9 Tips for More Financial Aid
If you are a parent of a college-bound high school student, you are likely wondering how much financial aid your child can secure for college.
If you are a parent of a college-bound high school student, you are likely wondering how much financial aid your child can secure for college. The most commonly used form of financial aid comes from federal loans and grants, which require you to fill out a FAFSA- Free Federal Application for Student Aid for consideration (www.FASFA.gov). To ensure the best possible federal financial aid package possible, consider these tips.
1. Consider having your child save in your name.
Since students are expected to contribute 20 percent of their savings towards their education versus their parents’ 5.64 percent expected contribution, it can be wise for students to save in their parents’ names while in high school and college, thereby boosting the amount of loans and grants he or she may qualify to receive.
- Pay off your debts.
Unfortunately, the FAFSA considers your income and assets but does not consider how much of your money is tied up in bills. Additionally, loans that have interest rates that depend on your credit score can be affected depending on your credit history and your current debt. Therefore, it may be wise to pay off credit card and loan debt to both increase eligibility and lower your interest rates on loans.
- Do not convince younger children to hold off on college.
The idea of having multiple children in college at the same time may seem terrifying, but the FAFSA does use the number of children you have in college when calculating your expected contribution. If you have a child who is expected to start college only a year or two after an older child, go ahead and let him or her apply as the amount of aid you receive will increase to meet the increased financial burden.
- Include unborn babies on your FAFSA.
Part of federal financial aid depends on how many children you support, and the age of dependent children does not matter. This means that if you are pregnant when you are filling out your child’s FAFSA, you can include your soon-to-be baby towards your dependent total, which lowers your expected contribution and can increase your child’s loan and grant amounts.
- Invest in your future early.
The FAFSA does not require you to list assets you may have in the form of IRAs or 401(k)s. You can therefore safely put away money for retirement without having to worry about it counting against you for your child’s federal financial aid eligibility. However, your prior year’s contributions to retirement accounts may count as income on the FAFSA, so if you have money in a savings account that you plan to invest for retirement, try to do so at least two years before your child is ready to apply for college.
- Discuss special circumstances.
If you have special circumstances limiting your ability to pay for your child’s college tuition such as high medical or law expenses, do not be afraid to call the financial aid office at your college and discuss the situation. This school official may be able to work out a better loan and grant eligibility for you than the impersonal FAFSA formulas cannot accomplish.
- Sell your securities sooner rather than later.
Money gained through selling stocks and bonds up to a year prior to filling out the FAFSA is considered income that can count against your child’s eligibility for federal aid. If you have securities that you want to sell, try to sell at least two years before your child’s college years to prevent those funds from reducing his or her financial aid package.
- Get the Grands involved.
Although money given to students by their grandparents for college can be considered a gift on the FAFSA, a 529 savings plan held by grandparents will not be counted as an asset for your child’s financial aid eligibility and can therefore be a way of saving money without reducing financial aid packages.
- Be Honest.
If schools discover that you have been deceitful on your FAFSA, you can risk losing financial aid for you and your child. It is more important that you are honest on your FAFSA and guarantee some financial aid rather than risk losing all aid by manipulating information to appear as if you have a lower income or fewer assets.
This list is not meant to be exhaustive, so be sure to work with your financial advisor and the college financial aid offices for more tips and advice.
