What You Need to Know to Win the Financial Aid Game

What You Need to Know to Win the Financial Aid Game

Why does it seem that some students get plenty of financial aid while others get next to nothing? While there are definitely some formulas at work that factor into financial aid awards, there are also some things you need to know that can help you get more aid for college. The important thing to remember is that the financial aid office at your college will place the best interests of the college over yours. Keep these tips in mind when applying for financial aid:

  1. Apply – Even if you think you won’t be eligible for financial aid, fill out the FAFSA. Almost everyone is eligible for some type of aid, even if it is simply an unsubsidized Stafford loan. These loans will provide you with a much lower interest rate than you will get elsewhere.
  1. Check it twice – When you get information from your college’s financial aid office, double check important information against the Department of Education’s FAFSA answer key. Do not discuss your finances with the financial aid office until you have confirmed your information.
  1. Keep assets in the right place – Since the student’s income and assets count more heavily toward financial aid eligibility than that of the parents, any college savings or other accounts should be in the parents’ names.
  1. Check your parents’ earnings – If your parents adjusted gross income and earned income are less than $50,000, you will get more aid. In addition, if your family has an AGI of below $31,000, your expected family contribution will be zero and you will get more aid.
  1. Take losses – If your parents are eligible for any tax losses, it is a good idea to take them the year before you file the FAFSA. For example, if you intend to file the FAFSA in early 2013, your parents must claim all losses before the end of 2012.
  1. Choose sides – If your parents are no longer married, live with the parent who earns the least amount of money the year before you apply for financial aid. You only have to report the parental income and assets of the parent with whom you live.
  1. Shop around – If you are considering several colleges, compare the financial aid packages they offer you before a choice. Typically, you must respond to offers by May 1, but you may be able to get an extension if you need it.
  1. Negotiate – If your family has faced a death in the family, massive medical bills, or recent unemployment, contact your college’s financial aid office to ask for an adjustment based on extenuating circumstances.
  1. Know your assets – Personal property, cash values of life insurance, annuities, 529 accounts owned by someone other than the student or parents, and retirement accounts are not considered when calculating financial aid. If you are planning to make a major purchase, make it before signing the FAFSA so you can reduce your assets.
  1. Beware gifts – If a family member wants to help you with tuition, make it a loan instead of a gift. Loans are not considered to be income when calculating financial aid, but gifts are. Put the loan in writing, including a market interest rate. You must also be sure to spend this loan money before signing the FAFSA. Later on, the family member you owe can forgive the loan in chunks of $13,000 after all financial aid applications are filed.
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