Kiplinger's staff writer and higher education guru Kaitlin Pitsker explains how parents and students can choose the best school that fits their financial needs. Hosts Ryan Ermey and Sandy Block also discuss how to reclaim forgotten money, as well as the ins and outs of credit freezes.
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A full transcript of the podcast follows:
Ryan: How much does college cost these days? The short answer is a lot, but really it depends on where you go, who you ask, and what kind of aid schools offer. Kiplinger staff writer Kaitlin Pitsker joins us to help you understand the cost of higher education in our main segment. On today's show, Sandy and I tell you how to track down money you may have misplaced, and Sandy explains why it might be a good idea to freeze your credit. That's all ahead on this episode of Your Money's Worth. Stick around.
Ryan: Welcome to Your Money's Worth. I'm Kiplinger staff writer Ryan Ermey joined as always by my partner in crime senior editor, Sandy Block. Sandy, how are you?
Sandy: I'm doing great, Ryan.
Ryan: So today to kick off the show, we're talking about something that everyone likes, which is free money. I mean obviously we know that there's really no such thing, but it's that feeling when you put on that ski jacket that you haven't had on since last season, and you look in the pockets and you find like a crisp $20 in there. And it's like one of the best feelings in the world.
Sandy: It's awesome.
Ryan: So that's what we're talking about here, free money. The thing is, it's very possible that you, dear listener, have money out there that you don't know is yours.
Sandy: That's right. Basically, Americans leave literally billions of dollars in inactive accounts, and if you don't access that money within a certain period of time, it reverts to your state. But the state doesn't get to keep it unless it's there for a really, really long time, but you got to go find it. And I think one of the most effective ways to track down this money, and this could be a bank account that you forgot about. I had it happen with some stock dividends from a employee owned stock plan that I was briefly involved in. Go to missingmoney.com. This is not, this is ... It sounds like something you'd hear on a late night commercial, but is totally legitimate. It is run by unclaimed property administrators. You go to missingmoney.com, plug in your information, and it will tell you whether you have money. And every time we write about this, I hear from somebody who found a few hundred dollars, sometimes more.
Ryan: Yeah. So it'll direct you to your state's unclaimed property database. And you know, we're talking payroll and dividend checks that were never cashed, benefits from life insurance policies, distributions from trusts, stock certificates, and stuff from even like safe deposit boxes.
Sandy: That's right. And there's just all this, you know, oftentimes as I said, it might be $50, might be $100, but who cares? You know, this is money that you don't. Now the one warning is sometimes companies will claim that they can go get this money for you for a fee. There's absolutely no reason to pay anybody to go find this money. You can find it yourself. Now missingmoney.com doesn't cover every state, but there's also a website www.unclaimed.org, and that will pick up some of the states that aren't covered by missing money. It may not be as easy to use, but you can look there, too. A couple other things we wanted to mention. Credit Karma has a tool. It doesn't cover every state, but again, it's free. It will look for money for you. If you have savings bonds, they're just just billions of dollars in unclaimed savings bonds out there.
Sandy: Often they're savings bonds that have matured, been sitting in some sock drawer for years, and people have forgotten about it. Now, unfortunately, they're used to be a pretty cool tool called treasury hunt. The Treasury got rid of-
Sandy: I don't know why. Maybe they want to keep the money, but you can still ask treasury to look for you. What you need to do is go to treasury.gov look up form 1048 claim for lost, stolen, or destroyed US savings bonds. And then you fill it out with as much information about yourself as you can and hopefully treasury will be able to find your bond for you.
Ryan: Yeah. You know, I definitely have a couple. I'll probably claim ... Well, I guess I can claim that they're lost because they are lost. I think I've had to move with them a couple times. They're like unlaminated pieces of paper. They're like physical paper bonds. So that's something that you can claim it. It's like my social security card. Like how can they issue social security cards with no laminate. Can't they make them out of plastic now?
Sandy: But you're not supposed to carry that around anyway, Ryan.
Ryan: I don't carry it around, but at some point I probably had to give it somewhere. I probably have to move with it four times. I've lived through all sorts of floods and things like that. Like, I don't know. Is it illegal to get it laminated? Can I get it laminated if I find it?
Sandy: I think you can do whatever you want with it, Ryan.
Ryan: Oh, that's good. I'm sure mine is dissolved in some sort of unspecified liquid by now along with my bonds. So maybe I'll call those destroyed. The last source of money that people may be missing is tax refunds.
Sandy: Tax refunds, that's right. A lot of people don't bother to file tax returns and frankly, the IRS isn't going to come after you if they owe you money and most people do get a refund, but you can go get that money. But you only have three years from the time that you should have filed your tax return. So if you didn't file a tax return in 2016, you have until April 15th, 2019, which is just around the corner to file a tax return and get your refund. And again, the IRS has billions of dollars in unclaimed refunds that people just didn't get around to filing their tax return and never claimed. And why would you leave that money on the table?
Ryan: I mean, yeah, I got a buddy of mine who will remain unnamed at the moment.
Sandy: Is it beast?
Ryan: No, it doesn't have any of the Brett Kavanaugh friend nicknames.
Sandy: No Gordo?
Ryan: This one just has like a normal first name. But, we always give him a hard time because he doesn't file his taxes. But I'm like, dude, it's going to be a ... Like it's a refund that you're going to get. You're going to get a few grand probably like it's worth filing. But he has three years, so he may be foregoing a year at this point.
Sandy: If you're out there, file your taxes. I was talking to some young people on a financial literacy panel the other day, and a lot of young people, maybe they work a summer job and they don't bother to file a tax return because they're pretty sure they don't owe taxes, which is probably true. But what they don't realize is that probably some of their money was withheld for taxes and they can get that money back if they file their tax return. So file your tax return. Get your money.
Ryan: There you have it folks. It's not free money, but it is already your money. So go get it. Coming up, narrowing down the college search just got easier. Our interview with Kaitlin Pitsker is next.
Ryan: And we're back, and we're here with staff writer Kaitlin Pitsker, who is our expert on all things higher ed. And because this time of year is close to spring break, people are going to visit colleges, and very soon people are going to be getting acceptance letters and financial aid letters from colleges. We thought it would be a great time to talk to her about how people can understand the costs of college. So Kaitlin, thanks for coming on.
Kaitlin: Thanks for having me.
Ryan: So I guess a good place to start is how should people go about examining the costs if they say get into or are considering multiple schools?
Kaitlin: That's a great question. It's really important to make sure that you're looking at the full picture here. Schools can be a little inconsistent about how they list expenses that families will pay. They might only list say tuition and room and board but you also need to consider what your student might be spending say on their books and supplies, as well as say transportation to and from campus for school breaks or other events.
Sandy: Kaitlin, a lot of times when people will look at the cost of a particular school, they'll think well I shouldn't, we have no chance of sending anyone to that school because it costs $70,000 a year. But that's not really representative of what with what a lot of people will pay. Right?
Kaitlin: That's right. Sticker shock is definitely a real thing when it comes to college prices. But that price isn't necessarily what your family's going to pay after need based and non need based aid. A non need based aid is also known as merit aid. Often the schools that have those really shocking sticker prices are the ones that do the best job of cutting those prices down to size for families.
Sandy: So you shouldn't rule out a school, a really good school, or a school that your child is really interested in just because the sticker price is so astronomical.
Kaitlin: Absolutely, you don't want to promise your kid the world if you really don't think you're going to be able to, but don't necessarily shy away from those schools either. One great step if you're looking at colleges and you really want to get a better sense before you really get out there and visit schools, is to go to a school's net price calculator. They're posted on the website, and they will ask for some basic information about your student and your family's financial situation. And it can give you a decent idea of what it might actually cost your family to send your student there.
Ryan: So I also know that when it comes to grants and scholarships, what you see may not be what you get either. Right?
Kaitlin: That's right. So the financial aid award that you get one year can vary the next year or even in subsequent years, while you are attending the school. So it's important to look at how the financial aid award has changed for other students. One thing that you can do to do this is visit collegenavigator.gov and look up the schools that your child is considering. And specifically look at the average awards for first year students and compare those with the average awards for all undergraduates. If you see a significant drop there, that's something you're going to want to look at it a little more closely or discuss with the financial aid office. It shows that a school may be awarding a really generous offer for first year students and then less so in subsequent years.
Ryan: So all things to consider if, especially for people who are doing that grand spring break tour, where they go see 21 schools in seven days or whatever it is. But let's say a little bit further down the line, you actually get that acceptance letter. You get the financial aid award letter. I know that this is something that you covered in the April issue of Kiplinger's, coming to a newstand near you. But how should people go about starting to interpret those letters when they come in?
Kaitlin: Those letters can be really confusing, and if your student has been accepted to numerous schools, the letters from different schools can also look incredibly different, which is just going to add to that confusion. So it's really important to sit down with those letters. Look at the full sticker price of attending that school. Again, that's all of the costs that your family would be incurring, and then break that award down into very specific components to make sure that you understand what, which portions of the aid are say grants and scholarships versus loans because some schools can make that a little bit unclear.
Sandy: One thing that I've always found really troubling is that some schools will sort of put together scholarships and grants and loans in one big amount, whereas they're not doing any favors by offering you a loan. Anyone can get a loan, and it seems like that inflates the award and makes college look less expensive than it probably is going to be.
Kaitlin: That's definitely a big problem. And sometimes they're not even labeled as loans. I've seen award letters where it's simply labeled as a specific term followed by the letter L or the letters LN, or just really not very clear if you haven't read several of these before.
Sandy: So that makes it hard to compare offers, doesn't it?
Kaitlin: That does. And we ran a piece a as Ryan mentioned in the April issue that helps families navigate these letters a little bit and also provide some great tips for figuring out what exactly is on the table for your family.
Sandy: And I guess you can always call, right? And if you have any questions or confusion, you could call the financial aid office for more information.
Kaitlin: Absolutely. The staff at the financial aid offices is really eager to hear from families when they have questions. They really do want to help families understand what they're accepting and help students make the best decisions for their own future.
Ryan: Well, I talked in last week's episode about the idea that everything is negotiable. Everything you can always ask for a better deal. Is that the case when it comes to financial aid as well?
Kaitlin: To some extent, yes. So financial aid awards aren't set in stone. The free application for federal student aid, or the FAFSA, uses older tax data now than it did previously. For the 2018-19 academic year, you're using 2016 tax data, and if your family situation has changed a lot since then, say maybe someone lost their job or you've incurred a major health expense, it's definitely worth going back to the financial aid office and sharing that situation with them and seeing if they can do what's called a professional review or a professional judgment and adjust the financial aid award accordingly.
Sandy: So Kaitlin, I was talking to a parent the other day of two, one girl who's in college and another who's in high school and he said they had already visited 30 colleges, which just blew my mind. But for, whether people are visiting 10 or 30 colleges during the upcoming spring break, what should they be looking for when they actually go to a campus? And I'm asking you this because you have actually gone to quite a few campuses yourself in reporting our best college values cover. So what would you tell people they should be looking for when they actually go to campus?
Kaitlin: That's a great question. One thing that I've noticed during my time visiting campuses, both in my job now and when I was doing this for my own interests applying to college, is that these tours can be such whirlwinds. Everything is crammed into a short period of time, particularly if you're trying to see 30 and maybe you're seeing three in a weekend or something a little bit intense like that. Try to make the most of your time on campus. Do the official tour, but also break off from the group, wander around on your own. Even encourage your student to grab a cup of coffee and chat with other students or whatnot, and let them do their own thing for a little bit. As a parent, you're not going to be there when they're in school. So let them do that themselves. And ask a lot of questions as well. Really let your student explore campus.
Sandy: I think that's great advice Kaitlin 'cause a friend of mine, her daughter was a stellar student, and I won't name the school, but she got a really generous offer from a small private school. They went there and the daughter went by herself to have breakfast and she came back and she said, "Let's just go home," because the vibe she picked up in the cafeteria, I think it was a very jock central school.
Sandy: Bro-ey school. And that just was not her scene. And she really, you know, you're going to be going there for four years. So there should be a level of comfort there that goes beyond the financial aid offer and all of those other things. And I think perhaps that's the only thing you can get by going to the cafeteria for breakfast or something like that.
Kaitlin: Absolutely. And one more piece of advice on that subject. Many schools offer programs that allow accepted students to visit campus, not just for a tour and the Rah Rah, let's go whatever team, but for a real opportunity to test out the campus environment, perhaps stay overnight, probably attend a lecture. Really just get a sense of it. Definitely eat a meal in the dining hall. So if the schools that your student is considering, offer this, it would definitely be worth checking out.
Ryan: All right. Well there you have it. So let the students get a feel for the campus. You get a much more specific feel for the numbers and for what you're paying. Kaitlin will be looking out for your story on deciphering the award letter in April and all of your upcoming college coverage. Thank you so much for coming on.
Kaitlin: Thank you.
Ryan: When we return. Sandy explains why freezing your credit is easier and smarter than ever. Stay right there.
Ryan: All right. And before we go, we're going to do another explain like I'm five segment, which I'm excited about because we're going to be talking about something that I genuinely don't know very much about and need a thorough explanation. And the impetus for doing this is because data breaches have become so totally ubiquitous, that a lot of people are turning to a move that is a really good way to protect yourself from identity theft, and that is freezing their credit. So Sandy, what is a credit freeze, and why are people doing this?
Sandy: A credit freeze is something you put on your credit report. You have three credit reporting agencies, Equifax, Experian, and Transunion. You can put a credit freeze on all three of them for free. It used to cost something, but after, as of September of last year, Congress got so fed up with all the breaches that they said, you should be able to freeze your credit for free and now you can. Once you freeze your credit, it basically means that no one can set up a new account in your name. They can't because lenders will always go to the credit bureaus to get information about you before they will extend any credit. And if there's a freeze on your credit, they can't get that information. So if somebody stole your identification information and tried to set up fake accounts in your name, they wouldn't be able to do it.
Sandy: So it really is the most effective way to protect yourself from a popular kind of identity theft where someone sets up accounts in your name. It's very easy to do. You basically contact the three credit bureaus. You can do it online. You can do it on the phone. When you set up a credit freeze, they'll give you a PIN, a personal identification number, and you need this PIN because the only downside to having a credit freeze is that if you want to take out a loan, you can't do it.
Ryan: It's frozen for you, too.
Sandy: It's frozen, yeah. Now I don't think that's necessarily a bad thing because if you go to a department store and they try and get you to take out a credit card on the spot, well you can't do it.
Ryan: You're not going to get talked into it.
Sandy: But if you are in the market for a car loan or a mortgage, you're going to need to unfreeze your credit, and you can use your PIN to do that. And that won't cost you anything either. So basically this is a very easy way to protect yourself, whether you've been a victim or not, it's a good idea unless you're in the market for credit. And if you're not in the market for credit, there's really no reason not to do it. Now, the one caveat is that it is not foolproof. While a credit freeze will prevent someone from setting up an account in your name, it won't prevent someone from using, who stole your credit card from going out and buying a bunch of stuff.
Ryan: So your credit, your normal credit use is still going to affect your score, still going to affect your credit worthiness. So to be clear, you can't, it's not like it completely freezes your whole credit report in time and you don't have to pay your credit cards off anymore.
Sandy: No. No.
Ryan: And someone could still take your card or get your number on your card and go spend it.
Sandy: Right. Someone could still run up huge amounts of credit card charges based on one of your existing accounts. So the thing you need to do to protect yourself against that is order your free credit reports. And as we discussed in an earlier podcast, you can get all three of your credit reports every 12 months for free. And that way by monitoring your credit reports, you can find out if someone has been using your credit card fraudulently. So don't think a credit freeze will protect you from anything, but it's again, very effective at preventing someone from opening accounts in your name, which is really kind of the scariest kind of identity theft because you don't know that someone has done that until you get the bill. If someone runs up a big credit card charge charge, oftentimes it'll tick off some software and you'll get a call from Visa or Mastercard saying, "Did you really want to go to Cancun?"
Ryan: You ever had one of those?
Oh, I've gotten them. I've gotten them on charges I've actually made, because I forgot to set up a travel notification, and I was on the other side of the country, and they're like, "Were you really in Denver?" And I was like, "Yeah." But that's the problem with the false account identity theft. That's not going to set off those kinds of alarms. So that's why a credit freeze is really helpful.
Ryan: Yeah. I had a guy once, City called me and said, "Did you spend $400 at a gas station in Pennsylvania?" I said, "No."
Sandy: $400, what would you be filling.
Ryan: You know, to be fair, it was $3 charge at one gas station. So he bought a couple snickers or something, and then went down two miles down the road to another gas station. And I'm guessing he bought like tires.
Sandy: He was driving a semi.
Ryan: Who knows? And my card was still in my wallet.
Sandy: Well, and that's the other, and we've talked about this before too, in addition to checking your credit reports, you should go online and check your accounts frequently just to see, because what some of these crooks will do is make a very small purchase to just test, to see if your credit card will work. That's the Snickers bar. And once that, if that clears, then they'll go out and buy the big screen TV.
Ryan: So there you have it folks, the credit freeze, not a full proof way to prevent identity theft, but a useful and now free way, and easy to do and easily undone to prevent a particularly insidious type of identity theft.
Sandy: That's right.
Ryan: That's it for this episode of Your Money's Worth. For show notes and more great Kiplinger content on the topics we discussed on today's show, visit kiplinger.com/links/podcasts. You can stay connected with us on Twitter, Facebook or by emailing us at firstname.lastname@example.org. And if you liked the show, please remember to rate, review and subscribe to Your Money's Worth wherever you get your podcasts. Thanks for listening.
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