Now is the time to find the most financial aid possible to help with the costs of school. It can be a challenge, though, to find financial aid, especially given the fierce competition and limited amount available.
It all starts with the FAFSA, the Free Application For Federal Student Aid. Then it includes the hunt for scholarships and grants. Finally, it ends with potentially taking out student loans. But what if none of these were options? What if a simple mistake made it impossible to get financial aid? It happens, and it can make financing college difficult.
Here are the top mistakes families make when it comes to preparing and applying for financial aid.
Not Filing The FAFSA
The biggest mistakes families can make when it comes to financial aid is simply not filling out the FAFSA. Mark Kantrowitz, Senior VP at Edvisors.com, lays it out in uncertain terms: "You can't get aid if you don't apply."
Many families, however, think they may not qualify for aid and simply don't apply. But then circumstances change, maybe a job loss or other unexpected event, and financial aid becomes necessary.
Regardless of your financial situation, all families should fill out the FAFSA, even if little potential of receiving a financial aid award. This should be done through every year of school, even if no aid was awarded in the past years.
Filing The FAFSA Too Late
Another common mistake is simply filing the FAFSA too late. Gwen Thomas, author of The Smart Guide to Sending Your Kids to College Without Going Broke, says "the worst thing is to delay the process [of] completing the FAFSA. Often, people believe that because they have not finished their income taxes they should not complete it. However, the process begins on January 1st and the last filed year can start the process."
Most schools across the country use a first come, first serve method for distributing their financial aid awards. Even if you qualify for financial aid, if you file your FAFSA late, all of the funds could potentially be exhausted. That's why it's so important to file your FAFSA as early as possible.
Remember, though. If not receiving financial aid would prevent your student from attending school, speak with your financial aid officer. There are sometimes special ways financial aid officers can help.
Saving Money In The Students Name
Schools use the information provided in the FAFSA to calculate the Expected Family Contribution (EFC). This is the amount that parents and families can be expected to pay for school. What many families don't realize, though, is that money in the students' name is expected to be used for educational expenses at a much higher amount than assets in the parents' name.
Jeff Rossi, from Peak Wealth Advisors, says "anyone saving for college is to refrain from stashing money in a custodian account or the child's name (savings accounts, CD's, etc). Those assets are calculated at roughly 20% when it comes to the Expected Family Contribution, whereas assets in the parents' names are calculated at roughly 5%. Also, if a parent has some control over their income, they should try to collect on any flexible income (exercising options, deferred income) two years before they need to fill out the FAFSA or CSS (college aid profiles used to determine eligibility for needs based aid), or later in their kids senior year so it doesn't show on their application. A high level of income will increase their Expected Family Contribution for the coming school year. Parents should, insteadm stash assets in 529's, Coverdells, and Roth IRA's."
Divorced Parents Not Filing Their Taxes Correctly
Finally, students of divorced parents have a special consideration that can seriously hurt financial aid. The FAFSA requires the parents report the income from their tax returns, but if the parents are not claiming their child correctly, it can lead to problems with financial aid.
That is why communication and coordination are incredibly important for divorced families who are sending their child to college.
Conclusion
In order to maximize the amount of financial aid possible, it's important that families avoid these mistakes, fill out the FAFSA early, and communicate to potentially maximize the amount of financial aid.
