Tip: Get a jump on the process
Most families that have been through the financial aid process will
say they should have started the process sooner. Even in high school,
there are important steps you can take to prepare for college. If
you’ve already graduated high school, start the process
now—scholarships are snatched up quickly, and you’ll want to have your
FAFSA submission ready by early January to ensure your place in the
federal aid queue.
Tip: First-come, first-served
Submit your FAFSA as early as possible (after January 1). The amount
of need-based financial aid available is limited, and is awarded on a
first-come, first-served basis. Don’t wait until you’ve filed your tax
return; estimate the required tax information and file an amendment to
your FAFSA later if the actual numbers are significantly different.
You can also shave weeks off the process by submitting your FAFSA
Tip: Accuracy counts
Submit your FAFSA carefully and submit it correctly. If your
application contains errors or incomplete responses, it will be
returned to you. The correction process could take weeks—weeks that
will move you further back in the financial aid queue. Since most
need-based financial aid is awarded on a first-come, first-served
basis, these few weeks could seriously impact your financial aid
package. See Tips on Completing the FAFSA for more information.
Tip: Save money for college
While family assets are a factor in financial aid eligibility, it
still makes sense to save for college. In the Expected Family
Contribution calculation, only 5.6% of a family’s assets and 35% of a
student’s assets are considered “available for college contribution”.
In other words, your savings will reduce the amount of aid you can
receive, but not by much. More importantly, you will be expected to
contribute some amount of money toward college, and it’s cheaper to
use savings than to borrow against credit cards or home equity.
Tip: But spend money, too
Students are expected to contribute 35% of their own money toward
college costs. The less money the student has, the lower your Expected
Family Contribution. If you’re planning any big purchases, consider
using money currently held in the student’s name instead of parent
savings or consumer credit.
Tip: Save money in the parents’ name
While there are potential tax benefits to saving in your child’s name,
there are also potential financial aid implications. Parent assets are
factored into the Expected Family Contribution at a low rate—5.6%,
while student assets are assessed at 35% of assets and 50% of
after-tax income over $1,750.
Now is the time to build up retirement savings. These funds are
shielded from the EFC calculation, so you can contribute as much as
you want to IRAs or other retirement accounts without impacting
financial aid eligibility.
A 529 savings plan, such as the NextStudent Scholar’s EdgeTM
plan, allows you to contribute to a tax-deferred account established
for the student, but in the parents’ name.
You can also save money in accounts held in other family members’
names. Only parent and student assets are considered in the EFC
Tip: Make it a family affair
The federal government aid programs were designed to help families
pursue their college dreams, and reward those that have more than one
Dependent student enrolled at the same time. In fact, your Expected
Family Contribution may drop as much as 50% if more than one family
member attends college.
Tip: Don’t settle
If you’re not happy with the financial aid packages you’re
offered—negotiate. The final packages are developed by school
financial aid officers, and they may not fully understand your
financial situation. Talk to them. Ask them how they arrived at the
final numbers. Help them understand your position. Each school’s
package may be different, so don’t give up until you’ve tried them
Tip: Don’t stop
Start looking for scholarships and apply for grants and work-study as
soon as possible, and don’t stop looking until graduation looms near.
Your financial situation or academic record could change over the
years, and these changes could impact your eligibility. And, free
money is awarded for a variety of reasons—not just financial need or
GPA, so you may already be eligible for more than you think.
Tip: Don’t assume
Just about every family is eligible for some financial aid—even those
that think they earn too much or don’t know enough about their
options. Fill out the FAFSA and let the Department of Education
determine the amount of financial aid you’re eligible to receive.
They’ll consider a number of factors—including college costs,
financial need, and non-need based criteria, such as academic
performance, ethnicity or nationality, and special aptitude for
athletics, music, art, leadership or other criteria.
You’ll need to fill out the FAFSA for any type of funding; there is no
other way to get government help. Remember, some sources of aid, such
as unsubsidized Stafford and PLUS Loans, are available regardless of
Tip: Start low
Focus first on the lowest-cost aid, such as scholarships, grants and
work-study. These cost you nothing because they don’t have to be
repaid. If free money isn’t enough to pay for college, look next to
low-cost student loans, such as the Federal Stafford Loan, next. Rates
for these loans are among the most favorable, and repayment is
deferred until after graduation. Your next best bet is Federal Parent
PLUS Loans, followed by private, or alternative, loans. Avoid
high-cost financing, such as home equity loans or credit cards—not
only do these carry a high rate of interest, they also require
immediate repayment and can jeopardize your financial status.
Tip: Aim high
Don’t turn your back on your dream school just because it’s expensive.
Your Expected Family Contribution (EFC) is based on your financial
situation and is the same regardless of the school you attend. Your
financial aid package, on the other hand, is based on the cost of
attendance minus your EFC so that a more expensive school may result
in a more substantial financial aid package.
Tip: Apply for loans
You can initiate a student loan at any time by applying online for a
Federal Stafford, Federal Parent PLUS or NextStudent Private loan.
Even if you haven’t submitted the FAFSA, you can get the process
started, and complete it when you receive your financial aid package.
Once you receive that package, usually in April, you’ll have just a
few short months to before school starts to secure your loans.
Tip: Consolidate your loans
Federal consolidation is one of the smartest, most economical
repayment tools available. This program allows you to consolidate one
or more eligible loans into a single new loan at a great, low rate—and
no additional fees. Right now consolidation Loan rates are at record
lows—the lowest in the history of the program. For
most, this means a savings of more than 60%, plus the convenience of
making a single payment and possibly extending the repayment period
for even lower monthly payments.
Tip: Stay on track
The financial aid process can be long, and there are so many things to
remember. Make photocopies of all forms and applications, and keep
them in a handy file. And sign up for NextPath, the customized message
service that notifies you about important financial aid deadlines,
tells what you should be doing and when, and offers up-to-date student
loan news so you won’t miss out on college funding opportunities.
Tip: Get help when you need it
Unless you’re a financial aid officer, you probably have questions
about the process and the types of aid available.
to make your life easier so you can focus on the fun parts of going to