What should you be doing right now if you’re the parent of a college-bound student?
When trying to get money for your child’s education, parents should follow these helpful guidelines. Not following these guidelines could end up costing you thousands of dollars in funding that the student could have been eligible for.
Most students whose families make $40,000.00-$100,000 per year are eligible for some form of financial aid. Over 30 billion dollars is available each year from the Federal Government, the states, colleges, and universities, and private foundations and organizations. You have to figure out how to get your share of aid. Most parents give up before they start because they assume they won’t be eligible, but that is exactly what everyone does! Make sure to apply. You will probably be eligible for some money. Filling out the FAFSA form early and make sure the information is accurate so that you can see if your student qualifies for need-based financial aid.
Do not assume that only minority students, athletes, and academically gifted students get financial aid. Need-based financial aid is solely awarded based on financial need, which is calculated by taking the cost of attendance at a school and subtracting the family contribution (the minimum amount the government feels you can afford to pay, based on your income and assets and your child’s income and assets). Whatever is left over after you subtract these two numbers is your financial need, your eligibility for financial aid at a particular school.
COA (Cost of Attendance)
-FC (Family Contribution)
= FN (Financial Need)
Pay attention to your student’s standing in comparison to the rest of the student body at a college or university. To increase your chances of getting the best possible financial aid packages, it is very important to pick a school where the student lies in the top 10% of the incoming freshman class with respect to their GPA and SAT/ACT scores. Although schools give some need-based financial aid, they give recruiting scholarships to the best students who apply. This preferential packaging is usually given to students in the top 10% of the incoming class. Schools want to attract the best students, and recruiting by giving scholarships is a good way to do that. Students can use this to their advantage by applying to schools where they fit into the top 10% category.
Don’t assume that all schools can give you the same amount of money. Some schools get a lot of money from alumni and corporations. They have much more money to give out and can meet most or all of a student’s financial need at their school. Other schools, like state universities, get no private funds and rely only on state and federal aid to help fill a student’s need at their school. Students may not be eligible for much money at these schools. If the money cannot be found to meet the student’s need, these “cheaper” schools can end up being more expensive. Before deciding on a school, get to know your school’s history of giving money.
Understand the difference between “included assets” and “unincluded assets” on financial aid forms. Pay attention to where you keep your money. It could mean the difference between you getting $10,000.00 in financial aid and getting nothing. Money in your child’s name weighted much more heavily than money in the parent’s name. If you don’t know how to legally and ethically position your money properly for financial aid purposes, you could lose thousands in financial aid.
Don’t let your CPA or tax preparer fill out your financial aid forms, even if she/he is qualified. They are experts at tax planning and preparation, not financial aid planning. They might suggest that you put some or all of your assets in your child’s name to save on taxes, but following this advice will usually kill your chances at getting financial aid.
Also, they are not trained in filling out financial aid forms so they may fill them out improperly. These minor mistakes can bump your forms and cause delays. You will have to re-submit them and it will put you at the bottom of the list, causing you to lose time and probably thousands of dollars.
Don’t wait until January of your student’s senior year of high school to start working on your college financial aid planning. Financial aid is based on your previous year’s income and assets, so it is imperative to start planning with your student as soon as possible before January. If you want to legally set your income and assets so you can maximize your eligibility for financial aid, start working on this at least a year in advance. The beginning of your student’s junior year of high school is a great time to start.
Then: Fill out your FASFA form. The longer you wait, the tougher it will be to set up your financial picture without red-flagging yourself for colleges and universities.
It is also important for you to know what your Expected Family Contribution is so you can start saving for it.
Learn which schools can give you the best packages before you start visiting and applying to them. If you haven’t started planning, do it now!
Once your student is in college, you should encourage them to continue to apply for scholarships, especially those geared toward specific majors and careers.