Maximizing Your FAFSA

When it comes to filling out the FAFSA, you might assume there would be no way to strategize.  After all, you can’t argue with facts and figures.  While that’s technically true, there are still a number of steps you could take to help ensure that you (or your child) earn the most aid possible.

Here are a few ideas:

  • Though this might seem counter-intuitive, don’t save money in the child’s name. Instead, save it under the parent. Or use something that is treated as though it’s a parental asset like a 529 college savings plan, Coverdell Education Savings Account or pre-paid tuition plan.
  • Have the individuals in your household attend college concurrently. Hence, if a parent or sibling is considering returning to school, now would be the time. After all, the more family members enrolled the more aid that will be available.
  • Spend down your child’s/student’s income and assets first.
  • Make any big (and necessary) upcoming purchases prior to submitting the FAFSA. This will reduce the amount of available cash you list.
  • Additionally, pre-pay your mortgage.
  • Minimize capital gains and maximize the contributions you make to retirement funds.
  • The assets of other children in your family (not currently attending college) will not be considered during your analysis. Therefore, as a parent, you can place your assets in the name of a sibling. However, there is a chance that the school may ask about that when considering how to allocate institutional funds.
  • Don’t overestimate income when reporting it on the FAFSA. You might be surprised but families have a tendency to do that. This is partially because they often list gross income rather than adjusted (ex: for health premiums).
  • Similarly, be careful when reporting your taxes. All too often, people conflate the amount withheld with the amount of taxes actually paid.
  • It’s important to recognize that trust funds are unlikely to shelter your money.
  • Oftentimes, grandparents will offer to provide grandchildren with some money for college. We know it might be hard, but have them hold off.  Let them sit on the cash and present it to the grandchild upon graduation.  That way, he/she can use it to pay down his/her debt.  And it won’t negatively affect your financial aid.

When it comes to financial aid, it’s essential to do your research.  The more you educate yourself, the more opportunity you’ll likely discover.  And that ultimately means more money in your pocket.

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