Potential Magazine College and Career Organizer 2020 | Page 46

9 pay the way maximizing financial aid Sponsored by: TIPS FOR MORE FINANCIAL AID To ensure the best federal financial aid package possible, consider these tips: HAVE YOUR CHILD SAVE IN YOUR NAME DISCUSS SPECIAL CIRCUMSTANCES PAY OFF YOUR DEBTS SELL YOUR SECURITIES SOONER RATHER THAN LATER Students are expected to contribute 20% of their savings towards their education while parents have 5.64% expect- ed contribution. So students should put savings in their parents’ names while in high school and college to boost the amount of loans and grants they receive. FAFSA considers your income and assets, but does not consider how much of your money is tied up in bills. Additionally, college loans may have higher interest rates depending on your credit score. So, it is wise to pay off credit card and loan debt to increase aid eligibility and lower the loan interest rates. DON’T WAIT, SEND SIBLINGS FAFSA uses the number of children you have in college when calculating your expected contribution. If you have a child who is expected to start college only a year or two after an older child, go ahead and let him or her apply, as the amount of aid you receive will increase to meet the increased financial burden. INCLUDE UNBORN BABIES ON YOUR FAFSA Part of federal financial aid depends on how many chil- dren you support, and the age of dependent children does not matter. So if you are pregnant when you are filling out your student’s FAFSA, you can include your soon-to- be baby, which lowers your expected contribution and increases your child’s loan and grant amounts. INVEST IN YOUR FUTURE EARLY If you have special circumstances limiting your ability to pay for your child’s college tuition such as high medical or legal expenses, the financial aid office may be able to work out a better loan and grant eligibility for you than the impersonal FAFSA formulas. Money gained through selling stocks and bonds up to a year prior to filling out the FAFSA is considered income. If you have securities that you want to sell, sell them at least two years before college to prevent reducing the financial aid package. GET THE GRANDS INVOLVED Although money given to students by their grandparents for college can be considered a gift on the FAFSA, a 529 savings plan held by grandparents will not be counted as an asset for your child’s financial aid eligibility and is a great way to save money without impacting financial aid packages. BE HONEST It is more important that you are honest on your FAFSA and guarantee some financial aid rather than risk losing all aid by manipulating information to appear as if you have a lower income or fewer assets. This list is not meant to be exhaustive, so be sure to work with your financial advisor and the college financial aid offices for more tips and advice. The FAFSA does not require you to list assets you may have in the form of IRAs or 401(k)s. However, your prior year’s contributions to retirement accounts may count as income, so any money that you plan to invest for retire- ment, try to do so at least two years before completing the FASFA. 46 | College Organizer 2020 www.potentialmagazine.com