Effective Strategies Parents Need to Employ to Maximize Their FAFSA Eligibility for Financial Aid

The students are applying for grants or financial aid to manage their high education expenses. Recently, the under graduates are avoiding taking out loans as they understand the consequences of defaulting on payments.

As a result, most of the students are applying for financial aid to avoid repaying the aid after graduation. Well, they’re not aware that they need to be eligible to get the grant.

You need to fill the Free Application for Federal Student Aid (FAFSA) to apply for the financial aid. Therefore, you need to strategically plan for maximizing eligibility for financial aid and completing the FAFSA.

Here are some of the effective strategies that you need to consider to maximize FAFSA eligibility for financial aid:

1. Try to save more money in the parent’s name instead of the child’s name. Make sure you use a savings vehicle that is considered as a parent asset like the 529 college savings plan, prepaid tuition plan or Coverdell Education Savings Account.

2. Eliminate your financial liabilities like the credit card debts or mortgage liabilities.

3. Parents can go back to school or college to complete their further education at the similar time as their children. You can get more financial aid if more family members are in the college at the same time. If the parents enroll in any academic program, the school or college may review the document to check whether the parents are genuinely pursuing a degree.

4. Spend the income as well as the asset of the students first.

5. In order to lower the available cash, make sure you spend the cash on necessary expenses. For instance, make sure you buy the computer immediately, before you file the FAFSA.

6. You can consult with the financial administrator at the school to check your case. In certain cases, the school can help to modify the financial aid package with the help of the process popularly known as Professional Judgment.

7. If you minimize your capital gain, then you can effortlessly acquire the financial aid.

8. It is advisable to maximize contribution to your retirement fund as it can be beneficial for you.

9. Avoid withdrawing money from the retirement fund to pay for schools. This is because the distribution is considered as taxable income, and in turn your eligibility for financial aid can be reduced. Therefore, borrow from your retirement account instead of getting a distribution.

10. Before you submit application with the FAFSA, make sure you minimize educational debt.

11. Request the grandparents to wait until the grandchildren graduate before offering financial aid for their high education.

12. Remember, the trust funds are not beneficial at sheltering money from the need analysis process. It can create problem while you apply for financial aid to manage your higher education expenses.

13. The effect on the financial aid is negligible for the parents who own a section 529 college savings plan.

14. You need to select a date to submit the FAFSA sincerely as the assets and student marital status are mentioned as of the application date.

Calculation of the Family’s Expected Contribution:

The Profile may not calculate an “EFC” figure, as the FAFSA and Profile use completely different methodologies. The profile number may not be similar among the schools. One of the prominent differences is that the FAFSA does not include the home equity in a principle residence, whereas PROFILE schools often do. Well, they can differ from school to school on the basis of the caps on the mortgages.

If you’re self employed, the PROFILE schools can look at the financial state in many different ways. If you have a non custodial parent, FAFSA schools may not review their assets and income, but it’s different in case of the PROFILE. Some sheltered assets like 401 K monies, money in siblings accounts are included in the PROFILE schools. You can enjoy the allowances of that you won’t get off of your FAFSA EFC like tuition for private schools for younger kids.

Therefore, you need to keep the above mentioned strategies in mind when you plan to maximize their FAFSA eligibility for financial aid. Make sure you review the PROFILE expected family contribution while applying for financial aid.

By Andrew Jackson,financial counselor associated with Oak View Law Group, APC now for over 4 years. He analyses people’s financial situations minutely and advises on different debt relief options available. He also helps people manage their budgets through free counseling.

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