THOUSANDS MISSINGOUTON COLLEGEGRANTS, STUDY FINDS

BY ANN CARRNS

Hundreds of thousands of studentsare missing outon free college aidbecausetheyare not completing a peskyfederal form knownasthe FAFSA, a new analysis finds.

Roughly 1.7 millionhighschool graduates didn’t filetheFree Applicationfor Federal Student Aidinthe2020-21 school year. And justunderhalf of them— about 813,000students were eligibleforfederalPellGrants aimedatlow-incomestudents, according to a report bythe NationalCollege Attainment Network,a nonprofit group that works onbehalfoflow-income andminority students.The average grant,which doesn’tneed to be repaid, wouldhave beenalmost $4,500.

All told,thehighschoolclass of2021 left anestimated$3.7 billionin available PellGrants unclaimedbyfailing to file the form,thenetwork found.Itsaid that thenumberofstudents filing the FAFSAhad droppedduring thepandemic.

The FAFSA istheportal to most typesof financialaidfor college studentsandmustbe filed annually. Thefederal government uses theform to determine whetherstudentsqualifyfor financialaid,includingPell Grants (Manystatesand colleges award their own aidbased onthe FAFSAas well.)Schools with high concentrationsoflowincomestudents andstudentsof color consistentlyhave lower FAFSA completionrates, the network said. Studentswho complete the

FAFSAare much more likely to attend college than thosewho don’t,soit’s frustratingthatthe number ofstudents filingthe FAFSAhasfallen,saidKimCook, thenetwork’s CEO.

Whendistrictsswitched to virtualclassesinthe2020-21 school year to avoidspreading COVID-19, manyschools weren’t able to holdtraditionalhelpsessions to guidestudents andfamiliesin completingtheform. Just overhalf(53 percent)ofstudents intheclassof2021 completeda FAFSAbythesummer, down fromabout 56 percentin2020 the network estimated.Schoolswith concentrations oflow-income students andstudentsof color saw greaterdeclines.

“Theclass of 2021 was disconnected fromsupport,”Cooksaid. “Somestudentsdon’t even know there isfederalstudentaid available.”

Other research has raised concernaboutthe FAFSAas well. Asurvey last yearbyEAB, an education consulting firm,found thatlow-incomeand first-generationstudents were farmore likely to report difficulty filling outthe form and in gettinghelp gatheringtaxdocumentsandother necessary information.Students often don’t fillouttheformbecause theythinkthey won’t qualifyforaid,saidBrett Schraeder, managingdirectorof financialaid optimizationatEAB.

Thefederal government recentlyapprovedlegislation to reducethenumberofquestions on the FAFSA andotherwise simplifytheform,butthe changes aren’tscheduled to take full effect untilthe2024-25school year.

Some states,including Louisiana,have made filing the FAFSA agraduation requirementfor highschoolstudents to helplift completionrates Cook’s network isencouraging schooldistricts to usesome of the fundsthey receive fromthefederalpandemic reliefprogram to expandsupport forpost-high schoolpreparation including FAFSA completion assistance. Here are somequestionsand answersaboutthe FAFSA and student aid:

Howmuchaidcould

I getfroma PellGrant?

Themaximum grantissetby Congressandis currently$6,495. Not alleligiblestudents get the fullamount;that dependson financial details reported inthe FAFSAandotherfactors,like the costoftheschooltheyare attending.Legislationpending inCongress woulddoublethemaximum amount and expand eligibility for the grants butitsoutcomeis uncertain.

WherecanI gethelp completingthe FAFSA?

Mostschoolsare back to inperson learning,and counselors should bemore available,although manyhave heavy workloads, Cook said.“Reach out and ask a counselor,”shesaid.

Some schoolsare working with community groups to bolster college preparationforstudents.

OneGoal, a nonprofit groupwith programsinIllinoisandseveral otherstates, works withschools to helpthem expandin-school instruction forstudents onposthighschoolplanning.Classes, taughtbyschool staffwithsupport fromOneGoal coaches, typicallyinclude helpwith FAFSApreparation.

SchraederwithEABsaidthe FederalStudentAidofficehas helpfulinformation onits website,including a YouTube channel withvideosthat walk you through theprocess.

WhenshouldI filethe FAFSA?

Each year,a new FAFSAbecomes availableOct. 1 for the following academic yearandmay be fileduntil June 30 after the applicableschool yearends.(The formforthe2022-23 school year, forinstance, openedOct. 1, 2021, andcanbe fileduntil June 30, 2023.)

It’s alwaysbest to filetheform assoonaspossibleafter it becomes available.Somestatesset earlierpriority deadlinesfor allottingtheir own aidandscholarships to students,so filing early increases your chancesofmaximizingaid.

Butwhenit comes to Pell Grants,Schraedersaid,students can fileatanytime Studentsoften assumethatif theymissed a state’s priority deadline,it’s not worth the bother

Butthat’s notthecasewith PellGrants,if you qualify You can filethe FAFSA forthe currentacademic yearuntilthe end of June.

If you haven’t filedforthe currentschool year hesaid, you maybedepriving yourself of cash assistance.“It’s stillnot too late forthis year,”Schraedersaid.

Carrnswrites for TheNew York Times.

Themaindifferenceisthatliving trusts avoid probate,the court processthatotherwisefollows death.

Livingtrustsare considered revocable,which meansthecreatorscanmake changesduring their lifetimes. At some point, though,thetrustusuallybecomes irrevocable,which means changes nolongercanbemade.

If a singlepersonmakes a living trust,thenthetrust wouldbecome irrevocable whenthatpersondies. With a married couple,part ofthe trustoften becomes irrevocable when the first spousedies with the restbecoming irrevocableat thesecondspouse’s death. Sucha setup allows you to bequeathmoneyandpropertyto yourkidsif you’re the first to die, ratherthanhoping yoursurviving spouse andpotentially your survivingspouse’s future spouse —willdosolater.

Dear Liz: Mywifediedin March 2020.I receive nothing fromher SocialSecurity (otherthan$255) andwill receive only a portionof minedue to thewindfalleliminationprovision.Isthere anythingI candosince I am receivingnoneof whatshepaidinto SocialSecurity andonly a fractionofmine?

Answer: In a word, no If you’re receiving a pension from a job that didn’tpayinto SocialSecurity, the governmentpensionoffset reducesanySocialSecurity survivor orspousalbenefitby two-thirds of the amount of yourpension.If two-thirdsoftheamountof your pension is greaterthan yoursurvivorbenefit, you don’t geta survivor benefit.

Isthatanoutrage? Perhaps if you thinkthatSocialSecurity should actlikea retirementaccount.In reality, it’s insurance. (The formalnameforSocialSecurity isOldAge,Survivorsand Disability Insurance.)

With a retirementaccount, what you take outusuallybears some relationship to what you put in. Withinsurance,that’s not necessarilythecase. You maytake outmore than you putin,less or nothingatall.

ManypeoplepaySocialSecurity taxesfordecadesbutultimately get more from a spousal orsurvivorbenefitthan from their own workrecord Thenthere are those, like you,whohave their retirement benefit reduced,ora survivor benefit eliminated,because they have a generouspension froma government job that didn’tpay into theSocialSecurity system.In these cases,itcanfeellike the SocialSecurity taxespaid the “premiums,”if you will have been wasted even if financially you’vecomeoutahead.

Taxesaftermortgagepayoff

Dear Liz: In a recent column, you answered a question froma couplewho justpaidofftheir mortgage. You suggestedincreasing retirementoremergencysavings orpossibly charitable contributions.All good, but you should have pointed outthatthemortgage lenderwillnotbe responsible forpaying theproperty taxand fire insurance goingforward.I wouldsuggestthe coupleopena separate accountandbuildupa fund to paythose expensesorthey couldbefacing financialhardship whenthetaxandinsurancebills come.

Answer: Goodpoint. Many homeownersare accustomed to payingtheirhomeowners insuranceandproperty taxesthrough escrow accountssetupbytheir mortgage lenders.Oncetheloanis paidoff,these billsbecomethe homeowners’ responsibility to pay. Westonisacertified financialplanner. Questionsmaybesent to her at 3940Laurel Canyon,No. 238, StudioCity, CA 91604,or by usingthe“Contact” form at asklizweston.com.

The opportunity to make moneywhile we sleepisonefew of us would turndown.Andpassive income,atfacevalue,suggests we cando justthat.

Social mediais chock-fullof influencers tellingushow to make passive income.Andwhile manyof those contentcreatorsdoactually earnmoney even whenthey’re not ontheclock,fewer ofthemare forthcomingaboutthe workrequired toget there.

“A lotof peopleare surprisedby how much work ittakesbecauseI think a lot ofpeoplewhoare earning a passive incomeare talking abouthow greatitishavingearned that,”saysPatFlynn, a Californiabasedentrepreneurandcreatorof the“Smart Passive Income”podcast.“Buttheydon’tnecessarily tell you thewholetruth. You’re seeingthetipof theiceberg.”

“Passive”income inmost cases, won’t becreatedpassively. Whatever thepursuit investing instocks to receive dividends, buying rentalproperties,earning ad revenue on video channels— you’llhave to put in work upfront before you canstart makingmoneywhiledoinglittle, or no, work. Andinmanycases, you’llhave to keep doing work to maintainthat income, too.

Passive incomehasnoset definition: Whendoes a job orside hustle turninto passive income? Thatdependsonhow you defineit. There isnoclear-cutpoint where income turnspassive. For some,it couldbewhenno work or upkeep is required,orforothers,it couldbewhen a minimalamount of work each weekis required.And “minimal work” isalsosubjective.

“Passive income,forme,is reallysomethingthat you have to work to setup,butafter that,it takes very minimal work to maintainand tokeep that income stream coming,”says Joseph Hogue, a chartered financial analystandcreatorofthe YouTube channelLet’s Talk Money Othersourcesofpassive incomeinclude investinginbondsor peer-to-peerlending generating ad revenue from a blog,orputting yourmoneyin a high-yieldsavings account.Eventhemoneyanartist makesthrough playsoftheirsongs on a streamingplatform canqualifyaspassive income. If you wantpassive income,be ready to work: Contrary to what thephrasepassive incomesuggests you need to putin work in order to attain it. Investingmoney you inherited or won in a lottery maybetheonly path to trulypassive income,start to finish.Butformostof us,creatingthisnew revenuestreamwill involve investingmoneymade from more traditionalmeanslikea job,or investingourtimebuilding a source ofincome fromthe groundup.

Without a large initial financial investment,peopleoften underestimate the“sweatequity or timeandenergy requiredatthe beginning,says Jannese TorresRodriguez, a Florida-basedentrepreneurandcreatorofthe “Yo Quiero Dinero”podcast

“Thatinitial workload,that timeit’s going to take toget toa placewhere it’s passive,iswhat freaksa lotofpeople out and makesthemthink that,‘Oh, well, thisis obviously a scam becauseI just want to make moneyquickly,’” says Torres-Rodriguez.

For both Torres-Rodriguezand Flynn,it tookatleast a yearbefore theysaw earnings fromsome of their currentsourcesofpassive income.Bothsaidthatit took consistent work during thatperiodbefore theystarted seeing money come from theirblogs, including from affiliate marketing, ad revenueandselling courses, amongother sources. Theamountof work upfront candependontheincomestream andwhat you want toget outofit. For instance,if you’re making income from rental properties, you canhirea personor a company to take care ofalltheproperty management.That’lltake away from yourearnings,butputtingin your own timewillmake theincome more active thanpassive.

If you’re looking to make passive income, keep inmindit’s not guaranteed downthe road even if you doputinthe work There’s nopromise yourinvestment, whetherthat’s timeormoney, will payoff.Inevitably, there isrisk involved.

Seeingotherpeoples’successes,orhearingaboutthem,can trigger thatfear of missing out on agoodthing.Butbefore you try to emulate them, considerthe journey It’s not unattainable,butit won’t happen overnight. Beresfordwrites forNerdWallet.

Providing financial solutions for investors

THE FOOL’S TAKE Room for Zoom?

Zoom VideoCommunications’(Nasdaq:ZM)stock soaredasthepandemictookhold,withmillionsofpeople usingitssoftwareforvideocalls.Itsshares were recently downmorethan75percentfromtheirall-timehigh,though, dueto a slowinggrowthrateandtheworrythatZoomwill fadeoncethepandemicwindsdown.Butthismaybea greattimetosnapupsharesat a relativelylowprice— becausethere’sstill a lot tolikeaboutZoom.

Meanwhile,besidesitsflagshipZoomMeetingstechnology,ZoomhasZoomPhoneandZoomRooms which arguablyhavegreaterlong-termgrowthpotential.They shoulddowellevenasworkersreturntotheoffice,because ZoomPhoneupdates a company’sinternalphoneinfrastructurewhileZoomRoomsmodernizesconferencerooms.

Risk-tolerantlong-terminvestorsshouldtake a closer lookatZoom (TheMotleyFoolownsshares ofandhas recommendedZoomVideoCommunications.)

FOOL’S SCHOOL

Theshortstory

Here’s a differentwaytomakemoneyinstocks:byshorting,whichinvolvesreversing thetypical“buy-low,sell-high” order.

Later,ifthestock doesfallinvalue you’ll“cover”your shortbybuyingshares ontheopenmarketatthenow-lower price,toreplacetheonesthatyouborrowed.Ifyoushort Scruffy’sat$120andcoverwhenithits$90,you’llmake$30 pershare(lessanycommissions).

Shortingcanbeprofitableifyoucorrectlyidentifystocks thatwillfall.Iftheoverallmarkettanks,yourshortpositions willlikelymakeyoumoney,andevenin a boomingmarket, therewillbecompaniesintroublethatshrinkinvalue.

Buttherisksinshorting aresignificant:If,insteadoffalling,Scruffy’ssharesroseto$150,andyoucoveredyourshort then,you’dhavelost$30pershare(lessanycommissions).

Andconsiderthis:Ifyouinvestin a stock expectingitto riseanditfallstozero,you’lllose 100percent of yourmoney —butnomore.A shortedstock,though,could keep rising; itmightdoubleortripleinvalue.Ifyouhangonthroughall that,yourlosscouldbe200percent,300percent or even more thelossistheoreticallyunlimited.