10 Tips for Maximizing Financial Aid

August 24, 2015

college-aid-377-177College tuition can be so costly that even high-income families can get offers of financial aid. Your first step is to complete the federal forms, and then contact the school directly to further negotiate a financial aid package.

So what does it cost to achieve this lifetime enhancement? The average cost of college (tuition, fees, room, and board) is around $19,000 for in-state public schools and $43,000 for private universities, as reported by the College Board. Keep in mind that these are averages for one year of college only. To plan accurately for college costs, it’s best to 1) identify the college the student is likely to attend and use those numbers; 2) multiply the one-year cost by 4 (or even 5); and 3) add an inflation factor.

Your income may lead you to think it’s not worth the trouble of applying for student aid. But because a greater portion of institutional grants is now going to higher-income families, and because subsidized loans offer such attractive rates and terms, anyone with a child enrolling in college should fill out the FAFSA (Free Application for Federal Student Aid at www.fafsa.ed.gov).

Even parents with students who are several years away from college should become familiar with the FAFSA so they can rearrange their affairs if necessary, perhaps contributing more to retirement plans (which are considered exempt assets) or spending down UGMA/UTMA accounts so those assets won’t raise the expected family contribution (caution: UGMA assets must be spent on the child and may not be for necessities; summer camp, cars, and computers are OK). Also, remember that the FAFSA must be submitted every year that the child is enrolled.

Here are some tips for filling out the FAFSA:

  1. Do it early. At many schools financial aid is distributed on a first-come, first-serve basis. Although the federal deadline on the form is June 30, the aid deadline set by individual schools could be as early as the end of February. Deadlines for state aid also vary. And although it asks for the prior year tax information, which may not be in yet, financial aid counselors advise using estimates or basing the figures on last year’s tax return rather than waiting.
  2. Do it online. Because of the FAFSA’s complexity, it’s common for people to make mistakes when filling it out. Paper applications with errors or missing information will be returned for corrections; therefore, their processing will be delayed. The online version of the form issues an alert for missing information and even recognizes some obvious errors.
  3. Do not include exempt assets. Retirement plans and home equity are exempt assets and should not be included in net worth information on the FAFSA.
  4. Keep all records. Make a copy of the completed application and save it, along with all records used to complete the FAFSA. Not only will this help in filing next year’s form, but documentation may need to be produced if yours is one of those selected for verification. The U.S. Department of Education checks FAFSA information against data from the Social Security Administration, the Veterans Administration, and the Internal Revenue Service. It also selects about one-third of all applications for verification.
  5. Read all questions carefully. The words “you” and “your” refer to the student, not the parents. Do not leave any answers blank. If the answer is “zero” or “not applicable,” enter “0” or “N/A.”
  6. Do not send letters of explanation with the FAFSA. Although it is a good idea to make financial aid officers aware of any unusual circumstances, such as a job loss or reduced income, such letters should be directed to individual schools. If they are attached to the application, they will be thrown away. Apart from the FAFSA, parents may want to contact the financial aid departments at individual schools to increase their chances of receiving a favorable financial aid package.
  7. Don’t discount expensive schools. Some families automatically cross high-tuition schools off their list. But interestingly, those colleges may actually be more affordable because they are often well endowed and can meet more of the need.
  8. Reconsider early decision. Some schools allow students to get a jump on the application process if they will commit to attending if admitted. While this may help the student’s chances of getting in, it could reduce the amount of aid that is offered, because of the student’s reduced bargaining position.
  9. Ask for a review. To try to receive a better aid package, ask that it be reviewed. Avoid using the words “bargain” or “negotiate,” however; financial aid officers do not like being put in that position, and they especially hate having offers from competing colleges waved in their faces. Counselors advise thanking the school for its generosity and then expressing doubt at being able to meet the family’s expected contribution as a way to ask for more aid.
  10. If outside scholarships come in, ask that loans be reduced first. Some students have discovered that outside scholarships from community organizations such as the Rotary Club end up going straight to the college. That’s because the grant portion of the aid package is reduced dollar for dollar by the amount of the scholarship. Ask that any outside scholarships be applied against the loan portion of the package.

The availability of student aid should not keep parents from saving for college. But because grants and loans are such an essential part of college financing today, even high-income families, who haven’t thought to request student aid, will probably want to participate in the student aid game rather than automatically writing checks to their child’s college.

At HFG Wealth Management, we embrace a more holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.



Asset Allocation
Investment Review Selection
Portfolio Management
Risk Analysis Management
Tax Impact Analysis
Asset Transition Analysis

Copyright © 2017. HFG Wealth Management, LLC. Investment advisory services offered through HFG Wealth Management, LLC – An independent Registered Investment Advisory firm registered with the SEC. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Therefore, any information presented here should only be relied upon when coordinated with individual professional advice. [ more disclosures ]