The Free Application for Federal Student Aid (FAFSA) application process is changing from starting on January 1st to October 1st - effective this year. Some high-income earning families don’t complete the FAFSA because they assume they won’t receive any aid. But most should file anyway. Here are five reasons why everyone needs to fill out this application.
Here are Five Reasons Why You Should Apply
- To get an admissions edge.To demonstrate your ability to pay without any help. It is counterintuitive, but some financial-aid specialists suggest families apply for financial aid to demonstrate that they don’t need or qualify for such assistance. Colleges and universities need to build a freshman class that includes families that can pay the full cost of attendance along with those who can't. The FAFSA form might give a student an admissions edge.
- To qualify for merit aid. Many schools won’t consider students for merit aid (which isn’t based on the family finances) unless a FAFSA is filed.
- To give kids “skin in the game” via federal loans. Filing a FAFSA is necessary for students to obtain low-interest federal student loans. And some parents may want to have children take out a loan so that they bear part of the financial burden. Parents can always choose to pay the loan off later.
- Because you just might qualify, particularly with multiple children. Financial aid is calculated based on the difference between the cost of attendance and the expected family contribution, or Expected Family Contribution on the FAFSA . Wealthy families may qualify for aid at higher-cost colleges, especially if they have multiple children in college at the same time. Increasing the number of children from one to two is almost like dividing the parent income in half.
- Because your situation might change. A job loss or other development could upend your family’s finances. Colleges have contingency funds for such situations, but this money is limited and schools may give priority to students who already have their FAFSA on file.
I saw a situation once where a family had filed a FAFSA earlier and the student had received a limited amount of federal loans. The family asked his son’s college for a “professional judgment review” of the school’s financial-aid decision, which netted the son about $8,000/year in school-based grants.
Date Posted: 09/09/2016 Advice provided in this article is meant for educational purposes only and financial education is important to us. Before making decisions regarding your personal financial situation, please consult an advisor or conduct your own due diligence. If you would like to discuss your Retirement Income Plan with an HCM Wealth Advisor, please give us a call – 513-598-5120. Located in Cincinnati, Ohio, we serve clients in 28 states, and we’d love to help.