So you think you won’t be eligible for financial aid? Did you know there are ways to increase your chances of receiving more federal financial aid? In order to maximize your financial aid eligibility, you need to arrange your financial aspects in a way that demonstrates you need more financial aid to pay for college expenses.
Applying for financial aid is a lot like an interview process. In an interview, two people can be equally qualified for a position, but the candidate better at presenting his or her professional qualifications usually gets the job. To get more financial aid, you’ve got to learn how to present your finances, starting during your “base year.” To determine your financial aid eligibility, the federal government and financial aid offices consider the whole year prior to your college enrollment. To increase your chances of receiving financial aid, there are lots of simple ways to minimize income and assets during the base year.
Submit the FAFSA annually. Since financial situations are constantly changing, you must file the FAFSA every year, even if you did not qualify for financial aid the previous year.
Visit your financial aid office. Schedule a visit to the financial aid office to find out if you qualify for more financial aid. This is especially important if you have a special situation, including a recent job loss or high medical expenses. Financial aid officers are sometimes allowed to make professional judgment calls and may be able to grant more financial aid to accommodate for these types of situations.
Save money in your parent’s name. When determining the Expected Family Contribution, the federal government will examine a student’s income and assets more strictly than that of their parents. Furthermore, students are required to contribute a lot more of their savings and assets than their parents, sometimes up to even 5 times more. Using a 529 college savings plan or Coverdell Education Savings Account to save money for school might end up saving you some money in the long run, and increase your financial aid eligibility.
Make big purchases prior to the base year. To help reduce your number of total liquid assets, try to avoid making any large purchases, such as a house or car, during the base year.
Pay off debt. To again decrease your number of total liquid assets, it is a good idea to use funds in savings accounts to pay off debt from credit cards, automobile loans, and even mortgages during your base year before applying for financial aid. While debt is not used to determine your financial aid eligibility, savings accounts are. It is best to go ahead and pay off debt prior to applying.
Sell capital gains. Sell capital gains from real estate, stocks, bonds, or related items about two years before applying for financial aid.
Increase the size of your retirement account. To free up liquid assets, contribute a higher amount to your retirement account, as retirement funds are not counted toward a parent’s assets. On a side note, it is not a wise idea to take money out of a retirement fund to pay for college tuition, as the money then counts towards your taxable income and will decrease your financial aid eligibility the following year.
Hold off on Monetary Gifts. If grandparents or other relatives want to contribute to paying for higher education, ask them to hold off until after you have graduated from college to reduce the size of your savings accounts. You can also ask your relatives to send their money directly to the school. This will allow them to help pay your educational expenses without impacting your financial aid eligibility.
Maximize amount of students in the household. With more than one student from the same household attending school, financial aid eligibility often increases. The more family members enrolled simultaneously in college, the more financial aid will be available to each member. Encourage your siblings to go to college, too!
Keep Your Grades Up. Many financial aid programs are based on academic-merit, so be sure to keep your grades high and study hard for standardized tests.
While many of these strategies are wise and effective, it is absolutely necessary that you don’t go far too far in your plans to maximize your financial aid eligibility. Always tell the truth on financial aid applications, as the penalties for falsifying information are very severe. All schools verify FAFSA forms, so if you provide false information there is a very good chance of your getting caught. If you aren’t sure, check with your financial aid administrator to verify the validity of any of your tactics to get more financial aid.