The New College Reality by Bonnie Kerrigan Snyder

Author:Bonnie Kerrigan Snyder [Snyder, Bonnie Kerrigan]
Language: eng
Format: epub
ISBN: 9781440533327
Publisher: Adams Media, Inc.
Published: 2012-07-15T00:00:00+00:00

FILLING OUT THE FAFSA

The government’s financial aid form, as I’ve said above, is called the Free Application for Federal Student Aid and is commonly referred to as the FAFSA. You can find it here: www.fafsa.ed.gov. It’s like a tax return but even worse. Why? Because they don’t just want to know how much you earned last year. They also want to know how much all of you—the parents and the student—have saved over your entire lives. Generally speaking, the more money you have set aside for college, the more you will be asked to pay, making you rightly wonder why you bothered saving. But income is going to be the biggest driver of your cost. It would be much fairer if the formula would average your income over a few years, but it doesn’t. All it takes into account is the previous year’s income. If you received a big bonus the year before college, watch out. This will swell your income and increase college costs.

The time leading up to college is really not a good time to have a great financial year. It is also a terrible time for a financial windfall, such as selling a business or a house, because sudden moves like that will make you appear richer on paper than you actually are. So be careful if any of these things are in your immediate future. If possible, take care of them before the junior year of high school or put them off.

Most families innocently sit and wait until January of their child’s senior year to find out what their college tax bill will be. This is too late, because at that point there is almost nothing you can do to adjust it. The tax information from the previous year is what determines the size of the bill, so the previous year is when you need to act.

For this reason, you need to do your own estimated FAFSA calculation early on. I can’t stress this point strongly enough. Ideally, you will do this a full year before facing the real one. You need to gain an approximation of the college costs your family will be facing and determine if there are steps you can take, while there is still time, to influence the situation in your favor. Failing to do this is like filling out your income tax form but not taking the deductions you are entitled to. It will cost you—potentially big time.

There are two ways you are going to try to approach your college costs:

Maximize the amount of aid you receive. Not every family can qualify for financial aid, but more families can qualify than currently do. With adjustments to your income and asset allocation, you may be surprised to find out that you can qualify for some aid, despite a relatively high income.

Minimize your costs. Everyone can do this, regardless of your income and assets.

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