Hello, everyone. Thank you so much for joining me on “This needs to be said.” Today our friend, attorney, Christine Kingston is joining us and I’m super excited about this because Christine and I got down and dirty with this and pulling out what needs to be said and exposing the elephants in the room. And while you’ve heard Christine on the show before talking about bankruptcy and the last time that she and I were talking together, we were talking about, her book, how to obtain your student loan dragon. And so now we’re getting ready to get into the guts of the dragon. I’d like to say it that way and we’re good. And we’re going to help you navigate any financial school stuff. Cause it’s not about bankruptcy. I discovered with Christine that she wasn’t just passionate about bankruptcy, but early on in our time together, she talked a lot about student loan debt and so I am super excited that the book is done. And now the book is our textbook and we’re getting ready to lead you on some discussion, especially right now, because it’s time the early period for filling out the student, FASFA for yourself or for your students. So I’m a welcome Christine on, into the conversation. You get your pen and paper out classes in session. Welcome back. Yes.
Katherine so great to talk to you again. I just enjoy our energy and the information that we’re going to share for everybody, on these topics and traveling through my book as a textbook is amazing how you came up with that idea, because it’s useful information and they can have that book on hand for the entire time they’re in college, pre-planning all the way through to graduation because it really gives them tips all the way through as, as we can see from, the, the review of the material that I put out there for everyone. I love it.
So we’re going to get started with, with pre-planning and getting your college students to look poor on paper, a K a the poor on paper program and, and me and Christine were talking, but this is the PPP program you want to be a part of. So that’s
Exactly! This is a new PPP called pour on paper program and I, the idea is, and I do tell that to people when I’m talking to prospective clients, because it’s important for college, prospective college students. So those of you that haven’t even started college yet, you’re going to fill out something called a free application for federal student aid called a FAFSA, hard to pronounce. And don’t say that five times fast. So the FASFA is the form that the colleges will use to determine what eligible for. And it’s based on a lot of different factors. It’s based on how much money the students themselves make. It’s also determined what their parents make under certain circumstances. They have to disclose the parental income and what that determines is the eligibility for financial aid, okay Whether they’re eligible for grants or scholarships or student loans and what the expected family contribution called EFC, which means to me on this FAFSA application is they’re looking for someone else to pay the bill before they give anybody free money.
And they’re looking for an expended, which is weird because this is where the parents get the idea that they have to pay for their kid’s college based on an expended expected family contribution. And I remember we talked about this before, when I went to college and how my parents were claiming me on their income taxes. And once they stopped claiming me, it took a few years before I got a grant or free money, if you will because I look, I might be poor on paper. Let’s say you’re a young kid. You’re getting ready to turn 18, 19, you’re going to college and you’re not making that minimum wage, but your parents are making a lot of money that will affect your ability to get those scholarships, grants and free money and even student loans, they might limit that based on the family expected family contribution.
Now, how do you bypass that That’s something that I read the FAFSA the other day in preparation for this, because I was thinking about how do you look for on paper Well, number one, stop cleaning your kids is dependence on your income taxes. That’s going to hurt. You’re going to pay more taxes because now you don’t have a dependent, but now you’re freeing your child to go to college. A little bit to free them up to not have to fill out the parent form of the FAFSA. However, what I also saw when I was reading the FAFSA, which it doesn’t make sense to me now on that with that bit of advice is I think if you’re over 23, age 23, your parents don’t have to fill it out if you’re emancipated. So it’s like part three of the program. You have to be 23 years old to get your parents off the FAFSA, which might’ve been my issue.
And then, your parents are deceased if you’re in foster care if you’re emancipated, if you’re currently acting, in the military in active service, or if you’re a veteran. So there are some factors there that will qualify you to not have to disclose your parental income, which is fascinating. So sometimes if they want to bypass mom and dad, they can wait until they’re 23 and go to college but it’s for the young kids between 18 and 23, where they have to fill out the parent form. So if they’re able to answer, yeah, go ahead. Well, let’s ask you this.
So is there a way under 23 that they can be an independent student
Yes, if they’re emancipated from their parents.
If they’re in those categories. Okay. Well then that explains what I ran into. Some insert, a little bit of my journey of going to school and actually my mom, she, she’s not going to help you do anything. So that, that was that’s what was set. So if I was going to go to school, I couldn’t get her tax information because she wasn’t going to give it to me. And I wasn’t on, I wasn’t emancipated from her and she still kept me on her taxes. I believe I’m not a hundred percent sure now because this is a long ago, but what I really remember is going to financial aid and they said we need your parents’ information. So she must’ve still been carrying me as a dependent, but by the time I went to college, I had two kids. So that meant she was carrying and me and my children on her taxes.
And that, you know most parents get the benefit of the dependent, right. So they’ll get the child tax credits when they claim you as a dependent, but that also ties you to your parents’ financial income, which then has an impact on the FASFA.
So would you suggest that when they graduated high school did that the last time I carried them on my taxes
Yeah. It’s not stop- when they turn 18. You know, and then if you’re, you know, if they’re doing any pre-planning, if they know they’re going to go to college and mom and dad don’t have the money to put them through college, the best gift they can give their child is to stop claiming them as quickly as possible on their tax returns. And it just, again, I think part of that is the parental relationship and whether or not you’ve got, you know, parents that are supportive or parents that are just wanting the money and who cares about the kids. You know, it’s interesting. It’s a mixed bag depending upon the parental relationship with the kid that wants to go to college but I think for the most part, parents are of the belief and feel that they have a moral obligation to pay for their kid’s college.
Right, and that’s part of what’s in my book is that they’re willing to do it at any cost, including going on the debt themselves. And that’s the problem that I see. And I think these colleges are forcing the parents to go on the loan. Obviously they want as many people to sign on these loans as possible and I see that happen a lot these days where, well, they told me I could have this much, but if my parents took a loan, I could have depressed because interesting. Right so the parents, they submit the FASFA, the parents don’t have that much money, and yet they’re willing to give out the loans, and no grants or scholarships to these kids but they’re more than happy to co-sign on private student loans or force parents to take out a parent plus loan just to provide for these kids.
You know and so it’s, it’s difficult. This FAFSA form is really hard to navigate and, you know, it’s just in, it’s requiring everybody’s personal identification, information, perinatal income, and then that’s going to determine their expected family contribution. And so they expect parents to provide for their kid’s college. Well, how was that You know, but then again, I think, you know, this is probably something that they’re trying to not allow the rich people to use the same system, you know, for the, for the wealthy to bypass it and get free money. So I think that’s really what the system’s designed for, but I think what it does is it snares all the middle-class and sometimes a little bit of the lower class, you know, in this same situation, by forcing them to go onto debt when they don’t have the liquid cash or the assets to support it. So it’s kind of sad when they, when they forced the parents to go into debt for this as well. You know, cause that’s not expected family contribution, that’s debt. There’s a distinction.
I understand that may, and that may have been what my mom was thinking. She’s not going into debt and it didn’t matter what the good reason was or what the reason was. She’s not going into debt because maybe she has the same belief that it’s the parents’ responsibility. And maybe she, I don’t even know what she was thinking because when you and I were planning for this, I told you she, years later, when my son went to college, she was like; you need to fill out the paperwork for him to go to school. And I was like; make him do what you had me do. And it’s, it sounds, it sounded real crummy when my mom did it, but that was years and years later for both instances. And I meet Christine and she was pretty much like, you know, that actually was a good thing.
And I’ve gone on to get a master’s degree on my own and whatever that I accumulated as mine. And I didn’t know Christine, so I could, preplan and everything. But, I did experience being an independent student. And if you don’t have that space between being a dependent on your parents and contacts and you being just on your own, on your own income tax form, for your proof of income, it is going to take you wanting to fight. You’re going to have to really want it. And I did. So people finally took the paperwork on me without my mom on there. I had to write a statement or something like that, but they didn’t just give it to me. So I’m, I’m cheering on for this book. I have them for years. And the more we’re talking about each step pre-planning this is something to think about.
So if you’ve got a rising senior or if you have a rising junior is even more time for you to plan, when will be the cutoff for you, for your students. And usually, in junior higher highs, I mean, not during high, but when you’re a junior or senior in high school, you’re working a little part-time job anyway. So at some point you’ll be able to file your own income tax. So I think that it’s not a terrible thing. It, it just, it was presented to me as a terrible thing, but it’s not a terrible thing for your student to be independent. And in fact, when we turn 18, when my kids turned 18, you know, I gave them the birth certificate in their social security card. Cause mom is not going to keep up with this anymore for you. You’re now a man and you can do it.
So for me, Christine, this would be where all of my kids have you had to it out, but this would have been a Rite of passage to say, I’m freeing you up to really be that man, or really be that, that adult woman, because taxes is part of that. And not in a negative way, that’s, that’s another conversation, but the trauma that some people feel when it comes to taxes, but, what you’re talking about, yes, we lose that dependent credit but it was going to happen anyway. so we, we, as in, should be in preparation of what does that new normal going to look like for our finances and a great time to have the financial talk with your students, because this is at the beginning, especially when they’re going to shove credit cards in their hands, as soon as they go to go to college.
So Inside the cafe at the on-campus this credit card recruiters right there,
That’s right. That’s right. So this is, I mean, it’s a lot, just a lot in what we were talking about, planning and all the stuff that’s rushing back into my mind, that I experienced when I was going to school and as well for yourself so yeah, planning, it’s serious, even if you don’t have the money to take your students to school on your own there is a way for them to go. And I said to Christine, there should be more poor families with students going to college.
That’s exactly right. There should be more, poor families going to college and there should be a lot less claiming of dependence, Right? And so, you know, the, as soon as you know, and we can even plan this from when they’re children, because you know, the other thing, there’s two things I want to touch on as well before we, you know, maybe even move on to the next part. But what’s important in planning for college is number one, at least a year before you want to.