Qualifying for Financial Aid

Don’t assume your child won’t qualify for financial aid because you “make too much money” or have saved for college. Nearly half of families with incomes over $80,000 qualify for assistance, particularly at more expensive colleges or when more than one child is enrolled at the same time. Consider the following:

• College financial aid experts recommend appealing aid awards when renewal letters are received or upon financial downturns such as those related to divorce, unemployment, death of a parent, or medical emergencies.
• A suggested strategy is to place money in employer retirement savings plans and annuities because they do not have to be reported on financial aid application forms. The same is true for home equity, which is not counted when tallying parental assets. This provides an incentive to prepay principal or make home improvements. Seek advice from a Certified Financial Planner™ or financial aid consultant when needed.
• Consider limiting savings in a child’s name to increase the chances of receiving financial aid. Students are expected to use about 35 percent of their own assets each year, compared to up to 5.6 percent of their parents’ assets, when calculating eligibility.
• Other planning strategies that may be appropriate according to financial aid experts are to spend down custodial account money on education-related expenses (such as a new computer), make grandparents the owner of a 529 plan account, and lower household income by deferring bonuses or declaring investment losses. In addition, since many colleges consider the financial resources of stepparents in financial aid awards, some divorced parents may decide to postpone remarriage until after their children graduate