All righty, welcome to another edition of College Coffee Talk with your hosts, Pearl and Andy Lockwood from Lockwood College Prep. Hello, Pearl. Hello, Andy. Hello, everybody. Very caffeinated this morning. We are each, again, with our accoutrement. Join us in a synchronized sip of your morning beverage. One, two, three. I'm going to admit something about my cappuccino. Too much cinnamon? No, I said I used almond milk. M-A-L-K. Yes, and I will tell you that I switched out your milk for milk. Oh. Sammy's calling you. Our daughter doesn't respect the fact that we're on the air. We have so many issues to discuss today. So this is a show that's really more about us just jib-jabbing here. It's about helping you navigate the process of getting into college, of paying for college, test prep. why even bother going to college, how to get out of all your student loan debt, which we covered last week, and a whole lot more, particularly your questions. So say good morning to us in the chat. Let us know what questions you have. Just pop them in there. And the topics that we have on tap today are, number one, some feedback from the first ever in the United States digital SAT. Number two, Pearl was working on a little bit of an appeal for a client whose information didn't quite fit neatly in the quote-unquote boxes of the digital FAFSA. And we're also going to be covering some latest, I guess, revelations on what caused this whole mess with the new FAFSA, all the delays and outages and things like that. I didn't, I should have prepped this. There's a question that we had lingering from two weeks ago. Do you remember what it was? it had to do with a Roth IRA, but it was like a special Roth IRA. And we're not financial advisors, right? So normally I would just respond back. So I can't remember who it was, but if you're watching this either live or replayed, I apologize, but this is an answer to your question about special Roth IRA fundings and how does that affect your financial aid eligibility so I'm going to give you the this perspective this answer from us as college finance experts and admissions experts but not tax experts so Broadly speaking, if you are contributing to a Roth IRA, and you mentioned some sort of special Roth, special to me because I never heard of it, then that's always done on an after-tax basis. There's no deduction as opposed to a traditional Roth IRA where you, let's say you make $150,000, you contribute $20,000 to your Roth, you get to deduct that $20,000 that brings your income down. For a Roth IRA, if you make $150,000 and you contribute to any Roth, your income is still $150,000, even if you put away money because it's on after-tax dollars. So the answer to the question is that won't affect anything for financially at all, right? Just to round out that discussion, if you're doing a traditional IRA and you're taking the deduction on your income, does that still get added back or is that one of the new changes? it doesn't get added back for financial aid purposes right it's a change exactly yeah so it's not counting twice well it used to count twice uh I'm sorry it used to prevent you from counting it twice but now I think I think it's encouraged now I think there is no ad back so in other words under the old rules if you made 150 and you contributed 20 your taxable income was 130 But for financial aid purposes, they would bump it back up to 150. I'm pretty sure that they no longer do that so that your new income is actually 130. So there's a benefit to contributing, for financial aid reasons too, to a traditional IRA. We are really on a roll today. Okay. So who's here? Who's in the chat? Say hi. Who's watching? Welcome. We have a lot of watchers. Not too many... Everyone's kind of quiet today. Feel free to pop in your questions that are college-related. All right. Hello to Sergio, to Chris, to three other people watching with us. And yeah, we have a... Oh, here we go. First time on Facebook? Yeah. Ha. Yeah. We're also looking for a new phone, I think. Sure. Her storage is... Limited. Yeah. I'll get on that today. Okay. All right, so feedback from the first digital SAT. So we knew going into it that it was new, that there would be some reactions to it being new. Primarily, it's a shorter test with shorter reading passages. It's kind of a dumbed-down SAT. But the feedback that I heard from clients and read about from various people credible internet source sites is that it seemed really hard to people and especially the math section. So what usually happens is if a test seems easy or hard, it doesn't necessarily reflect in the scores because they are in effect curved. So they're not actually curved. It's not like a test you take in high school where there's a curve, but what the people who make these exams understand and do is is they engage in something that's called score equating. So they know ahead of time the difficulty of the tests and what a good score would be in terms of how many answers are correct and how many are not. One of the weird things, I'm still not completely able to wrap my head around embarrassingly, is that there's something called adaptive scoring, which other tests have. I think the GRE has it. I think other exams you take has adaptive testing. So there's three sections. like in the math, the half of the test, the math part. And if you do really well in the first section, which is pretty easy, then you get harder questions. That doesn't mean your score is going to be worse. But what it does mean is that if you don't do so well on that first easy section, then the next section is going to be easier, but those questions aren't worth as much. So you won't be able to get as high of a score if you don't do well on that first section. It's pretty interesting. And it sounds like you won't also be able to really judge how you've done. If you feel like you've done well, it just depends on the questions that you advanced to or did not advance to. Yeah, I think hypothetically, if you felt the first part, the first section of the questions on the math section was hard, then you probably didn't get a good math score overall because you would have gotten easier questions, which didn't give you as much of an upside to get a score in the 700s or higher. So anyway, we're all feeling our way about this, and our tutor Marissa is on the forefront of all this stuff, and she's got all sorts of secret prep materials, and she's working with kids right now. We have a class going on for the ACT. We've got another one coming up for the SAT. Related to this is that colleges are – starting to walk back their no-test-required policies. So test optional is, I wouldn't say it's dying a slow death, but it looks like it's going to be dying a slow death. So we talked about this before. Revived on the emergency room table. Well, the elite schools and some that are not so elite are requiring tests. And I think it's more than 20%. And coming back to requiring it again, where they had maybe had a year or two where they were not. So that's the trend to pay attention to. Yeah, so overall, there's a little bit more than 20% of colleges will require tests. And the most recent ones were, I think it was Brown and Yale just said we are now requiring tests. And they joined Georgetown and Georgia Tech and numerous other competitive schools. So don't think that don't matter anymore and I think another reason why the sat changed was because they recognized that you know they were losing relevance I think where they were fearful of losing relevance so that's why they made the test shorter and easier uh for for most people for the attention span challenge so it's like an hour shorter than it used to be yeah wow yeah um all right pearl so talk a little bit about the um the appeal that you were sort of teeing up for a client of ours and start with the concept of the base year. I think that is critical to understanding for people who are applying for financial aid. If you have a, let's say a 2025 graduate or a 2026 graduate, let's frame it that way. Okay. So if you have a current junior and therefore they're graduating years, 2025, the financial aid, aid application that you will complete next year will be based on, and all of your numbers will be from the 2023 tax return. This is for next year, 2025 graduates. So it's a two-year look back, essentially, or rather assessment of the income portion of this financial aid formula that doesn't quite square up with what current financial reality may be for any families. So how do you get around that? You can't use a more recent tax return or more recent numbers. You are confined by the two-year-ago tax return. So that's for the 2025 graduating year next year. The 2023 tax return is what you need to use. Well, what happens if your 2023 tax return shows any number of things like you're married and now it's 2025? and you're no longer married. Or in 23, you had a wonderfully paying job, and in 24, you were laid off. But now it's almost 2025, you're filling out financial aid forms. Based on 23, a reality that is no more. What do you do? Okay. So obviously, okay, you appeal it. You appeal it. Great. We want to... A lot of people don't know they can appeal, first of all. Okay, so first of all, let's start with that premise. The... Financial aid eventually. So you file forms. There's going to be back and forth between the school and you. The school is going to continue to require additional information to get a full picture of your financial situation to some extent. And then it will issue a financial aid award to your student if that student gets admitted. Right. Seems like an obvious point. You're not going to get a financial aid package from a school you don't get admitted to. We get those questions too. We do. We do. So now we're at the point in time where you've gotten a financial aid package award that is based on 2023 tax return. And now it's 2025. and that does not bear reality to your current finances, then what do you do? So you want to appeal that financial aid package based on the fact that your current financial reality bears no resemblance to what this award was based on, namely your 2023 tax return. So now you're essentially, you're like a little bit of a lawyer in that you're advocating your position when you're making an appeal and you want to make sure you have your best evidence going because you don't get 20 bites at the apple when you're presenting a case. I used to be a prosecutor. and when I would be presenting a case you you don't get you're gonna present your best arguments all of them and then once the judge hears you and agrees with you you you know you're done you be quiet you don't throw in every other thing from the kitchen sink okay sometimes I feel like you're still a prosecutor uh sometimes I feel like one sometimes anyway um so In order for you to do your best in terms of best evidence, you want to provide the financial aid office in your appeal, not just with a discussion about, okay, this has changed and that has changed. You want to back it up with proof. So if your 2024 tax return shows, tells more of the current story, then you want to get with your accountant, your CPA, and have them file that 2024 tax return ASAP so that along with that appeal, you can attach your, and see my here attached, my 2024 tax return proving this. You don't have to just take my word for it. Here are my taxes that I filed with the IRS. That's a much more compelling argument than if you just write a paragraph saying, you know, my situation's different now. Take my word for it. And I'm on abstention. And I'm on extension and I don't really have anything else to prove it. Or here's the other thing. Financial aid offices like to deal with provable, verifiable facts and what's currently happening. They are not interested in my husband might be retiring next year. And so therefore our income really will drop if we do that. Ifs, mights, future, language. No. Present reality. That's what they want to hear about. Like you were banging the gavel. It's almost like you went from prosecutor to judge in about two minutes. Yeah. So very, very important information to just, you know, and frankly, when you're filling out an appeal form, which many, not all colleges have, Some of them will say attach your proof of loss of income or something like that. And they'll either ask you for a glimpse of your tax return. If you're self-employed, you might have to provide a P&L showing the drop. But you always have to be prepared to back it up. You can't just deal with the hypotheticals. That's an important point. We hear that a lot. You want to make it easy for people. the reader, the financial aid office, the committee that they're going to present your appeal to, to do something about it, to do something for you. One other point on this. With the thought that your appeal is going to be evaluated and looked at in a sea of other appeals. So if you don't have something that compelling to say, just understand how that's going to be taken and viewed when it's going to be read before, during, or before or after a compelling, you know, hey, doesn't have a job anymore, doesn't have a parent anymore, doesn't, you know, just so be careful with your appeals. The context. Context matters. Right. We've had, we've had clients say, I don't really have much money left over after I send my kids to sleep away camp. Right. And we're like, yeah, you know, that's something that in college they call privilege, right? You can't, you can't make that as an argument to a financial aid officer who makes $50,000 a year and never went to sleep away camp. All right. So I see some questions coming in here and some more people. Hello to Amy. Maria. All right. This is client Maria. So I'm going to have you answer this question, Pearl. Maria says, regarding financial aid, my understanding, she's also an attorney. So watch yourself. My understanding was that you didn't have to disclose your primary residence information, I guess the value, but all of the college calculators require it. So are those calculators accurate at all? So all of the calculators do not require it. All of the CSS profile requiring schools will require it because all the schools take the FAFSA, but a subset of all the schools also require an additional form of the CSS profile. On the CSS profile, you are asked about the value of your home, what is owed on it, what you purchased it at. It is not treated, is not penalized to the same extent as a parent asset. However, there is some penalty attributed to the equity you show in your primary residence for CSS profile requiring schools only. FAFSA only schools and on the FAFSA, and even if you're filling out a FAFSA for a school that requires the CSS profile, nowhere, nowhere, nowhere should you put anything about the financial information about your primary residence on your FAFSA. So Ohio State, for example, is a FAFSA-only college, but MIT is a, well, they use their own form, or are they a CSS profile school? They're a CSS profile school, and they may also use their own form. So it really depends on where any of your kids is applying. And by the way, this also just brings up a general concept, also to the appeals discussion before, but also to this, responding, and also to essay prompts, responding in kind. You're going to have a lot of schools out there and a lot of schools require different things from one another. You don't want to just start like assaulting everybody with everything that everyone's asking you because that way it'll just cover your bases. And no, don't do it that way. Well, Maria is a very shrewd, highly trained attorney, so she would not do that. You just want to respond in kind to the question and the contents of the party that's asking them no more, no less. Just the facts. Right. Here's the Joe Friday of college advising. All right, I see a lot more people coming on here. So if you have questions, pop them in. This is your opportunity for free college coaching. God, I hate saying that. So let's talk a little bit about some of the latest and greatest you know, investigations about why the FAFSA caused such a kerfuffle. So just to recap, the FAFSA changed. There was a massive seismic overhaul of the free application for federal student aid. That's the financial aid application that every college uses in the country. And after years of planning and a two-year delay, the Department of Education released the new FAFSA in December. I think it was New Year's Eve. and then had a soft launch, and it was on, it was off, et cetera. But it's caused all sorts of problems. And the upshot that affects everyone who's applying to college this year and hearing back this year is that in a traditional year, housing deposits, where you committed, did all the bed parties and all the other important things that go along with deciding where to go to college, was May 1st. because everything got pushed back and behind the scenes colleges are having all sorts of issues with downloading the new data, that is being pushed back by most colleges. So look for more and more colleges to say, you don't need to give us a deposit by May 1st, it might be May 15th, it might be June, it might even go longer, we'll see. We've been told that the downloaded data from the FAFSA is going to happen this month but they didn't you know no one's saying I'm getting the feeling there's been some backpedaling language again as predicted right yeah some of the easiest predictions we've made uh over the last probably year and repeated them so so what caused it at least so first of all you're dealing with you know huge bureaucratic institutions you know one of the articles that I read I thought was made a very interesting point which was that they changed the formula to update you know um eligibility and all that but they didn't have to also redo all of the software that runs right the programming right but they they it was overdue it's based on cobalt which you know people who program haven't used in in decades and the um most of the systems is all these different systems were from like 50 years ago they hadn't been updated yet so it was it was definitely time to do it but you didn't have to do the formula and the programming at the same time. Yeah, that was a problem. Plus, the department kind of took their eye off the ball with this because they had to deal with COVID and, you know, I won't rehash those, but all these complications. They were trying to get schools open again according to their language. So they couldn't do both. By the way, and this same site is the site that's attached to all of the loan repayment programs that have also been released in the last couple of years. And now you have three years of everyone not paying. And now the payments have restarted. So this is all happening in the same website, same site. Yeah, I mean, there's different programs and, you know, I'm not sure they're technically on the same site, but they overhauled all this stuff at once when they could have rolled it out sort of, you know, in linear fashion as opposed to all at once. They were, you know, bitching and moaning about not having enough funding, of course, you know, from Congress to do this, Congress to their credit, didn't authorize, you know, a blank check, the department had to do all this stuff. it just gets me thinking like if they just privatize it and they outsource it, you know, to a competent IT company, there wouldn't have been any issues because the CSS profile is, which is private, never has these issues. And they've changed it up. Yeah. And they asked for probably, you know, five times as much data. That's true. They do. Yeah. So I would have just hired like someone from the CSS profile, IT department and had them do the best. Now we're getting philosophical. No, I'm not. That's not philosophical. I'm just saying like in general, you know, for some reason the department hasn't asked me what I think yet, but if I were in the department of education, it's employees who get paid no matter whether this works or not. Nobody over there. Not even the interns. Not even the per diem people. Nobody's asked me. It's insulting. But had they asked me, that's what I would have suggested. Yeah. So now you all know. Okay. Any other questions before we wrap up? Pearl Chisner is watching. Pearl Chisner Lockwood. Yes, she is. Okay. Usmar. What happens if one parent refuses to submit the CSS profile and divorce and my son doesn't have a relationship with his father? Our court order does require a small amount of child support, but my son hasn't had any contact since 2020. Father's refusing to share tax returns with us. That is very common. And Pearl Chisner Lockwood has a lot to say on that. I do. Okay. So take a breath. Don't worry. Don't worry. You can't get blood from the stone. You can't. The school can't. And if this person is unwilling, that's it. Stop there. Don't even try to ask for it, beg for it, whatever. What will end up happening, what you should do for the schools that require the CSS profile and are looking for the noncustodial parents' information, you should complete the non-custodial parent waiver. It's searchable. Look up college board non-custodial parent waiver form for 24-25 if you're for this year. And in that form, it is just based on your circumstances, you would be able to explain no contact or how long it's been or infrequent contact. You want to establish that. He's unwilling. He has said so. He's not going to participate. Whatever the case is that supports lack of participation, lack of contact, you're going to put in this waiver, accompany it with a letter, and it says this in the instructions, from any third party that is aware that there's this level of contact or lack of a level of contact and participation, be it a clergy, a guidance counselor, a teacher, a lawyer, an accountant, anybody. Those two things should get uploaded. And then at that point, even if a school says, well, it's not good enough and we're not waiving this requirement. So dramatic. What can you do? Still nothing because you can't get blood from a stone. So therefore, you let it be. And that school, I promise you, if your student gets admitted to that school, is going to figure out and provide you a financial aid package based on the information it has. So don't sweat it. Yep. It's always a deadbeat dad, and this happens so much. It's not funny. We see this, I don't know, half a dozen to a dozen times a year easily. But don't feel vulnerable, too. He has something that you need. Yeah. Good point. Maria says, thanks for all the compliments. I think Pearl has me beat. You know, it's not a competition, Maria. We can both be great lawyers. Well, Pearl's very competitive. Not about that kind of stuff. No. Just like my golf game. Oh, my God. Let's not even go there, but yesterday. Julia McFadden, did I miss updates on the new, yeah, we talked about that earlier, so you can watch that on replay. And hello to Christine Picano, our associate. Extraordinary executive assistant. Candida, are you able to negotiate slash leverage an offer you receive from one college to another? You are able to. It helps if the two colleges compete with each other, that they're basically on the same tier or there's some other sort of baked in competitiveness, like they're in the same conference or something. But if one school is significantly harder to get into than the other one, for example, you're probably not going to have much luck on that. But that is definitely one of my favorite ways to negotiate offers. All right, Janine. I heard kids who took the digital SAT this past Saturday couldn't submit their test. How awful. Yeah, I can't verify that. I think there were some kids who couldn't figure out how to submit it. I have a hunch that the data is in there and they were submitted ultimately, but that's just more stress that you don't need. Back when we were in the pandemic, what would happen, I think, was even worse, where kids would drive two hours from New York City to somewhere in Jersey, show up at the test center, and then find out the test center was closed, and they never told anyone. I don't know what's worse, actually. Maybe taking it and not being able to submit it is worse. Awful. That's just not great. Bruce, can you get aid if you are laid off, but you own a home and have a large retirement account? The short answer is income is the most important thing. Right. Retirement accounts do not factor at all. But if you have required retirement income, distribution income that's hitting your tax return, potentially putting you in a place where you may not be need eligible, that's where it could impact. But just having the assets in retirement is not going to hurt you. Yeah, you have a very good argument that you will qualify for aid because if you had a huge drop in income and let's say you have no other severance income or something like that, depending on how you look in the formulas, you have probably a formulaic argument and a non-formulaic argument. which is that, look, even if I wanted to take equity out of my house, no bank's going to approve me without income. There's usually a handful of others, like a cluster of adjacent arguments that go along with, I currently don't have income. So that might be one of them, and that might be the silver lining in a tough time, I'm sure. All right, I think I saw one last comment coming in, then we're going to wrap up here. Okay, this one's from Pearl, from Maria Tina Petty. If you have a rental property and it's on It's in a company, in an LLC. Do you have to disclose that? Yes, you do. All right, thank you. Have a good week. All right, what do you mean? Okay, so I'll try to be brief. If it's in an LLC, on the FAFSA, yes, of course, to all these answers on the CSS profile, but specifically, I'm guessing that you're asking me about the FAFSA. Well, cover both. Right. On the FAFSA now, the value... of your business value netted against the debts of your business is reported now as a separate line item in the asset section of the FAFSA, okay? So you're gonna give three numbers in terms of your assets on the FAFSA. The first is a total of the parent cash checking and savings, that's one. The second is a total of the parent's non-retirement investments, and then the third is the net value of the parent's business so that's brand new and while it is a number that gets figured in whatever in your so in your case the llc that has the asset this property whatever the net value of that property is, and maybe you're upside down, in which case you've done through a zero, but if you have some value there, whatever that value is, and that's the only asset of that business, then that net value would be put on that third line net business value. What I can share with you though, thankfully, is there is a different seeming lower value penalty that is attributed to that business value on the FAFSA. It is not treated the same as the two top figures, not like a regular parent asset. It's treated differently than the parent's personal asset is right. But it is now given some penalty, but not as much. So to answer your question, if this investment property is in an LLC, that's how it's treated. If it was not in an LLC, just to round out this discussion, you had an investment property that you own personally. Do you hear the Oscar music playing? And the net value of that piece of property would get added to the parent's non-retirement investments. And it would be treated with that same 5.64% penalty. I was trying to play Oscar music when the acceptance speeches go on too long. Oh, yeah. Oh, my God, that was the cane. I'm so sorry. No, that was a very good explanation. All right, so we are done for this week. Join us. Any questions that came in after last call and under the gun, we will answer them in the comments section. Please join us next week, 10 o'clock Eastern, Mondays, 10 to 1030 for College Coffee Talk. Thank you very much for joining us. Nice, nice, fulsome answer today. Congratulations on your Oscar nomination and award for best college advising show on Facebook. On Facebook, yeah. All right. Take care, guys. Bye.
