"The 10 Deadliest Mistakes Most Parents Make When Applying For College Funding. Mistake 1: Most middle and upper-middle class parents assume they will not be eligible for financial aid due to the fact that they own a building and make over $40,000 per year. Reality: Most families with incomes ranging from $40,000 - $100,000 per year who own homes are eligible for some shape of financial aid. There is over 30 billion dollars available each year from the Federal Government, the states, colleges and universities, and private foundations and organizations. You just should have knowledge of how to obtain your "fair share".
Unfortunately, most parents release up prior to they even begin and assume they will not be eligible. This is exactly what the government hopes you can do so they can hold more of these funds. Do not make this mistake! Whether you fall into this category, make sure you apply; you shall probably be eligible for SOME money. Mistake 2: Focusing your time and life on a private scholarship look for instead of spending your time trying to qualify for "need-based" financial aid. Reality: Private scholarships make up only 1% regarding the cash available to you to help pay for your child's college education.
The other 99% returns from the Federal Government, the state you live in, and the colleges and universities your child is applying to. Therefore, you can be many better off spending your time and life going subsequent to the 99%, rather than spending your time on the 1%. Mistake 3: Assuming only minority students, athletes, and academically gifted students get financial aid. Reality: Nothing should be distant from the truth! "Need-based" financial aid is solely awarded based on "financial need" that is calculated by receiving the price of attendance at a college and subtracting the family contribution that is the minimum quantity the government feels you can afford to pay based on your income and assets and your child's income and assets. Whatever is left over subsequent to you subtract these 3 numbers is your "financial need" or eligibility for financial aid at an exact school.
Whether you have not noticed, this has nothing to do with a student's ethnic background, athletic ability, or grades. It's purely based on this simple formula:. COA Price Of Attendance. - FC Family Contribution. Mistake 4: Picking colleges and universities without paying attention to where your student lies in comparison to the rest regarding the student body.
Reality: To increase your chances of getting the greatest likely financial aid packages, it is imperative that you pick schools where your child lies within the top 10% regarding the incoming freshman class with respect to their GPA and SAT/ACT scores. Consequently schools release financial aid based on your calculation of "need" at their school, they shall definitely release preferential wrapping i. , more FREE money, fewer loans to students who lie within the top 10% regarding the incoming class. The reason they do this is to attract the better students to their school. Use this to your advantage and apply only to those schools where your child should fit into the top 10% category.
Mistake 5: Assuming all schools are created equal and shall be can release you similar amounts of money. Reality: All schools are not created equal and shall not be can release you similar about insurance aid packages. Some schools are well endowed and get very many of cash from alumni and corporations. These schools have more cash to release out and are generally can meet most or all of a student's financial need at their school. Other schools, like state universities, get no private funds and rely solely on state and Federal funds to help fill a student's need at their school.
In many cases, these schools leave students brief and release them fewer cash than they can be eligible to receive. It can definitely end up costing you more to send your child to a "cheaper" college if they do not have the cash to meet your need. It is very important that you have knowledge of each school's the past of giving cash prior to you ever apply, so you are not blown distant when you get an evil financial aid product from your child's top college choice. Mistake 6: Not understanding the difference between "included assets" and "unincluded assets" for purposes of filling out financial aid forms. Reality: Sure assets are counted many more heavily within the financial aid formulas than others.
For example, savings accounts, CD's, stocks and bonds are all included and asked about on the Federal Financial Aid form. However, it does not ask related to the price of annuities or cash-value life insurance anywhere on that similar to form. Mistake 7: It does not reason where I hold my money; it's all counted within similar way. Reality: Nothing should be distant from the truth. Where you hold your cash should mean the difference between you getting $10,000 in financial aid or getting nothing! For example, cash within the child's name is weighted many more heavily than cash within the parent's name.
Whether you do not have knowledge of how to legally and ethically position your cash properly for purposes of financial aid, you should end up losing thousands in financial aid!. Mistake 8: "My CPA or tax preparer is qualified to fill out my financial aid forms - I'll let hime or her do it. Reality: Unfortunately, CPA's and tax preparers are experts at tax planning and preparation - not financial aid planning. For example, a CPA or tax preparer may suggest that you place some or all of your assets in your child's name to keep cash on taxes. While this advice is well meaning, it shall usually kill most or all of your chances of getting financial aid.
Also, CPA's and tax preparers are not trained in filling out financial aid forms. In many cases, they shall unknowingly fill out these forms improperly i. , creating use of pen instead of pencil, creating use of white-out to close mistakes, omitting corporate security numbers, etc. , and these "minor" mistakes shall bump your financial aid forms. If this happens, you can should re-submit these forms all over again, and you can probably end up losing thousands in financial aid since it is awarded on a first come, first served basis.
Mistake 9: Waiting until January or even worse subsequent to January of your child's senior year of high college to begin working on your college financial aid planning. Reality: Since financial aid is based on your previous year's income and assets, it is imperative to begin your planning as soon as likely prior to January of your child's senior year. Whether you should legally set up your income and assets so you can maximize your eligibility for financial aid, you should begin working on this, at least, one year in advance - preferably within the beginning of your child's JUNIOR year of high school. The detailed you wait and the closer it gets to your child's senior year, the tougher it gets to set up your financial picture without creating a "red flag" for the colleges and universities. It shall also be important for you to have knowledge of what your "Expected Family Contribution" is so you can begin saving for it.
And, you should also have knowledge of which schools can release you the greatest packages prior to you begin visiting and applying to them. My advice is whether you have not started planning, DO IT NOW!. Mistake 10: Going Through The Financial Aid Process By You Due to the fact that It's "Cheaper". Reality: If this describes you, the colleges and Federal Government are going to like you! This allows them to hold manage over the process instead of you, the parent, understanding how the process works and receiving return manage from them. It always amazes me that people shall readily use a doctor when they get sick, a lawyer when they get sued, but suddenly when they can be going to send their child to college and give between $10,000 - $28,000 per year, parents should keep themselves a couple of dollars and do it themselves.
Unless you spent the final six - 10 years of your life studying and understanding the financial aid process, there is no method you can be going to have knowledge of how to obtain the maximum number of cash from each school. And, whether you do try it yourself, you shall probably give countless hours trying to figure it out. The moral to this story is "Don't Be Penny Wise And Dollar Foolish!" Use an expert who can help you through this process and make sure you get everything you are entitled to. For more helpful points like this leave and to return to two of our monthly workshop leave to.
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