Student Loans Insight

The more you know about financial aid, the easier it will be to navigate the process. Qualifying for federal aid means first filling out the dreaded Free Application for Federal Student Aid or FAFSA.  This is the form that most financial aid officers use to compare your family’s finances with what your child’s colleges of choice cost, before calculating your expected family contribution.  If your child is applying to private colleges, you may also need to fill out the CSS/Financial Aid Profile, a form administered by the College Board, a non-profit membership associate.

There are a few key steps you can take the year before filling out the FAFSA that can accurately help portray the money you have or do not have in getting the aid you really need.  There are three strategies in particular that can help your chances.

One, save in the parent’s name.  Many parents set up accounts in their Child’s name to build up college funds. Financial aid officers generally expect 35% of a student’s assets to be used to pay for college, compared with a maximum of 5.64% of the parents’ assets.  So, if a child has $10,000 in a passbook savings account, she/he would be expected to contribute $3,500 towards college, while the parent with the same account would be expected to use only $564 towards college.

Two, increase the number of children in college at the same time.  Simply, when you have more than one child at college at a time, the amount of money you are expected to contribute towards each education would be reduced.

Third, reduce your assets.  That is, reduce the appearance of your assets by moving money into accounts financial aid officers will not touch, such as retirement accounts, or by paying down debt

This entry was posted on Sunday, January 13th, 2008 at 12:42 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.