Let's face it, qualifying for college financial aid is complicated. Colleges use formulas that are opaque and hard to understand. There are lots of factors to consider. I know, because I'm about to go through this gantlet as my oldest daughter applies for college.
A long-time source on this subject -- Mark Kantrowitz of Edvisors -- has been the go-to person on financial aid as long as I can remember. His new book Filing the FAFSA gives a wealth of detail on how to file the federal student aid form and reap thousands in aid. Here are some secrets that you need to know when filing for aid: * You Should File as Soon as Possible After Jan. 1, even if you think you make too much money. Aid formulas are fickle.
"Changes in the number of children in college, household size, dependency status and marital status can have a big impact on eligibility for need-based financial aid." * If You Can Reduce Your Income, That Will Help Your Aid Chances.
"Financial aid formulas are heavily weighted toward income and cash flow. Reducing income and avoiding artificial increases in income can yield more need-based financial aid." * Don't Title Assets in Your Child's Name.
"Save for college in the parent’s name, not the student’s name, because student assets are assessed more heavily than parent assets in financial aid formulas. " * Watch Your Capital Gains.
"Selling assets can yield capital gains, which will increase income and decrease eligibility for need-based aid. Sell bad investments at the same time to offset the capital gains with capital losses. " *Provide Reasons Why You Need More Aid.
"If there are unusual family financial circumstances, ask the college financial aid office for a professional judgment review and provide the school with documentation of the circumstances. Don’t overlook other sources of financial aid besides the FAFSA, such as scholarships, education tax benefits and private student loans."
Once you file the form, are you done? According to Kantrowitz, not so fast:
"Students should file the FAFSA every year, even if they got nothing other than student loans last year. The formula is very complicated, so subtle changes can lead to an increase in financial aid.
For example, the number of children in college at the same time can have a big impact on eligibility for need-based financial aid. When the parents’ eldest child enrolls in college, they might apply and get nothing other than loans, especially if they are middle or high-income.
The next year they say “why bother” and don’t apply. But that year they would have had two children in college and qualified for much more financial aid, since the parent contribution portion of the expected family contribution (EFC) is divided by the number of children in college. Other factors that can have a big impact on aid eligibility include student income, student assets and capital gains."
