don't miss an episode!

Transcript

Jessica: 0:00

Hey everyone, welcome back to the Reach Your Summit podcast, where we are helping you navigate the path to a better, more secure future. I am Jessica Magnuson, your host here, with one of our Ridgeland, Mississippi advisors, Josh Oller, who is joining us again about college planning and savings.

Jessica: 0:20

So thanks again for coming back. If you did miss our first two episodes. We went over how to choose a college, anticipating cost of college, and then some of our options with saving as far as possibly 529. So those two episodes are jam-packed with information. I would highly encourage you, if you haven't listened to those ones, to go back, give those a listen and then come back to episode three and we will be doing four as well, to finish out this series.

Jessica: 0:51

Today, though, we are going to be talking about some of the options for paying for college that are outside of those savings account options, because, if we're just being real, that's not a reality for every person to have a 529 or to even have someone that's able to pay for their college. One of the things we are diving into is some of the assistance that the government actually offers for those who need it and can qualify for it. Some of you may be familiar or have heard of the free application for federal student aid, also known as FAFSA, which I find terribly hard to say. Really have to concentrate on that, but even if you haven't heard about it, don't fear, that is what we have Josh here for.

Jessica: 1:43

So he's going to be answering all kinds of stuff for us. So for those that aren't familiar, let's just start with what is FAFSA, and how do clients know, or any of our listeners, if this is something that they should be exploring?

Josh: 2:00

Yeah, good question. We do talk about decent amount, about FAFSA you have to apologize, my Southern draw as I mumble through that word as well but yeah, we get a lot of questions about it. We always talk with clients about kind of like you said, there's four main ways to pay for college. We've got grants and aids, we've got scholarships, we've got cash flow and I even include work and that cash flow, you know, maybe your son or daughter wants to work while they're in school. They got work study programs and then, last but not least, very important, is loans. We generally try to stay away from the loans and we'll touch on that a little bit more here later in this podcast.

Josh: 2:41

But you know, like I said, focusing on the grants and aids, the free app, the FAFSA, the free application for federal student aid, is probably the most widely known, most utilized grant aid that comes from the federal government, and so what this is is a massive program where they hand out billions and billions of dollars in student aid every single year to kind of help, you know, help families and help students pay for college.

Josh: 3:08

You know we always highly recommend clients go on there and fill it out. You know you never really know. You know I personally haven't had anybody who's gotten a lot of aid from FAFSA, but you know there are stories out there about the clients and families getting a lot of help from FAFSA and a key part of it is you know, I talked about the four ways to pay for college and those four ways between aid, scholarships, cash flow and loans. You know those come from the federal level, they come from the state level and they come from the college level, the college itself, and so a lot of these, you know the state and the colleges themselves require you to fill out the FAFSA anyway if you want to try to qualify for some kind of aid from the school or from your state. So it's almost borderline of requirement at this point in time and so it's a program you hop onto what's called studentaidgov is.

Josh: 3:58

The website is where you fill out the FAFSA, you create an account and there's like a 47 point checklist of all the things you need to gather. Most people can Google that information, but you go through there, you fill it out and essentially what they're doing is they're trying to. You know the federal government is trying to understand your family's income, your family's assets. You know what assets do you have available to help pay for college? And then you know, try to determine what the cost of the universities that you are looking to attend you know, and how that matches up. You know, if the cost of the college you want to extend costs $30,000 a year and you don't have that income and assets, they'll look at aid based programs for you.

Josh: 4:38

Once you go through the whole process, they're going to send to you what's called the student aid report. You'll hear people call it the SAR and then that student aid report it's essentially a summary of all the information that you put into the FAFSA application. Within that application they will have what's called the expected family contribution. That is kind of exactly what it sounds like how much they determine your family can afford to spend on college and then, at that point in time, they base that up with the universities that you're looking to go to and either present to you that you don't qualify for the aid, they present to you certain grants that you qualify for. They offer you the grants you know. A tricky part about FAFSA is that at that point in time, they do offer you student loans. I've heard horror stories about people thinking that that was a grant that they were applying for and they actually signed up for a student loan.

Josh: 5:29

So be, very careful there. They also take this information and they send it to all the schools that you put on your list and so those schools, and at that point in time they crunch their numbers and then they get in touch with you and say you know, here's the aid that we can provide you based on your FAFSA application. Not every school will reach out to you. A lot of times it's going to be on you to reach out to, you know, the financial aid department and whatever school to see if they got your FAFSA information, to see if there's anything out there that they can qualify for. So you know it's a process. It takes a long time. It's very important.

Josh: 6:07

However, I was reading earlier today when I was looking, doing a little research on this. I think like $3.2 billion of federal government aid went left, like you know, unspent last year just because people weren't signing up for the FAFSA or maybe filled it out incorrectly. So it's very important. Yeah, I recommend people do it. You may not get anything out of it, but you know what's, what's the worst case scenario. You spend an hour or your Sunday trying to get some college aid, you know.

Jessica: 6:34

Yeah, when I was on the FAFSA website as well just kind of going through refreshing my memory, because I did also use FAFSA when I went through college and all over everywhere they were making it very clear what you're mentioning about people thinking that the student loans were some sort of grant. But that, to be very clear, read your fine print and make sure that you know what is a grant that's being offered and what is a student loan that is going to be expected to be paid back.

Jessica: 7:10

So, definitely something you want to pay attention to there.

Josh: 7:14

Big difference between a grant and a loan.

Jessica: 7:17

Yes, yes.

Josh: 7:18

The FAFSA, the federal grant money, is handed out on the first come, first serve basis. The window in which you can apply for FAFSA started October 1st 2023, and it will end on I think it's either June 30th or July 1st. And so how do you recommend? You know, stay on the ball, set a calendar reminder, you know. If you haven't done it for the upcoming school year next year yet already, hop on there and do it, just in case.

Jessica: 7:46

Yeah, I feel like the reoccurring theme that we keep coming back to in this is start early plan ahead. You know it opens October 1st a student senior year, in order for them to apply and so, like you were saying, I didn't realize that it's first come, first serve basis, which kind of goes all the more urgency to get in there and just start exploring it and get familiar with what you're going to be needing and what you are going to be eligible to get back. Potentially what kind of thing.

Josh: 8:21

They ask a lot of questions. It does take a little time and you've got to get tax returns, w2s, stuff like that. But you know, like I said, they're trying to understand the full picture of what you're capable of spending on college. But you know how they recommend it. It's not a fun process but it can be worth it.

Jessica: 8:39

I know that also part of it is getting back a little bit of an estimate, it said, before you actually get accepted to colleges.

Jessica: 8:47

Once all the kind of final numbers are inked and you get hard numbers, you'll get a little bit of an estimate which I felt like could be so crucial for people for knowing maybe what else they're going to have to cover with either scholarships or loans or, like you were saying, if kids are going to be working through college, knowing exactly how much they're going to be having to pay for. So I, when I went to college, I somehow made friends with a woman in financial aid like freshman orientation, and had this relationship with her and she was like my guide. I would just go in there and be like OK Mary, what do I need to fill out? What do you want from me? Tell me what I need to do. And she did. And I realized now, looking back, that is very much not people's experience. So getting familiar with this stuff ahead of time and doing your own research is really really vital, especially in this case especially on the side of the school.

Josh: 9:50

I mean, these schools have grant money, they have aid money. They want to give it to students, but if you don't apply, if you don't apply yourself and try to track this stuff down a lot of times it just goes unspent.

Jessica: 10:03

Yeah, which? Yeah, you're just leaving money on the table there for sure, which we don't want to do. Another thing I didn't realize about FAFSA is that I've always heard about appell grant but never really knew what this is, and I didn't realize that that kind of falls under the FAFSA thing. So if someone comes to you and is wondering you know what kind of grants or scholarships they should be looking into, do you ever kind of advise anyone on what appell grant is and how they can get it?

Josh: 10:36

Yeah, it's funny. It's like I feel like everybody in the country has heard of the word appell grant Nobody knows what it is.

Jessica: 10:41

No one knows what it is.

Josh: 10:43

You hear about friends getting it or you know people's daughters, sons getting it. But yeah, I mean appell grant is. You know kind of exactly what it is they grant. You know, given A, it can only go to undergraduate students, but it's truly for and they put it you know all over the website for extreme financial aid and so essentially you know you've got to have very low income as a family to qualify for the appell grant. But you know it's also, you know it's a source.

Josh: 11:12

You know they give out a lot of money through the appell grant and there's a lot of other factors that go into it. But extreme financial aid you can only get I think it's around $7,400 a year from the appell grant but you can get it every single year. Schools actually are the ones that decide, kind of, who gets it and who doesn't and you've actually got to fill out the FAFSA every single year. You know that you are applying to get the appell grant. It's like a one year contract. You know, because they want. If you qualify for the appell grant and then your family hits the lottery, you're probably not going to get the appell grant the next year.

Jessica: 11:45

Right, right, yeah. Which is another important part to point out is that FAFSA is something that has to be done annually. You're not just a set it and forget it. Freshman year one and done, you got to keep going back and keep re-upping that contract, so to say Five percent. Yeah.

Josh: 12:03

Just like our lives change, you know, year to year financially, so does people qualifying and applying for aid.

Jessica: 12:09

So another part that I wanted to touch on today is any kind of scholarship. So if clients come in to you asking how do we figure out if we can get scholarships, Do you know of anything we can apply for? How do you kind of guide people in that arena?

Josh: 12:24

Yeah, I guess it kind of goes back to what we talked about earlier, saying early and often People aren't going to walk up to you off the street and hand you a scholarship just for being a nice guy that day. Yeah, you know, I always. You know, it's kind of a ray of things. I talk to people about this. A lot of high schools offer scholarships. You know, talk to guidance counselors about what you may qualify for, contact the financial aid at the schools that you're applying for, about what scholarships they think would be a good fit for you. You know, when you're applying for these scholarships, you read the fine print, read everything to a detail and follow it to a T. They say on there that you need to dot every single I that you write on this application. You better dot every single I. Yeah, they will toss it out, you know.

Jessica: 13:07

Well, it's highly competitive. I feel like I remember applying for scholarships and it was like it felt like I was just a number in the sea of applications for it. So definitely, you know, like you're saying, do everything you can to kind of stand out and do it correctly is vital.

Josh: 13:24

You know, and don't ignore the small scholarships there's. You know it could be a $500 skips scholarship. Your local community is offering a thousand dollars here. That stuff adds up.

Jessica: 13:34

And so absolutely.

Josh: 13:36

One thing I urge to is, like a lot, of, a lot of scholarships. These days, there will be a thousand applicants that have a 4.0 GPA. That's usually not the determining factor. It's really about who you are as a person, what your story is, what you're doing outside of school, how you're spending your time, and those scholarship applications are a good time to brag about yourself, what you're doing outside of school. Like I said, who you are as a person because that's what they're really trying to figure out is who you are and why you deserve this scholarship. And so grades are important, for sure, but it's almost like they're just kind of a filter. I mean, you already got to have good grades, you already got to have whatever. They want to know who you are. Get involved and do as much as you can outside of school to kind of help boost your resume and tell your story.

Jessica: 14:25

I have heard and I don't know about the validity of this, maybe you can speak to it a little bit but a lot of times I've heard that smaller schools if you're looking at those, they have opportunity to give out scholarships for academics or extracurriculars or just your background if they're looking for more diversity at their school or just people like whoever you are applying. So to not kind of write off these smaller schools just because they're not the big universities and whatever, but they really have a lot to offer as far as the financial help to go towards your tuition.

Josh: 15:03

Without a doubt I think we talked about it in the last episode or two episodes ago Only very few people are paying the average sticker price of these universities. I think it was Princeton I used the example of. The sticker price was $50,000, something thousand dollars, and just by applying yourself and applying for these scholarships, more than likely. If you've worked hard in high school, there's going to be some some aid out there for you.

Jessica: 15:28

There is so many resources now. Things are so accessible if you are willing to just put in a little bit of research for what scholarships are out there and available. And I think even in this phone is tracking everything and computer, I'm getting all of these targeted videos on, like TikTok and Instagram and things of people that are saying go to this website to find scholarships for you that would apply to you. Or even going on YouTube and looking at how to apply for scholarships or where should I go, Like it's so much more accessible than it has ever been.

Josh: 16:04

When I was going through high school, you had to like go to Barnes Noble and buy a book. Yeah, educate yourself. Or you truly just relied on your guidance counselors at your high school Right.

Jessica: 16:15

It's like scholarships for dummies, like going by one of those books. The biggest, biggest piece of this we keep coming back to is preparing early and often, like you said, that is all we have on scholarships and financial aid for you. If you liked this episode, please subscribe to our channel and we will be coming back to you next week with some more information on student loans and student debt, which I feel like applies to a lot of people. So you definitely don't want to miss that one. We'll see you then. Thanks for listening to the Reach, your Cemetery Podcast brought to you by Summit Wealth Group. If you enjoyed this episode and would like to help support the podcast, please share it with others and subscribe so you don't miss an episode. If you have any questions or topics that you'd like us to cover, please email us at info at SummitWealthGroup. c om.