School financial aid offerings are a crucial part of deciding where to attend: the average cost of attending a public universities exceeds $20,000, private universities are broaching $50,000 per year. without a comprehensive financial aid package, you could easily incur thousands of dollars in debt each year. Financial assistance is not created equal, and, can vary greatly based on both federal and private resources available to the student and the school.
Maximizing financial aid can increase free money, reduce required family contributions, and otherwise lower the cost of attending their preferred school.
Types of Aid Found in Financial Aid Packages
Free money, such as government aid, scholarships, grants, and fellowships lower borrowing needs and do not require repayment.
Subsidized loans save money because the government pays the interest while your child attends college. Universities award subsidized federal loans based on financial need and established loan limits.
Unsubsidized loans accumulate or capitalize interest during the years of attendance which will add hundreds of dollars in the balance before repayment begins. Federal and private lenders offer these loans to both undergraduate and graduate students. Repayment can begin immediately or after leaving school.
Four Ways to Improve Your Financial Aid Package
Learn About the University Appeals Process
After reviewing the award letter, which lays out the proposed financial assistance available, you can accept, reject, or appeal any of the assistance offered. The appeals process takes time and comes with strict deadlines. However, the process can result in an improved financial aid award letter.
The first step in appealing a decision is contacting the financial aid office or scouring the school’s website to learn the process of filing an appeal.
Financial assistance falls under two categories: Need-based and merit-based.
Need-Based: The focus of a need-based appeal is your current financial circumstances. The financial aid formula considers the family’s previous year's income and current assets for both the parent and the dependent student. The process typically begins with the financial aid office.
A change in financial circumstances is a common reason for an appeal. In addition, schools may have other resources and a separate application process for private aid, which can increase need-based assistance. A competing institution offering a stronger package can also provide leverage.
Merit-Based: The focus of a merit-based appeal is your child’s skills. Valuable attributes can include academic, athletic, musical, or other merits, which could qualify for additional assistance in the form of scholarships, grants, or fellowships. The process typically begins with the admissions office. An appeal for both need and merit may require two separate processes.
How to Win an Appeal
Typically, you must submit the appeal in writing. Specifically state the reasons you should qualify for additional assistance: An error in the FASFA form, a change in circumstances, or a personal hardship are common reasons a school might reconsider the initial award letter.
Include specific facts, dates, and relevant information to provide the financial aid or admissions office with a better understanding of your financial hardship or merits. For example, claims such as unemployment, high medical bills, or a better competing offer, should include evidence to support the claim.
Strategically Title Assets
The FASFA form considers non-retirement assets held in both the child’s and the parent’s name, in households with an adjusted gross income (AGI) over $50,000. For dependent students, the formula calculates 20% of account balances titled in the child’s name and only 5.64% of assets in the parent’s name to establish the expected family contribution (EFC).
Strategically titling assets might include moving accounts out of the child’s name before college begins. The more assets your child owns, the higher out of pocket costs you can expect to pay. Accounts might include certificates of deposit, savings accounts, checking accounts, and savings bonds. Custodial accounts such as UGMA and UTMA fall under student assets, where 529s typically fall under parental assets. A tax or financial advisor can help you develop the best strategy.
Avoid Mistakes When Completing the FAFSA
Federal assistance begins with the FASFA, and simple mistakes could delay the process. Given that most schools offer help based on a “first come, first serve” policy, delays can cost you money. Apply early. You can complete the FASFA with estimated income and then update the form with the exact numbers after filing your taxes.
Additional Forms of Importance
The FAFSA form regulates federal aid, but, it is not the only avenue to receive the free funds for college. Universities often have their own application for private and school-specific aid. Scholarships tend to have an independent application process, which can include both merit and need-based help.
For instance, educational institutions may offer the CSS Financial Aid Profile form, which provides aid from sources other than the federal government. Aid can come from different departments, alumni groups, or foundations linked to the school.
The financial aid office can help you apply for assistance through other avenues beyond the federal programs to increase your access to free money for college.
Taking proactive measures can ensure you receive the highest awards for free money available before borrowing money for college. While earning a college degree is an expensive venture, there are ways to reduce the cost of attending the school of your choice.