Paying for college education is a major concern for many families. With the sticker price of many of the best private universities exceeding $200,000 for a four-year program, financial aid is more important than ever for many students to make their dreams come true. In order to get federal financial aid, students must complete the Free Application for Federal Student Aid, or FAFSA. Colleges use this form to determine the amount of financial aid students will receive each year. Many FAFSA deadlines are around the middle of February, and many programs are on a first-come, first-served basis, so this is the time to submit forms for the best awards. Here are 10 valuable tips from experts to ensure that you get the maximum financial aid award:
File as Early as Possible
By submitting your form as soon as possible after the first of the year, you have a better chance of getting the most aid. Illinois, North Carolina, Kentucky, Tennessee, South Carolina, Washington, and Vermont all have financial aid programs that are awarded first-come, first-served, so waiting too long can cost you valuable financial aid dollars. While it is easiest to file your income taxes first, this is not a requirement. You can estimate your income and taxes paid and update the application once taxes are filed. The IRS data retrieval tool makes this easy, as it imports your information directly into the FAFSA. In addition, check with your school to see if the CSS Profile is required so you can submit it by the deadline.
Leave Nothing Blank
Mistakes or missing information can delay processing and cause you to miss out on award money. Instead of leaving blanks, put a zero in any field that does not apply to you. The online FAFSA will let you know if any fields have been left open improperly.
File Even If You Think You Aren’t Eligible
It is nearly impossible to predict how much financial aid you will receive. According to Finaid.org, however, families earning as much as $180,000 a year will probably qualify for some sort of assistance. Even if your income is higher than that, you should apply because not applying for the first year will often disqualify you from applying in later years. In addition, you must complete a FAFSA to qualify for federal student loans.
Take Money Out of the Child’s Accounts
The formulas used to determine financial aid count 20% of a student’s assets, but only 5.64% of the parents’ assets. As such, accounts in a student’s name should be moved into a 529 savings account to exclude it from consideration as the child’s asset. Money in a parent-controlled 529 account will be counted at the lower rate. Another option is to use the child’s savings to pay for the freshman year, which will remove it as a limiting factor in following years.
Parents who have a great deal of savings can spend that money down before filing the FAFSA. Using the savings to pay off credit cards, prepay mortgage payments, or purchasing big-ticket items that are needed will help the family’s overall financial state and will also make the student eligible for more aid. Remember, however, that you do not need to spend it all. The FAFSA formula provides a shelter for around $50,000 in assets from inclusion in the Expected Family Contribution amount. Protected asset amounts vary depending upon the age of the parents.
Explain Special Circumstances with a Supplementary Letter
The FAFSA asks many questions, but does not allow families to enter explanations of special circumstances. This can be a problem for families who have suffered massive medical bills, loss of a job, or other changes. If your family has experienced such problems, send in a supplementary letter that will explain the details of your particular situation. This will allow colleges to consider all the facts when awarding financial aid. According to College Confidential, this can make a major difference for students in need, just be prepared to provide documentation to prove all of your claims.
Appeal Disappointing Offers
If you have had a drastic change in your financial situation, or have received vastly different offers from other schools, feel free to make an appointment to appeal the package offer. During the meeting, be polite and thankful for what has been offered, but also provide evidence of why your student should receive more. You may present offers from other schools, documentation of changes in financial status, or proof of your student’s achievements. While not all appeals will be successful, you never know until you try.
Prepare for Different Offers
While many schools claim to meet 100% of students’ financial need, awards vary greatly, even among similar universities. Most offer a mixture of grants, loans, and work-study funds, so make sure you fully understanding how much aid is a gift and how much has to be repaid when making comparisons.
Limit Capital Gains
Capital gains are treated as income when calculating financial aid. As such, cash in on securities before the end of your child’s junior high school year. Put that money in a 401k or IRA, which is not considered in FAFSA calculations.
Don’t Be Tempted to Cheat
Though you may be tempted to lie about your assets and income to get more aid, this is considered fraud and comes with hefty fines, possible prison time, and loss of any financial aid awards. The Department of Education and the IRS have worked to make it easier than ever for schools to detect fraud on applications. Stick with legal steps like spending down and transferring assets to retirement accounts.
College is one of the major investments of many people. Financial aid can make college much more affordable. Make sure to follow these 10 tips to ensure that you get the maximum financial aid award.