Five Common Financial Aid Myths

With some private colleges now crossing the once unthinkable $70,000-per-year mark in the 2017-2018 school year, and higher costs at public colleges, too, financial aid is essential for many families. It’s important to be educated about this key piece of the college attendance puzzle.

Consider these 5 financial aid myths:

1) My child won’t qualify for aid because we earn too much money
While it’s true that family income is the main factor in determining aid eligibility, it’s    not the only factor. The number of children you’ll have in college at the same time is a significant factor — for example, having two children in college will cut your expected family contribution (EFC) in half.

Even if you think your child won’t qualify, you should still consider filing the government’s Free Application for Federal Student Aid (FAFSA) for two reasons.

  • All students (regardless of income) who attend school at least half-time are eligible for unsubsidized federal Direct Loans, and the FAFSA is a prerequisite for these loans.
  • The FAFSA is always a prerequisite for college need-based aid and is sometimes a prerequisite for college merit-based aid.

2) The form is too hard to fill out
Years ago, the FAFSA was cumbersome to fill out. But now, it’s online at   www.fafsa.ed.gov, and it’s much simpler to navigate. The online version has detailed instructions and guides you step by step. There is also a toll-free number you can call with questions (800) 4-FED-AID.

Additionally, the FAFSA now relies on your tax information from two years prior rather than one year prior. Meaning, your necessary tax numbers will be handy as you answer questions on the FAFSA.

3) If my child applies to a more expensive school, we’ll get more aid
Not necessarily. Colleges determine your EFC based on the income and asset information you provide on the FAFSA and, where applicable, the CSS PROFILE. Your EFC stays the same no matter what college your child applies to. The difference between the cost of a particular college and your EFC equals your child’s financial need. The more expensive a college is, the greater your child’s financial need. However, a greater financial need doesn’t automatically translate into a bigger financial aid package — colleges aren’t obligated to meet 100% of your child’s financial need.

4) We own our home, so my child won’t qualify for aid
The FAFSA does not take home equity into account when determining your EFC (it also doesn’t consider the value of retirement accounts, cash value life insurance, and annuities).

5) I lost my job after I submitted aid forms, but there’s nothing I can do now
Not true. If your financial circumstances change after you file the FAFSA — and you can support this with documentation — you can ask the financial aid officer at your child’s school to revisit your aid package; the office has the authority to make adjustments if there have been material changes to your family’s income or assets.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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