Ron Caruthers 0:00
Good morning everybody. Welcome to the Make More Keep More podcast. I am your host. Dominic will not be joining us today. I think he's on a cruise somewhere in the ocean. Far far away and loyal listeners of the show will notice I've got a new hoodie because my son's going to law school, so he showed up brought his hoodie. And I added to the collection of hoodies, pullovers with a pouch on top with a pouch in front love these things. Today's guests with us is a friend of mine, who I've known almost as long as I've known Dominic, Ed Sanderson of Ducerus HQ. And I've worked together. And how long have we known each other? We've known
Ed 0:53
each other for close to 20 years, we've worked together in almost 19 years.
Ron Caruthers 1:00
Wow. Dude, you're making me feel old. A lot of years, man. And it has a corporate background banking background, but really has kind of specialized in all things College. For those 19 years. At the time we met, I ran a financial advisory firm, that kind of specialized in late stage college planning. And so today, we're going to chat about like I said, literally all things college. And anyway, just want to welcome to the show, Ed, it's good to have you on. Nice to be here. You
Ed 1:35
guys have a great program I've been listening in.
Ron Caruthers 1:37
Thanks, man. Well, hopefully do Dominic proud. I'm sure he'll, I'm sure I'll have his comments when he gets back. What's going on? What we did, right and his notes on critiquing, and he complained. Good morning, Karina. Yeah, complaint last time that the birds were too loud in the background. So Dominic's a musician, you know, and you know, musicians get fussy sometimes, but it's get to work, man. What do you what would you say is the number one biggest myth about college?
Ed 2:14
Number one. In my experience, the number one myth is that there's no scholarships and grants for college that at the rate of inflation, the way it's going up, there's no way that a family, even a family that is in a six figure income, is going to get any free money for college. So that's the big one. And that's the one we fight the most. Because the reality of the matter is, most people when I talk to them, if they've got a kid who's already been through college, they say, I went through the process, I didn't get anything. Therefore, I'm not eligible. But that is the biggest myth. And it's the thing that we fight against the most. And we prove to people time and time again, that there is money available, you just have to know where to look. And run. I always say that it's the right circumstances, the right student and the right university, you kind of have to combine those things together and know what you're looking for and where to look for it. And that's really the key. And that's the biggest myth is people just don't believe there's any money for school. And it's probably, I think the last time I checked this, it's like $2.6 billion in pre money, or 26,000,000,020 6 billion. It's still early for me. So I'm the decimal point. Yeah,
Ron Caruthers 3:30
it's ridiculous. Yeah. pesky decimal points, man. They
Ed 3:32
always gets you another one. I'm absolutely wrong. It's 226 billion.
Ron Caruthers 3:39
So do you want me to carry the show? Do you need to go get some more coffee, man?
Ed 3:43
Actually, I do. And I just realized, we talked about this yesterday. You said, Hey, man, you gotta fill that gap in the guitar. Well, I did. I just moved it. So now I slide over, I just move over. Catch it.
Ron Caruthers 3:56
And yeah, so. So tell you something really interesting. For those you guys listening? At night both have similar backgrounds. And this is how we met at a friend's in a mutual friend's anniversary party. I actually had grown up up in LA near his wife and had I don't know that I ever actually met her his first wife. And but I'd seen her on occasion and we knew several those same people. So we were at a anniversary party. And we started chatting about what I was doing at the time. And both of us have similar backgrounds in that. Neither one of us went to college, right out of high school because of money. We both were under the impression, you know that our families couldn't afford it. There was no money for college. And like Ed said, Nothing could be further from the truth. Now, I would add a second myth in there, which is the if you go to college, that is a guarantee of success. It's though like I know the right thing, because you know, there are certain degrees that really don't have a market value in today's society. So let's talk about the money first that you get to some of the other some of the other niceties around college time permitting, and we'll tell everybody by the way, this he's, he's the head of do saris HQ, full disclosure, I have a financial interest in do seris. But you guys blow up his Instagram direct messages after this is over. If you guys have questions, work him abused him, treat him badly. No, it'd be nice to him. He's sensitive.
Ed 5:44
That's true. But
Ron Caruthers 5:46
yeah, feel free to blow up questions, and he'll talk about you. So let's go through and talk about how someone gets started. Because this is the make more, keep more show how someone gets started applying for college money, getting college money, all those things. And of course, since we both kind of run it, I'll let you take point. But I will jump in fire away.
Ed 6:11
Yeah. So there's a couple of things that I was thinking about that question about myths. And the biggest myth is that the process is not only you get both sides of this, right, which is there's no money, don't even bother. And the other one you get is it's super easy. Just fill out a form and be done with it. But I think the biggest challenge is, folks, one of the big questions I get wrong is, Am I too late, that I start to light? And ultimately the answer to that question is usually yes. So I would start with the idea that if you're serious about getting free money for college, which all parents should be, and frankly, their kids should be to, you got to start early. And you have to understand how a college or university looks at a family. And you also have to know what schools have money, what school don't so the other big thing is that most families think that when they fill out the Free Application for financial for free, for a free application for financial aid, the FAFSA, they think that the government is giving them money. But in fact, it's not what it is. It's an application that gets submitted to the university or to the college. And the first stop is at that university or college, do they have the ability or the interest in giving families money based on their need? So the first thing I'd want to know for a family or family should want to know is what is my need? Calculate that need. And that's one of the things that we help with with our families is calculate whether or not they have a need. And then when you start to look at this university and colleges that your student is interested in, final take any money. Then the next step in that process. Can
Ron Caruthers 8:03
I can I stop for once? Yeah, just to go in you and I know this. You just dropped like five different steps on everybody.
Ed 8:10
Yeah. All right. That's a little while.
Ron Caruthers 8:14
Let me back it up for a little bit. First of all, mad respect, whoever said I was there boy blue. I didn't get a seat because it scrolled by so fast. I just sat down last Friday night and watched the old school while drinking a bottle of wine. While my wife was out with the girls. And literally, short of having front row for a Mayweather prize fight. I wouldn't have gone anywhere. And it was so freakin funny all these years later. So I especially appreciate the shout out. So what Ed said like literally he just dropped 10 points on you guys. So let me back up and jump back in and unpack the very first thing. First of all, when you say early, what is your definition of early for when someone needs to get started?
Ed 9:02
Well, if you really want to make the feel good about being your advisor, you should be coming to me when your kid is in their freshman year. What you want me to be ideally not as good but still pretty good. Sophomore year is a sweet spot to get sweetspot to get started.
Ron Caruthers 9:24
And Junior, right? Yeah. When do most people come? They
Ed 9:29
come to me if the when their son or daughter is going back to school for their senior year. So it's like they get the advertisement from Kohl's and it's a back to school flyer and they go what's going on something interesting is happening. What was that again in in sheer panic hits that they realized that their kids supposed to be applying for college
Ron Caruthers 9:49
sites for prenatal care while your baby's in the birth canal right? It was literally Hey, could you check and see if there's anything I should be doing? Look,
Ed 9:58
I want to get better lamb that's
Ron Caruthers 10:05
this show this show is free, we got to say we got amuse ourselves. Yeah, that's impressive. Look, it's better late than never right. But ideally, when they start high school, it's a really good time to start thinking about. So that's number one definition of early is, ideally, when your kids in high school, would you turn somebody away if their kids in middle school or even younger, and just wanted to kind of know where they stood?
Ed 10:30
No, in fact, that would be awesome. For a number of reasons. I think the one thing that you taught me from a financial planning perspective is that, on the other side of this, most people haven't saved enough for college. So if you are sitting there going, I'd like to get started, I'll give you an attaboy for that your kids in middle school. Because you want to get an idea of what, where you fit in the formula. And granted, that could change you. It can change. But at least knowing where you're at is really important, and then starting to plan accordingly. Because the worst position to be in is a family who is up against a clock, and is trying to figure out not only how to apply to get money for school, but also trying to figure out how to pay for it. Because their intentions were I meant to get started earlier, they blink their eyes. And next thing you know, they have a 17 year old living in their house, which has happened to me three times. And you just go Wait, what just happened? Yeah, your kid just graduated from high school three weeks ago, Mike? Wow, that went by fast. So it goes by quick. The last thing you want to do is wait till the last minute and starting early is recommended.
Ron Caruthers 11:43
Yep. Yeah. So that's the definition of early now. You said, figure out what your need is. So explain that. How does someone go about doing that?
Ed 11:56
Well, I mean, the best thing to do is to sit down with a professional. Now I'm sure you use that expression. On your show, as I've heard you talk to other people that the best place to go is to a professional who does that it knows what they're doing. So basically, what you're going to do is you're going to gather up some financial information, almost like you're going to a bank to get a loan a little bit different. Yeah, getting those details. But rather, you're going to gather some financial information. And there's a calculator, so we have access to it, it's on the internet, you can find it. And what you do is you're going to plug in your your income, your assets, other basic personal information, and it's going to give you a number and that number, no matter what it is, families thinks it's way too much. It's the amount. And I'm gonna say this, because everybody knows it's true. It's it's a challenge, because it's what the federal government thinks you can afford for college. And, I mean, let's face it, the federal government, all due respect, and I know you're gonna say without respect, but with all due respect, I have no idea what it's like to live in the real world, they just don't. So when that number comes back to families, they're astonished about what the federal government thinks that a family can afford, in order to send their kid to school. But whether we like it or not, it's the starting point. And because it's the starting point, we have to know where we're starting from in order to determine how we're going to end the story. And we wanted to end it positively. So you better figure out what it is and then figure out if you can lower it, change, what's weighing what's going to impact it to go up the things that you should do while you're in the process of qualifying. So you're not creating an artificial number, because you decided to pick up a bonus from work. And you didn't realize what impact that was going to have. Now, listen, I've had people come to me and go, wife wants to quit her job, we want to get this number as low as possible. And I get all that but we still have to eat, we have to pay for gas, and we have to pay for our home. So we can't just go broke. But at the same time, it's really important to know what's contributing to that expected family contribution. That's what they call it. In our world, you would I call it a EFC. But we need to know what what the number is the what contributes to it, so that if there was proactive things we can do to reduce that number. You do that with the idea that the government also gives you legal, moral, ethical ways to manage that number. If you're waiting to the last minute, the ability to put that structure in place to plan accordingly, is exceptionally difficult, particularly when it comes to income. Because they're not just going back one year, they're going back two years. And so back to starting early. If you didn't know that before. There's no excuse you know it now. Get in and sit down with myself or another person who's been at this for a long time to understand these rules to determine how they're going to impact you, and then move proactively in your planning. So that you're in a position where there are no surprises.
Ron Caruthers 15:14
Yeah, so throw some back at that Lakers back to back has been dropping some good comments there, although I will correct you in a moment on one of the asset numbers. But basically, to what Ed was saying is the government has a formula, it's 36 pages long, you can find it on the internet. On afap.ed.gov, I realized that went by real fast, but just search for it. Not the form, but the actual formula. And if you read through it, you'll realize the government gives you an allowance for money, like you could have this much money before we begin to penalize you for it, you can make this much income before we begin to penalize for you. But the numbers are stupid love. You know, 26,000, for a family of four nature mod is white, you need to have $18,000 in your bank, if you're 52 years old, and anything about that we're going to penalize you. But because it's the government, there's also a whole list of things that don't count, like your home equity, like retirement accounts, like non qualified retirement accounts. And so if you understand going in, kind of what that is, like I had said legally, morally and ethically, you can turn around and lower that amounts. And then there's not just what the formula says, but the way a school is going to interpret some of that data, because they're going to get the raw number, that expected family contribution, which the government spits out. But what they're also going to get is all the data behind it. So if you are sitting on Allama cash, even though and just to correct someone, it's actually counted, counted a little over 5% in the formula, meaning whatever asset number you have beyond the allowances, it gets run through the mill, and it ultimately ends up at about 5.6%. But if you're sitting on enough cash, even though in the formula, it doesn't directly affect it, the school may look at it and be like, well, formula says we should give you this money, but we see that you have all this available cash. And so you don't really need that cash. So we're going to liberate you from that cash by not giving you money for it. So that planning step is really important. Because as again, like there's back to back 100%. Correct. But if you guys are following the crawl about what's counted and what's not.
Ed 17:49
Yes, about people on this thing, man,
Ron Caruthers 17:51
dude, I'm telling you good looking and sharp Ed. Don't forget that. So anyway, now You distracted me to the point is understanding that formula lowers the expected family contribution, which then gets subtracted from what the total cost of attendance is at those schools. And it can be different based on whether it's a $30,000 a year school or at $80,000, your school. And then the difference if there is one as need. So explain to them at real quickly, if you don't mind how that need changes between a public school and a private school. And then we'll move on to your next point.
Ed 18:32
Yeah, so. And I'm glad that we are breaking it down like this, like you said, when you do it all day, every day, it kind of just a blurry just kind of goes through it. And so the question about how it varies from school to school, and I noticed that there was a comment that scrolled up, and this is kind of cool ROM, and you can see people typing in stuff as you go, right? Like this. And somebody mentioned, another financial aid form called the CSS Profile, which is basically another financial aid form or application, a lot of private schools or a few public schools use in addition to the FAFSA. So that's important because schools determine how they're going to distribute their money based on their own internal formulas. So if you're looking at I think the number is somewhere close to 2800 plus nonprofit, private and public universities, each one is going to have their own formula that they use to determine how much they're going to get. So when you said $80,000, a lot of families are like, Oh my gosh, $80,000 a year. That's, that's ridiculous. I can't afford to pay it. But that's not really what you should be looking at. What you should be looking at is what their internal formula is, to determine how much money they're going to give a family. So for example, out I'll use a school that your daughter went to USC. USC is one of those schools, that's around $80,000 A year all in. But they're also very generous when it comes to need based aid. So if a family is $100,000, a year or less, or 100,000, and just more, you're probably going to get a big chunk of that money. And free scholarships, it's just part of the program that they use to help lower their retail price. And when we're talking about how schools look at people, I'm not interested in retail, I'm interested in their wholesale price. So if we want to get to the wholesale price, we have to dig in deep. And this is the part that takes a lot of time, which is why if you're going to do it on your own, which some people do, and it can go bad if they're not careful. But if you're going to do it, you have to start early because you have to, and they don't make it easy for you to find out how they handle your particular situation. And when they plug your particular, we talked about this formula, expected family contribution into their formula at that school, it's going to spit out a number and each school is going to have a different number for each family. So if your kids applying 1216 18, college universities, you have to look at each and every single one of them individually, and figure out who's got money and who doesn't. And it's not always the same, even at public schools. Because the other thing I'm going to drop knowledge on is that a public school that's out of state, but we live in California, and a college like a University of Colorado Boulder, they're going to tack on another $25,000 to their cost of attendance, because you're asking to come to their school, and they're like, Hey, we're going to make you pay for the privilege University of Texas, US California, folks, we got to pay a premium to go there. It just because that number goes up. Well, that means you're getting more money. In fact, you're probably not going to get any money. So you need to look at all of those things and take them into consideration. Before you make an arbitrary decision was saying no matter where you get in son or daughter, we're going to pay for the whole thing. Will you read that statement?
Depends on how that school performs. So let's go figure out how much money they got to offset that retail price. So you said 80, there's 50, there's 35. But you got to do the calculation, because I've seen situations repeatedly, where an $80,000 year school can be cheaper than a $30,000 your school. Why planning with clay, because that school has money. And to your point, you've done your planning. So you know, when you put your head on the pillow at night that you've done everything humanly possible to maximize scholarships and grants, so that you know what number you get is the best number you can get. Which is I hate to be this guy. But that's why you talk to a professional so you know for sure that your school offers you 25 You go, Oh, I'm excited. But maybe they should have offered you 40 And you have no idea. And that's what we're trying to get to is it's an investment of time and resources to maximize that effort.
Ron Caruthers 23:35
Let me great points. All great points. Let me handle the let me just handle some questions that have come through. Yeah, and whoever meadowland This is my front porch. So I've got neighbors walking by and you'll see me waving at people and the ocean is over there. But you can't really see it today because it's foggy. So let's go back to just some questions that came by one person wrote that, hey, where can I find this info? My kids going to school in the fall? My answer would be we can you can google search it but it may not give you the application that you need. And so I would just jump into Ed's DMS, try to get in this calendar and just show him what you've done. And you guys might be able to shortcut some stuff. Again, if you prefer to, to review it and go to I F AP information for financial aid professionals, if aap.ed.gov. And you can actually find the formula. It's 36 pages, I think is what it prints out to and for Lakers back to back. That is where you see if you go through the formula. That's where you'll actually find directly from the federal government. That assets are counted at 12 per are set, but then they're run through the formula once the number gets plugged in, so it actually comes out to the 5.6%. Another point that Lakers back to the back made, which again, love all the questions and participation, really appreciate from you guys. It makes this enjoyable. It's kind of why we keep it on Instagram, even though we can upgrade the quality and do it as an official podcast, you know, with Dominic's stupid amount of equipment that he's got in his hat, house and stuff like that. But no, it's the Lakers back to back, we don't want to argue about this one. This one is 100. It goes right into the EFC formula. So I can show it to you DM me, and I'll get you the information, just so we can clear that up. But that is accurate. So anyway, back to he made a really good point. And by the way, all your stuffs been solid, it's just that number is a little different. So anyway, on the what he's what he mentioned, was that there's about 30% of the private schools give 100% with no loans. But remember, it's 100% of what they calculate, you can pay. So you still want to have the planning in place there. And so this is where planning comes in. It's kind of like getting divorced in California, where everything gets split down the middle 50 5050. Right. That's what the court deems what you argue about is what this is worth versus what that's worth, if you get that desk and I get this TV, how much is the TV worth against how much the desk is worth? It's kind of the same with the schools. So the Ron just said, Yes, sir,
Ed 26:54
I just want to jump in on that one thing. Because the other misleading point about 100% is sometimes what they'll do is they say 100%, and then you get to the fine print that's below the superfine print. And the superfine print says on tuition. So they make it a tuition grant. But I think it's important to point out that tuition is only one part of the cost of attendance. So you've got living expenses, and room and board and you've got all these other things. So I get this a lot, which is oh, they're gonna give me 100% Your follow up question should be 100%. Of what I've why
Ron Caruthers 27:37
exactly. I don't know why all the trucks are coming by today. Certainly super quiet here. Today's truck back. So now let me handle one other quick question for Karina. And how do Artemis is in a better or a kid's Roth IRA better? Or What? What? For college?
Ed 27:59
None of the above? Okay, so. I mean, I let me just start by saying I commend anybody. And I mean, anybody who is looking to save for college? I mean, that is what you in theory should be doing. But back to the formula. And Ron, you pointed this out is understanding how they interpret what an asset is. That's the first thing. Yeah, which layers back to back had really good points on what they spot on, and how they calculate the value of them, and who they assign them to. So some of these assets are technically in the parents name, but they've assigned them to their kids to redeem them at some point in the future. And the university and the colleges, they're going through that information to determine what they're going to give you. They're gonna go wait a second, this asset is technically in the student's name. And because it's a student asset, they up the value of that asset in terms of how much they're going to have contributed EBIT contribute to the overall expense of college. So let's use round numbers. Let's say you've saved $100,000 in a five to nine plan, UGMA or something like that, in the school in their infinite wisdom goes, Hey, that's technically not for you parent. It's technically for the advantage of the student. They technically own that. So back to Ron's formula of taking 5.6% of an asset that's above kind of a bottom line threshold, that students don't have bottom lines. They don't have basements or ceilings. They just take it from dollar one. And they go from 5.6% to a range of two wanting to 25% of that asset is going to get added into that financial aid formula. So if you've got $100,000 saved, they could easily come to you and go great. And we're going to increase your expected family contribution by 20, or 25% of that asset. Because in their mind, you're gonna go, let's just cut it into pieces. If your kid goes here for four years, that's 25% per year, it's all gone, your son or daughter is all gone, and we don't have to give you anything. Or if your kid goes there for five years, 20% for every single year, same thing, money's gone, they're gone, there is no money for you. So before you decide to start putting money in there, you really need to have a conversation with Ron or myself about whether or not you ever been. Okay. These folks like default?
Ron Caruthers 30:58
I mean, except for you, Karina, you've talked, you call me? So not him?
Ed 31:04
Oh, there's every rule. So there's every rule, you gotta remember that the universities and colleges, that's true, too. But the point of it is, if you've got one of these, and I think Ron, you alluded to at the beginning, so for folks who were there, it's never too late to start planning. So if you if you've got a kid who's going to school in the fall, and you're, you're having a panic attack, listening to this, reach out to me, let's just see what's going on. Right? The see what's happening, and then we can talk about what to do. I've had situations where we're able to go back to the school, because there was a mistake, or multiple mistakes, and the student or the family would have been eligible. And some schools are really cool. They're like, Yeah, we just do a letter of explanation, we need an additional couple of forms, fill it out, they come back, they go get we'll give you an exception, some schools, not so much. But this is why you have to look into it before, not after this is not one of those situations where it's better to ask for forgiveness, because it's not, it's better to know what you're doing. Forget the whole, they're good. They're there to help me know you're there to help yourself. And you have to do the work to make sure you understand how those assets are going to be positioned by the university to determine whether or not you're going to be eligible for aid and, and how much.
Ron Caruthers 32:30
So how many are up there, we spent kind of the first half of this show. Oh, and Dominic would like me to do station break. So this is the make more keyboards show. Normally, my host is Dominic Abril, biz advisors, and Rob Carruthers. And basically, we just talk about money, how to make it, how to keep it, how to pay loose, loose amount in taxes, how to pay the least amount for college, which is what we're chatting about today with Ed Sanderson have to saris. And so we talked a lot about planning. So to summarize that, let me do this. Number one, figure out where your share is in the eyes of the college. And remember, it can be different because even though certain formulas apply certain percentages, the school can jump in and be like, right, we're going to assign a different value, for instance, 520, nines in our working practice, working with families and seeing what the colleges actually do, even though, you know, the formula is supposed to only counted at 5.6%. That's just for federal money. If a school breaks that money out and sees it, they can and will assign a much higher value to it. And we've seen it go through. So anyway. Um, so that's something to keep in mind. Then the second thing is to figure out which schools have money in which schools and when we determine have money by branding, when we determine that a school has money, it's free money that we're looking at, not just loves loans are part of the deal. But we're looking for free money. And again, like I'd said, we've had schools that have turned around and been way more expensive on the front end, but ultimately, because of the offset, they gave so much aid that it ended up coming down. So now we turn around and let's talk about so the planning you want to take place, ideally, freshman, sophomore year, or sooner. If you have a kid that's older, don't worry about it being too late. Now let's move into actually filling out the paperwork and applying to schools and things like that. So you want to walk them through the forms that they need to follow what some of the most common mistakes are and when they should file them, and I'll interrupt you, as I always do. So take them one at a time so we can comment don't just machine Yeah, okay. Like you did the first time. I am excited
Ed 35:03
to be here. By the way, when you said buy brownie, were you talking to me?
Ron Caruthers 35:07
No, it's my wife. Brownie, each brownie, that's your name. So, by the way, people my wife's half Native American, half Mexican, if you guys haven't seen her, and my friends are kind of like, what's your nickname? And I'm like, Brownie, and she wants to call you white man. I'm like, you know, like, we're gonna pretty brown. So anyway,
Ed 35:32
that was, that was a detour. i Sorry about that. So, Foster, talk to him about Yeah. So, you know, there's been a lot of changes to the financial aid process over the last few years. And one of the things they changed was when you're filling out the form. So back, not that long ago, the financial aid form was like, January, you're filling it out January, February or March, correct. Now, they've moved it back, if you will, or made it available earlier to start the process in October. So I'm going to say this. Because it's true, is that you want to, you want to pull that out as soon as humanly possible, because you want to get in line as early as possible. But like I said, there's always exceptions to rules. And here's the exception to that rule. I'd rather put a little extra time on the clock to fill it out accurately than to rush through it and do it wrong. So
Ron Caruthers 36:40
and if I can jump in and say one thing is, so the FAFSA goes live on October 1. That was a change that Obama made back in 2015, where they now look at the years prior taxes, what they call prior prior year. So cheers before you go. But one thing that I've noticed said is if you try to jump in, right in October 1, because it is the federal government, and they don't really test this every year, they make tweaks to the software, they don't really test it, most of us fill it out online. And we notice about the first two to three weeks, the system keeps breaking and having a lot of problems and people get kicked out. So I don't know about you, I generally don't even touch any clients boxes until third or fourth week of October. Unless your school specifically is like, hey, we need it by this deadline. So I would be careful because you might experience a higher than average frustration, because you're like, Why does it keep kicking me out? It's because they pushed it live without testing it. And then they sit there and watch it break in real time. And they're like, Oh, we better go in and fix that. Yeah, why did they do that? Dude? I don't know, man. It's the federal government. I don't know if there's a lot of things they don't understand.
Ed 37:59
And I would also say that I think
Ron Caruthers 38:00
that same people would not understand and I don't know that I want to understand it, because then I may think like them, and then
Ed 38:08
what I was gonna say, Ron, is that and waiting till the last minute does the same thing too, which is the system crashes because there's so many people on there trying to do it. Oh, totally good point. And I would and I think the other thing that's really important here is I'm all about diligence and wanting to get started. But the other thing you have to check in, Ron, you alluded to, I just want to drive this point home, is schools have different deadlines for those forums. So a lot of times you'll get a notification from a high school saying you got to do your FAFSA, it's due on March 15. Well, that might be the state deadline. But the university or colleges, they've got their own deadlines. So just like in the admissions process, there's deadlines, the financial aid process, there's deadlines, and you better figure out what forms they want. So we're talking about both boxes. But as I mentioned earlier, there's another form called the CSS probe. Oh, stop stops. I'm what is?
Ron Caruthers 39:07
What is the FAFSA? Ed?
Ed 39:10
Yeah, I messed this up early, because I don't have any coffee yet Free Application for Federal Student Aid. How many? It depends, but you better brace yourself for about 100 right around 100? Because it depends on who's filling it out. Who's eligible 100 schools you got? All right. There's a lot of variables in there. But think in terms of I've got 100 questions I gotta get.
Ron Caruthers 39:36
Yeah, by the way, the cheat because it's actually more than 100 questions, because they have questions that are like this is question 89 A through Q. You gotta fill in all these things. I counted. It's 156 lines. Wow. Because I had apparently had nothing better to do when I Okay, and what are the most common mistakes besides I'm not filling it out at all. And I swear to God, if I find any of you on this, listening this that didn't fill it out because you didn't think you were eligible, and I will straight come to your house, kick your ass, and then drive home, do absolutely fill it out. I can tell you guys stories about this, where clients were way over limits to qualify, but because they got it in on time, then they lost a job or something bad happened, where the school turned in and now made up all the money, whereas if they hadn't filed it, they would have been screwed. So what are the most common mistakes on the FAFSA? Well, I
Ed 40:36
love the first one that you said is not filling it out besides that one, but I love that one because I don't fill it out late. But besides that one, when you're actually sitting down to fill the thing out, what are the most common mistakes, alright, so we'll break it into two categories. One is the clerical is you put in a wrong birthday, you put in a wrong Social Security now, that is going to mess you up in a big way. Because if you do that, it's getting stuck in the system. And guess what, they're not going to tell you that it's going to stop. But when the school goes to pull that application, they're not going to find it. So making which puts you to the back of the line. Hold on,
Ron Caruthers 41:21
let me let me extend that which puts you to the back of the line. So that we've worked together long enough, you know, we kind of each other it's, I want to say marriage, storytelling. One day, we used to go to the same restaurant sit on the patio, and how martinis every Friday afternoon I showed up one day without it and the lady the waitress straight looked at me and goes, where's your heterosexual life partner today? That's funny, but uncalled for. But anyway, yeah. So when you're, we're, we're totally distracted by worrying about
Ed 41:56
clerical mistakes, making mistakes and go into the
Ron Caruthers 41:59
back of the line of the back of the line. So the problem is, by the time they get around to like, Oh, hey, by the way, they've given a lot of money away to other families that didn't make that mistake. So that's clerical. So well.
Ed 42:13
So let's talk about probably the three biggest ones. One, the federal form, asked very specific questions. And I would say read the instructions, but we don't, nobody's going to read them. But you should read the instructions that go with them, because they define assets in different ways. And as one of your followers mentioned, what they define as an asset and what you define as an asset or a local bank are two totally different things. And modal asis totally that so let's talk about the big one, ever, I won't say every single time because there is no absolutes in this deal. But most of the time, when I find a parent filling this out on their own, literally, the first mistake they made is they've include the equity in their residence, their home, the home, they live in, number one, but that doesn't mean that right off the bat, usually what I'm gonna go look for. The second thing they're gonna do that's really going to hurt them is they're going to include the accounts they have in retirement. So they look at that and go, Well, if I was qualifying for a loan, that would be considered an asset. But the Department of Education excludes that as an asset. So a 401, K, 40143. B, Ira, Roth IRA, the list goes on. But that's the second biggest mistake is there, including something that doesn't qualify as an asset.
Ron Caruthers 43:47
And if I can jump in real quickly, yeah, think about what you've learned so far, if you guys were on the early part of this, and if you guys weren't, and you're just jumping on, please go back. If you have a kid getting ready to get a college or a kid that may go to college at all. Definitely go back to the start. We'll post this later today and listen to this, because we walk you through how to plan ahead and the questions to ask of each school and those sorts of things. But if you lose, if you heard the early part where we're like, if you've got a lot of cash, the school is like, yes, that is our cash, accidentally, with all of your home equity and all of your 401k which shouldn't be counted, that might be 456 $800,000 that the school now thinks you've got sitting in the bank. So we'll based on your income, we were gonna give you this. Now we're gonna give you this because you've got all this cash. You've got all this cash sitting around, and yes, I can't read the name, but you exclude your school pension, it does not count. Now in the profile, which the other form add, which we'll touch on real briefly, because I want to get to Nico striation you may have to list that, but not on the FAFSA. Yeah. Which is the Free Application for Federal Student Aid? Was there a third mistake that people make?
Ed 45:10
Well, I always look at this as a circumstantial mistake, I would we deal with a lot of families who own their own business. And the rules on how much that business is worth is also very specific. So we would have to talk about your specific situation in this case, but in most cases, the value of a business that you own is zero. So a lot of times people come to us and they go, I've got this business, and I've got this situation and it generates X amount of dollars, and I got to appraise for X amount of dollars, therefore, the value by business is a million dollars. Yeah, probably zero, because they have an exception to business value if you qualify. So those are the three big ones. I'm sure there are other ones in there all relative to circumstances.
Ron Caruthers 46:05
And again, if you have questions on specific situations, jump into saris HQ, DMS, it's got the one the green logo. And just reach out to chat with them. And one of the questions jackpot has because I can't read his his name is excluding crypto so interesting. The new form will come out in a month or two, we'll look at it and see if they have anything addressing it. But the IRS addresses crypto for the moment like personal property. So that would exclude it because personal property is excluded. So until we until we turn around and get, you know, a clear ruling. And obviously we like that, particularly if you have a lot of crypto, right. Although even if you have a lot of crypto is it really important? Because God, I looked at mine yesterday, and I'm like I shouldn't have done. Like, I am so happy. Let me check on my crypto Oh, more not demanding. Yep.
Unknown Speaker 47:09
All right,
Ron Caruthers 47:10
let me see JP, we're gonna get to your question in a moment. And drop knowledge on him on the CSS Profile. One, all right, one minute,
Ed 47:20
that's a rough timing, same thing, you have to understand, they're gonna ask you about 300 questions. And they're gonna get a little bit more nosy here, because most of the schools we use that forum have tons of money to give. So you want to get this right. So all you have to know about that is that you take your time, you start early, that deadline is usually earlier than the federal form. So you gotta watch that one. And to Ron's point, always, always, always fill it out. And I'll give you a second reason. Because a lot of schools who give merit money, want to see that you're playing by the rules, and you fill out these forms. So even under the rare circumstances, you're not eligible, you gotta fill them out. And you have to do it early. The only other problem with this form is how detailed it is, if you got to pay for it, you got to pay 25 bucks to put the first school in, and then they add on for every school after that. And again, not only they're going to ask you about what you make, they're basically going to tear your tax return apart, almost line by line, they're going to go back two years, they're going to ask about grandparents and what they're doing. And by the way, that's the other big mistake, or the thing you should be thinking about, because there's a question on there. And remember, technically, the student is supposed to fill out this form, don't let that happen. Sit down and work on it. Do you do the majority of it? They're going to ask you and I know this is unfathomable? How much can your friends family and relatives contribute to college for this kid? Zero, don't. Don't put grandma on the hook. Because grandma might have lost a bunch of money in crypto so you can expect her to contribute. But again, just make sure you fill it out on time early and do it accurately. Those are the two big things on the CSS Profile.
Ron Caruthers 49:13
Yeah, much more intrusive. And like it's said, that really is a problem where the minute you put out what grandma's good for $10,000 a year. First of all, we've seen situations where grandma offered 10,000 a year, and then for whatever reason lost it. Your grandma said yeah, that's I'm laughing. I can think of three cases where that's exactly what happened. The fourth case was grandma married the security guard at the residence she lived in at the end of that let everybody into the property and all the money went to the you know, 30 year younger security guard. Lovely CGP asked a great question, which is and then we're going to spend the last few minutes chatting about appealing and award and There's so much we didn't get to. So if you guys liked that, let us know in the chats, we'll have him back. But um, and if you didn't like that do me privately. So we don't hurt the big guys feelings. We don't want to do that. But, um, and what do you do if you have a family? First of all, let me define this. See JPS question is, what if a parent won't provide FAFSA information? So let's be clear about who does provide it. In a divorce situation is one household that provides the information at a public school, nowadays, school that requires the profile. You turn around, and you may have to introduce the noncustodial parents information. And again, that's a whole whole other conversation about whether to do it, whether or not to do it, what to put on there. But so if you're in a divorce situation, lovely, and you have, let's say, hypothetically, you were one parent and the other parents like, Absolutely not fine, we just use your information. Now, if the parents will cooperate. And one household custody shared in one household make significantly less, which means there would be, you know, all other things being equal significantly less of an EFC than by all means, let's use that if we can get cooperation. Beyond that, that's probably a more case specific question. So literally reach out to me, or you can reach out to me, because I see you here every week. So I kind of feel like I know you. And I appreciate everybody who's here all the time. Did you have anything to add to that? Add? If not, we'll move on to appealing and award.
Ed 51:41
Yeah, in the world of big mistakes, separated parents and divorced parents, they usually put both. So that is significant. I gotta tell you, over half of my clients last year, were either separated or divorced, you got to pay attention to those details. Because those situations, the schools usually are pretty cool about how they measure what goes in. But if you put both you're in trouble, you're not going to catch that.
Ron Caruthers 52:10
And by the way, I'll tell you a quick story on that. Edie, my elementary school kids principal showed up at one of my her ex husband showed up at one of my workshops that I was teaching years ago. I know you know, this story, but we were chatting afterwards. And he had a weird name. And I'm like, wow, that's a that's the name of I never heard that name before, except for my kids principal. And he's like, I'm the one that gave it to her. So he drugged her into my office, and let's see this lady every day. And she came in kinda, you know, arms crossed, like, what am I doing wasting my time here, I fill out forms for the state all day. I know, I didn't make a mistake. And the minute we got into the conversation, she both parents were included on the forms, how home equity was included. And the minute we clean that up, two things happened. Her kid got a free ton of money at Santa, UC Santa Barbara, and my kids for the whole time that she was principal at that school got exactly the teacher they wanted. You know, all I had to do is really Hey, Emily, can you next year? Can we have this? Absolutely. Miss credits, whatever you want. Ron, you got. So be very careful about that. Yeah, man, there's so much we got about five minutes left, there's so much that we didn't get to, we will absolutely get you back on here. But let's talk about what I deemed the final piece of the initial process, which is once you have all your awards in front of you what next? So you've got half the schools you apply to you filled out your paperwork correctly, you did your research on which goes, Hi, buddy. Now you've got the awards. Now what?
Ed 53:51
Well, I always tell folks that you got to be careful in this step, because you're comparing an apple to an orange to a nectarine, these schools are all different. So at the very least get a notebook or an Excel spreadsheet and break it down. What's the top line number cost of attendance, subtract the grants and scholarships you receive, not the loans yet, just the grants and scholarships to see what the net price is. Now, if you've done your research, you can go back and see how that school perform based on some of the historical data which we track every single year to make sure our clients know exactly where they should be and how much they should be getting. And see if it lines up. If it lines up. Now it's just a matter of picking the right fit for that student at the beginning. I said right student right circumstances right institution, if those things all fit, then you're good to go. The challenge is, did you get what you were supposed to get in if you didn't How do you approach that situation? Now the thought process is it's us against them. So we're gonna go to war with them, and we're gonna bust down their door and go, I need to see the dean of financial aid right now, no, you can't do that the last thing you want to do is alienate them. So what you want to start with is a nice conversation that starts with, you know, I did my research. I know you guys are really generous school, I'd like to understand my financial aid award letter. I thought, based on your website, and again, my research that we were gonna get a little bit more. So there seems to be a difference. Could you explain to me what's going on, and have a conversation, and believe it or not, they make mistakes. They go, Oh, man, I messed this up, I had this happen for a client, they came back and go, we're so sorry. Not only did they award them, the grants and scholarships they should have gotten, they add a little bit more to it as well. So you got to know when to hold them and when to fold them. And when you fold them is when you're dealing with a school, but he doesn't have any money to give. And B is not flexible in the way that they give their money or they're not open to a conversation, you either move on or frankly, you have to pay that difference,
Ron Caruthers 56:21
I would say, to Ed's point 80% of the time that we go to a school to appeal and award and ask for an increase, we get an increase in free money. And so there's, like Ed said, you can get it based on your research. You can get it based on a change in circumstances, you can get it based on a potential change in circumstances. A few years ago, Sony was laying off here in Rancho Bernardo, which is an inland suburb of San Diego, about 400 engineers, they were closing a plant down. And they were laying off all 400 engineers. So the marketplace was just getting everybody doing the same job dumped into it at once. So we upheld like, Hey, I haven't lost my job yet. But here are the articles. And I'm competing against 399 other engineers that do exactly what I did. Would you were a little hesitant to commit before I'd have a job secured and the school bumped his award almost $10,000 A year of free money. So you can also appeal based on like we said, changing circumstances would another school is doing and like Ed said, the key here is to just be very gentlemanly or gentle, womanly, about the whole thing. Just be gracious. There is no pounding of fists or threatening. It's just like, hey, man, can you guys help me out? And that works really well. As we wrap up, what's the single best a word that you can recall right off the top of your head for your, your client that you got, that shouldn't have gotten out of work. And what I mean like not somebody who was kid was homeless and the parents were into jail, but like someone who
Ed 58:17
I can, the first one that popped into my head was a client that own three rental properties, their primary residence, made $170,000 A year and picked up $48,000 in free money in scholarships from MIT. I thought that was pretty good. That's good work if you can get it.
Ron Caruthers 58:38
Yeah, I had a mom. In the classes I teach her bring her up every time she lives down in Del Mar. If you guys know San Diego del bar, you know, it's like the the nice area that the wealthy area are one of them in San Diego. And we set the planning that we did she had three kids. The planning that we did was worth about $520,000. I can't remember the anything beyond that was $520,000 of just cash received at Boston University wash University of St. Louis and Westland, where her kids went. And she's got a million dollar condo up here. She's got a couple million dollar house down. They're just they made six figures, but it was the planning that we legitimately qualified for each of her kids for over $40,000 A year of free money. And that Lakers Doctor back reminded me that there are no loan schools. In my case, I don't know if you're referring to me or Ed Lakers, but Miley was 43,000 issue here your person was 48,000 a year, per year most grand for your numbers. And then there are schools that again, that don't believe in loans. But remember, even if they say that, they're like, well You don't need lunch, but we feel you can pay this based on our research. So you still want to do the planning. So I am going to wrap this up, Ed, thank you so much for jumping on. And we'll get you back because the one thing I saw said to have you back. And what we'll do next time is chat more around the other stuff that goes around it. How do you select a career? How do you select these schools besides money in the first place? What are things you can do? What do you do after you go to college? How do you pay for your share that's leftover? We'll jump into all those things. And then don't forget to tune in here every week. Fridays at 8am. Pacific. The make more keyboard show. We will dominate will be office crews and back next week. We'll get Ed back soon. And if you guys have questions about college planning, jump into the disservice HQ, DMS, abuse him use his knowledge, you know, 19 years and sow I mean, between us we've we've probably I mean we've helped 10,000 families, you know, personally like overstaying their foster reviewed, and I've done that math. And a lot of times a lot of the accountants don't know this because one of the other businesses that we have is actually teaching CPAs and enrolled agents how the college rules are different than the tax rules. So a lot of times they cross each other. So again, don't assume that they know it will be my final words. And yes, the lives are recorded. And this one will be posted here. And then it's also on make more keep more show.com and I believe it's on we're on Apple and Spotify and all those sorts of things.
Ed 1:01:47
And once again, Tronic thing coming on, because I was half asleep this morning when we started if you guys kept seeing me look up at the screen, I wanted to get this number right so I just looked up the latest numbers on financial aid. It looks like the number has dropped. It's at about $187 billion. Oh, that's all
Ron Caruthers 1:02:07
well Okay, nevermind, you never bet it everybody everybody go home.
Ed 1:02:14
And a big chunk of it doesn't get used because the all the reasons we talked about so freakin ridiculous. freaking ridiculous. So,
Ron Caruthers 1:02:23
alright guys. We'll see you next week. And thanks again for jumping on go get it. Be at the airport. I'll see you guys later. All right. Take care. Take care.
Transcribed by https://otter.ai
