364: Financial Aid Explained for First-Gen Students and Their Families with Erica Hernandez

364: Financial Aid Explained for First-Gen Students and Their Families with Erica Hernandez

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Dra. Yvette Martinez-Vu: [00:00:00] Have you ever looked at college tuition rates and immediately felt your stomach drop? For many first gen students and families, the cost of higher education can feel overwhelming and confusing at the same time. You might hear terms like financial aid, FAFSA, scholarships, grants, and even the CSS profile, and yet you might feel unsure about what those terms mean for you and your family's financial future.

On top of that, many families worry that if they are not considered low income, then they may not qualify for any meaningful support at all. Today we are tackling the topic of better understanding financial aid for first gen students and families. I'm joined by Erica Hernandez, who's a first gen college graduate and seasoned Bay Area admissions consultant.

With over 15 years of experience in education and nonprofit [00:01:00] leadership, her expertise lies in guiding first gen parents and their college bound children through the complexities of admissions and financial aid. Erica's approach encourages students to confidently present their authentic selves, while also offering candid insights into the role of legacy and other influences in the college admissions process.

In this conversation we talk about some of the biggest misconceptions that families have about financial aid, how middle income families can approach college costs more strategically, and why long-term planning plays such a powerful part in building generational wealth while supporting you and your family's educational goals.

This conversation offers practical insight and a broader perspective on how families can better approach these decisions. So let's get into it. Here's my conversation with Erica Hernandez.

[00:02:00] Welcome to the award-winning Grad School Femtoring Podcast. The place where first generation BIPOC students and professionals can listen in on inclusive grad school stories and gain practical tools for sustainable success. This is Yvette Martinez-Vu, a certified coach, consultant, author, and speaker.

I will be serving as your femtor, providing you with insider knowledge to help you thrive in grad school and beyond.

Welcome back everyone to another episode of the Grad School Femtoring podcast. This is your host, Doctora Yvette. Today we're talking about all things financial aid for first gen students and what families need to know about paying for school. We've got our special guests here, Erica Hernandez. And [00:03:00] Erica, I would love to start by hearing a little bit more about your journey.

I know that you grew up in the Bay Area and that like many first gen students, you had to figure out the college process with very limited guidance. So I'd love to hear more about how that early experience shaped your decision to become an admissions consultant and also how it influences the way you work with families today.

Erica Hernandez: Thanks so much for having me. It's great to be on your podcast and all the work that you do. To share a little bit about my journey: I grew up in the Bay Area. I am third generation. My mom's family grew up in New Mexico and the Southwest. First generation from my dad, he grew up and immigrated from Mexico, and both perspectives helped me understand college very differently. I was told by my mom, I didn't go to college. You're gonna be the first to go to college, so you're going, and that was about as much guidance as she could offer, and [00:04:00] driving me around to different fairs or attending different school events to help better understand the system was really important for her to support me through that while I, as a first generation, learned on my own what all of it meant. My dad was just asking how much it was gonna cost and how far was I gonna go away from home if I was going to explore. I will say that despite their support in that way, I was left to the system itself.

Whatever the guidance counselor shared, whatever information I could gather from college events was really hard to understand as a first generation college graduate. And so I was sometimes blinded by maybe a bill, once I was in college from loan that didn't arrive or maybe it was just not understanding the idea of what a major was.

So all of these very detailed questions outside of just going to college is how I'm informed now as a admissions [00:05:00] consultant, but also a financial aid planner and strategist with families of what questions need to be asked? What information do you not understand so that we could equip you with that reality, when it comes time to make a decision for your family.

Dra. Yvette Martinez-Vu: That's great. Thank you for telling us a little bit more about your background and it makes sense to have gone through the experience, and notice just how many gaps there were in terms of access to information and resources, and then later on having that inspire and be the foundation of the work that you do in supporting families.

I know that you work with a lot of first gen students and families or first gen individuals who later on go back and have families and have to think about this too, and I know that. Many of them assume that if they're not low income, then they're automatically out of luck when it comes to accessing financial aid, especially for colleges and sometimes too for graduate [00:06:00] programs.

I would love to hear more in particular about the misconceptions that you hear, right? Because we know that that's not necessarily true and that a lot of it is circumstantial and has to do with where you apply, but I wanna hear more about the common misconceptions you've run into, especially tied to college admissions and financial aid, and what you wish more families understood earlier in the process.

Erica Hernandez: So the majority of the families that I work with are first generation college graduate parents raising college bound students. So they themselves learn the system similar to me, and now they are middle income, maybe upper middle income families, established family structure, and by that I mean they've bought a home, maybe they have run their own business. Maybe they're themselves are laying the ground root for that generation wealth to build for their children. And then comes the college bill or the idea of graduate school, and [00:07:00] that's when I hear all the misconceptions from this specific demographic group of families, because this is the first time you're exploring these things for your children in this way, and the factors that were considered for these parents when they were students are so different, right? I compare myself a lot to the students of these parents, because of the background that I have. My parents owned a home. My father worked a lot of overtime to be able to afford the home and tuition at these parochial schools. And so when it came time to go to college, it looked like I didn't need any financial aid, which was a misconception.

The problem is, is that I couldn't understand what questions to ask as a first generation college graduate student . I didn't understand the intricacies of the factors that are considered when an individual college or university make a decision [00:08:00] on a financial aid offer. There's a separate piece to get accepted for admission, and then there's a whole financial aid.

So if anything, I want parents to understand it's more than just your gross income or even your net income of a family. It takes into account the number of students in your family, depending on the school. There's just so many different factors that are considered and I just recently have worked with a handful of families who understand that asking questions about it is really important because these families wanna preserve their generational wealth. That's what I'm hearing right now. There's a population of people who are looking to preserve their generational wealth. What my passion is, is for families to build that generational wealth, and it requires a lot of questions, a lot of curiosity of not just trying to figure out, oh, my child wants to go to USC and that's a hundred thousand dollars tuition and for room board and [00:09:00] fees. Rather than take out the retirement, really ask questions and figure out how can we make this happen and still build generational wealth. And so the misconception is really, these offices do want to help families understand the system, but you have to be willing to be vulnerable and share, and think long term for yourself to know what questions to ask.

Dra. Yvette Martinez-Vu: It sounds to me like a lot of the families that come to you are in that middle income space, and we know that a lot of folks who are in that bracket, they might feel like they're in the middle, like they're feeling that gap of, okay, well, we're earning too much for financial aid, but not enough that we can comfortably pay out of pocket.

We want to build generational wealth, and even in some cases, maybe they do have enough, but they're trying to preserve their wealth. I guess what I want to hear more about are [00:10:00] the options that you have if you are in that bracket. So if you find yourself stuck in a middle income gap, and in that circumstance, what can you actually do to position yourself and your family in a way where you can afford that experience, the college or the graduate school experience without it potentially harming your future wealth building opportunities?

Erica Hernandez: So it's really important that families get uncomfortable to get comfortable, because right now a lot of families are just thinking about tomorrow or even the next year, and what I ask of families is to think 5, 8, 10 years long term. So at a decision making workshop that I run annually, I work with families to really position themselves to think, long term, because let's be honest, middle income families are really gapped out right now. The colleges and [00:11:00] universities aren't giving them offers that are affordable for their families and inflation and all of these other expenses, it becomes overwhelming to think beyond today. Right? So when I have the space to work with the families.

I'm actually making them uncomfortable by thinking long term. Like what do we need to do today to be able to position your child to afford the cost of higher degree, right? Because I see one extreme and the other extreme. So one extreme is I think it's best if my child just goes to a two year community college and then transfers to a state university, and that will be the best option for them to receive their bachelor's.

And that's a great pathway, but it's not really setting anyone up long term, because we're not still taking into consideration that that student may want graduate school and there's not that much money for graduate school. You really have to explore and position [00:12:00] yourself to be able to get those fellowships in other funding for graduate school if and when they choose that path. That's one path some families take. The other extreme is that families think they need to liquidate everything to afford the tuition, right? We're gonna take out a credit card, we're gonna put another mortgage or take from our home equity to be able to pay the cost, not thinking maybe we have a younger child who's gonna follow and we may not have enough equity to afford their tuition.

And so what I ask families to do when they're in the middle income is, let's just look at what's present, right? This is the things you have to pay for. This is your mortgage. If you own a home. This is your food, and you need to be able to pay for health insurance. And that's an extreme cost, and what about emergency funds? Let's take care for your family first. How much is left? And 98% of the families are like not much, if anything at all. And so now we're toppling [00:13:00] that, if there haven't been used to paying a tuition at all, we're putting a tuition in front of that. And so I asked them to sort of break it apart. How can your student help you with that bill and how can you help that student with that bill, ongoing for all the options they've been accepted to. And what is going to be the most cost effective one and two make the most impact in four years, in eight years, in ten years. And the families that I have been working with that are preserving generational wealth their decisions are really based on what's gonna make the most impact now, but also long term. So I'm willing to put in a higher tuition, and pay a little bit more for my child to then be granted something at the end of that education.

So, my answer's not easy, but it [00:14:00] does force that long-term thinking because at the end of the day, it really frustrates me when families are positioned to only think right now at the present, which no fault it's true, I am experiencing that myself, but it's really important to think long term 'cause those long term decisions make a big impact sometimes.

Dra. Yvette Martinez-Vu: I actually wanna ask a quick follow up question, because you mentioned the long-term thinking, and I have a 12-year-old, and in less than 10 years that 12-year-old will be off to college, assuming he chooses to do that. So I guess I wanna hear just a short follow up about when is the right time to start doing the long-term thinking and planning around college and grad school as well?

Erica Hernandez: Most of the families start in fourth grade just thinking about math placement, right? That's like the big subject everyone's talking about to be college admittable, let's put our child in the really rigorous math program since fourth grade. Those students that are [00:15:00] positioned by senior year to be admittable to some of the more rigorous universities, funding wise, right? What are we doing now that can be helpful long term. I will say that talking to an accountant may be helpful. Not always. Talking to a financial planner may be helpful, but not always, because I do financial aid planning and strategies, it's really just studying every year, what are the financial aid applications taking into account this year? And if we were to apply today, what factors are going to be inputted? And that automatically is going to change our way of thinking. A simple example for you and any other parent out there is I never advise a family to buy a car in the year that taxes will be issued to a college or on a financial aid application because the school will receive that as current, even though it's prior, prior year and say, if this family can buy a car right now, then they [00:16:00] can afford a tuition. And that's not always the case. There's many reasons why you may need a car.

So it's really strategic if you need to make big purchases to think about when I need to make those big purchases because I need to, and two how and what ways will it show up on my tax forms? Because that's what, at least right now, colleges and universities and even K through 12 private schools consider. Speaking for myself, I have a 3-year-old this month, and we had a decision, right? We bought a home, which is awesome, yay to us, but I was very intentional to my husband about when we needed to buy the home because if we wanted that to reflect kindly, it needed to have already been established that we're good creditors are paying our mortgage on time for X amount of years so that a college can see the debt and say, wow, this means this family is good on payment and for their good fortune got a house, but now they can't pay tuition versus [00:17:00] us buying it when she was applying to a school that would not have been viewed as favorably.

Dra. Yvette Martinez-Vu: Thank you for sharing that. That was really helpful and I'm so glad that I asked.

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Okay. Now I wanna talk about those of us that find ourselves part of the sandwich generation. I know that comes up a lot, where you're supporting yourself, you're supporting your family. You may be supporting your parents as well. All of that impacts how you plan around the tuition expenses, and it can sometimes feel like you're sacrificing all of your financial stability in order to support everyone around you. I would love to hear your thoughts on how to approach tuition planning if you are part of the sandwich generation.

Erica Hernandez: This is not an easy answer, but again, future planning [00:19:00] helps. There are many large families, and there's maybe one or two individuals who have the capacity to financially support their aging parents. And I say this, because one would assume the whole family can support, but when you're building generational wealth that's not always the case. It falls on a couple of individuals. And I bring this up as a complicated situation because colleges and universities want to know how dependent this person is of you, meaning the elderly, aging parent. If they truly are a dependent of yours, then they need to be put on their taxes to demonstrate that you're financially paying on their behalf as a dependent.

That is complicated though. There's a lot of other consequences. I'm not a tax preparer. I don't do taxes. I'm not an accountant, but from a financial aid perspective, if you put an aging parent on your taxes as a dependent, then they are dependent and you can demonstrate with taxes that that's the case. When that is not the case, [00:20:00] then you make the soft argument of why and how you support aging parents as a dependent without them on their taxes. And that's an individual school case by case. As schools get more expensive and are less generous, that's a more difficult appeal. So I say that the focus should be on the student applying, especially for those graduate students you work with, who are in this situation. Their focus is on their tuition first and foremost, and their ability to put in the most amount of payment for that. And once you demonstrate that, then the appeal may be treated it a little bit more fairly saying like, I have all of this money, let's just say, and I could pay 40% of the tuition, I'm just making up a percentage, but I cannot pay the other 60% because of all these factors, including an aging parent who's dependent on me. And these are the receipts, and usually when you start off with I can pay, [00:21:00] then it's treated more fairly and them listening to you versus I can't pay. I have too many things going on. Everyone will shut the door quickly and not open it up for discussion.

Dra. Yvette Martinez-Vu: That was really helpful. Now I wanna transition to really talking about how some individuals will confuse financial aid with the types of schools that they're considering. And so then some folks might feel more anxiety around how their income or assets will play into it, but we know that there's so much more that goes into what matters in both at admissions and also in the funding decisions.

And so I want you to break that down a little bit further, the differences between admissions financial aid, the types of schools you apply to, and also what families tend to misunderstand about that.

Erica Hernandez: So similar to understanding what is asked on a financial aid application, one of the tasks I ask families to do, is to [00:22:00] understand the school that they're applying to and label it as such. For example, I'm here in the Bay Area, California. Many of the families that I work with apply to UCS or California State Universities. Generally, any school that's run by this government or state or federally funded or state funded is a public university. We're dependent on tax dollars and any aid from that government and that budget towards a school, understanding that it's a public means that there's not that much money, unless there's a special presidential scholarship a student should go after, or a small endowment that is given selectively. Generally, public institutions don't have as much of a budget to give out on financial aid. And financial aid is any money granted to you that are through loans, which means you have to pay back. Grants, which you don't have to pay back scholarships, which you don't have to pay back, [00:23:00] and a work study, you know, positions where you work for the university and then they pay you a stipend that goes towards tuition. Those are some types of financial aid that are given and granted from public institutions.

Private institutions have so many types of funding that goes their way because they're private entities. Unlike the state or public institutions that only require the FAFSA, the private institutions actually require an additional financial aid, and this is a misconception. A lot of families don't understand. They just go through the motion of completing, but it makes a difference. You're asked in addition to the facet to complete the CSS profile, which asks a lot more questions and asks for tons more information because they're trying to figure out from their private funding where to pull money and support a family like yours.

They also have high tuitions, but they're pulling from different endowments and scholarships and [00:24:00] need and these different pockets to offer a family so that they could enroll. So understanding the difference between public and private in the schools that you're applying to is the first step in understanding the amount of aid that a school may have.

So if a student or family comes to me and their list is only public, I usually ask them to pick up a private school or two, or an out-of-state school because I know generally those schools may be able to give more money. So special circumstance, if I see a family that's all private, I ask them to apply to public because I don't know how generous those schools will be this year.

So I want them to be able to have a safety net with a smaller tuition that at least they can have as an option. And the process a college counselor or even someone like you to sit down and label it is so helpful at the beginning stages of even applying, because then you can make a more well-rounded list of options, [00:25:00] that if they give you an offer can be more holistic to helping you make a more informed decision for long term.

Dra. Yvette Martinez-Vu: I find it so interesting to hear you talk about college admissions and the funding aspect of it, because it does differ so much with the graduate admissions process and how grad school funding works, and in my work, I don't work with newly admitted college. Students, and I don't help them with their financial aid offers, but I do do that with college students who have applied and have been admitted to graduate school.

And it's really interesting because we also do look at the distinctions between public and private institutions, and also it matters whether or not you're applying to Masters versus PhD programs and the types of funding that you can tap into. So I want to say is I want to affirm that you are so incredibly knowledgeable in what you do.

You are so right about noticing the distinctions between public and private institutions, and to give yourself the opportunity to have [00:26:00] options by tapping into both, by applying to both and seeing what you get. So yes to all of those things. I would love to hear a little bit more about any word of advice that you have to share to a first gen student or to a first gen parent as they're starting their journey right now, especially if this is their first time navigating it and they may not have someone like you to support them in that process. What words of advice do you have for them?

Erica Hernandez: I really think that every family, if you walk away from this session, understand that just sitting down and thinking 10 years from today, what are your expectations of yourself as a parent and what are your expectations of a student? There are so many unique factors that are gonna come into play for every individual family. There are families that I've worked with, where 10 years looks like retirement and others where there's a huge age gap, and they forgot about the baby, and now that baby's [00:27:00] gonna be applying to schools, or maybe your goal is to pay off the mortgage in 10 years, and that's going to infect deeply the financial aid outlook if you don't have a mortgage to pay. There's just so many different things you can think about for 10 years. I believe, people may disagree, it's the more fun part of this process, because everything else feels really chaotic and miserable and overwhelming when you're looking at the bill and the offers. And what does this mean and what does that mean? But if you just use an hour of time to imagine 10 years from now, this is what I would like to financially look like. This is what I would like my child to feel and be developmentally at, then it'll be helpful to make more informed decisions about the now, which is the offer, which is the decision that you have to make. For undergraduates, it's May. For graduates students, I believe it's around the springtime. And for parents, it's the matter of like preserving [00:28:00] and building wealth or liquidating some things for your child to have that dream in 10 years. It just varies, but sitting down 10 years, 20, 36, believe it or not.

Dra. Yvette Martinez-Vu: You heard it from Erica, do that long-term planning now. I needed that reminder as well. Okay. Is there any other question that I missed or that you were hoping that I would ask you today before we wrap things up and have you share about all the details related to how folks can learn more about you and your work?

Erica Hernandez: The only thing that I didn't mention, in line with the work that you do is, in those 10 years, especially if you're working with an undergraduate, assume they're going to graduate school. It's just an assumption. So then they could financially plan out for that, and then the student can treat college differently with the intention.

I may want graduate school, so these are the things that I have to think about.

Dra. Yvette Martinez-Vu: Yes. Thank you. Thank you for adding that. And yeah, let us know how can folks reach you? How can folks know more about you and your work? Please share all the details.

Erica Hernandez: [00:29:00] I run a substack that I try to put out in articles every other week. College Money Made Easy. My name's Erica Hernandez. You could find me on Substack. I'm on LinkedIn, where I share a lot of events. And I have an upcoming one in March for decision making, especially if you have all those offers, but I offer conversation to anyone who's willing and able to have them. It's really important just through a discovery call, through reaching out in a direct message to connect so that I can learn a little bit more your family and maybe help guide you with some questions that you should be having with the right people.

Dra. Yvette Martinez-Vu: Thank you. Thank you. Thank you so much. I know that the audience doesn't know this, but we know this, this is our second attempt at recording this episode because sometimes technology fails us and you do what you do. So I am really, really grateful that you came back that we did this re-recording.

It just as brilliant as last time, so I'm just really happy that you came [00:30:00] back to share all the wealth of knowledge today. Looking forward to releasing this episode soon. And yeah, please check out all of Erica's resources, and all of her services and please stay in touch.

Erica Hernandez: Thanks so much.

Dra. Yvette Martinez-Vu: I really appreciated this conversation with Erica, especially in light of her being generous enough to return to the podcast for a rerecording.

One takeaway that is going to stay with me is that financial aid decisions involve far more than just income. Colleges consider many different factors and understanding how different colleges and universities work can open up more possibilities than families initially expect. Another important point is that the types of schools students apply to matters.

Public and private institutions operate within different funding structures, and that also influences the kind of financial aid offers that students will receive. Erica also reminded [00:31:00] us about how powerful it can be when you step back and imagine where you want to be 10 years from now. Again, I needed to hear that too, and that you should be thinking about that before making decisions about college costs today.

I hope this episode is one that you can share with your own family, friends, and peers as they too navigate this process. Thank you so much for listening. That's it for today, and as always. I'll talk to you all next time.

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The third way to support my show is by joining my email newsletter where I share key [00:32:00] takeaways and additional resources. Thanks again for listening, and until next time.