The February 2011 Newlsetter from LEXOR College Funding. Tips and strategies on how to pay for your student's advanced education.

1. College Keystones—A College Planning Relief Publication
Feb rua ry 201 1
“The Gap”
If January was the month for FAFSA, then February should be considered the month of “The Gap”.
Shortly after the FAFSA is filed, families will receive their Student Aid Report (SAR). The SAR is a summary
of your FAFSA and is used in comparison with your actual data (tax form, etc.) to see if any updates to your FAFSA are
needed.
The difference between what you think you can afford and the cost of attendance at the schools you are
considering is what we call “The Gap”. The difference could be significant and almost always more than families
imagine. While understanding the reasons behind the difference is important, the real issue is how to reduce or
eliminate “The Gap” without crippling your current lifestyle or sacrificing other financial goals, such as retirement.
Before we delve into those important issues, hopefully, you have already filed your FAFSA! If you have yet to
do so, we cannot stress enough the urgency to get this done. Start with a list of between 6-10 schools where you want
the FAFSA sent, even if you have not yet applied to that particular college or university. Now on to “The Gap” and
the reasons behind the difference…
Many of the calculations used often go against sound financial planning. For instance, many of these
computations assume your retirement contributions to 401(k)s, IRAs and other types of qualified plans are optional.
The assumption is that you can instead redirect those payments from retirement saving vehicles instead to pay for your
student’s college education. Much of your debt, such as car loans, boat loans, and credit card payments, is not taken in
to account on the FAFSA.
To begin bridging “The Gap”, first and foremost a review of the SAR is imperative. If you filed the FAFSA in
January without having completed your taxes (the federal government fully expected you to estimate your numbers on
the early filing), then you need to take your actual financial numbers and compare them with what is listed on the SAR.
Be sure to make any necessary adjustments and corrections to the SAR based upon your actual numbers. By simply
making this review, you could reduce “The Gap” by lowering your EFC. If you happened to overstate your financial
information on your initial FAFSA submission, a lower EFC would increase your aid eligibility.
The five most common errors you should look for in the comparisons are:
1. Make certain you filled out the FASA for the correct school year (it is the FAFSA corresponding to the
upcoming fall school year).
2. Review that the parent information was recorded in the parent section and that the student information was
recorded in the student section.
3. Make certain you correctly listed your assets and specifically ensure you did NOT list retirement accounts as
part of your assets.

2. 4. Did you list the proper income? For example, while the balance in your retirement accounts are not
considered assets, the amount of your contribution in that year has to be added back to your income. This
differs from a tax return and is a common error families make.
5. Finally, make sure you listed 6-10 schools on your form, even if you did not submit an application to that
school. You want to create competition between colleges. By listing private schools or regional colleges that
compete with your preferred college, you encourage a Financial Aid Officer to create a more lucrative
financial aid package.
Once your taxes are completed, it is important to update your SAR with the correct data. Schools are required
to audit three out of every ten FAFSA forms (30%), however some schools audit 100% of all FAFSA forms. This is not
a time to get creative with your financial data. Families need to make corrections whether it is in their best interest or
not.
We are in the business of helping families through the major life transition of sending their children to college.
For many, it will be the most expensive time of their lives and, if not handled properly, could cost them their retirement.
If you or someone you know needs the help and guidance of a trained financial professional, don’t hesitate to contact us
at 423-289-7472. Remember, you shouldn’t have to choose between your child’s college and your retirement!
Scott T. Moffitt is one of the nation’s leading experts in paying for college without jeopardizing retirement. He is the
author of the book, College & Retirement: You Can Do Both! He is the founder of College Planning Relief, a national
training and certification program for financial advisors in short-term college planning. For more information about
Scott or to find one of his certified licensees in your area, please visit www.collegeplanningrelief.com.
LEXOR College Funding
2611 W. Andrew Johnson Hwy, Ste. B
Morristown, TN 37814
423.289.7472
www.lexorcollegefunding.com