Filling out your FAFSA and qualifying for financial aid through the government or your school can be a great way to save money on college costs. Because of the huge potential savings, however, many people are competing for the best scholarships. Fortunately, there are ways to make sure that you qualify for as much aid as possible.
Start by reducing the assets and income that you claim on the FAFSA. The FAFSA requires individuals and families to provide a snapshot of the total amount in their cash and taxable, non-retirement investment accounts. To lower this amount legally, make any major purchases and retirement account contributions immediately before filling out the FAFSA. In addition, you might also want to consider accepting non-cash compensation from your job or increasing your retirement contributions to lower your reportable income.
Remember that an individual is considered to be able to contribute 20% of his or her personal income and savings towards his or her educations costs, while his or her parents (assuming the individual is under age 26) should be able to contribute 6%. For this reason, it makes sense to move as many assets as possible from the student to his or her parents. If possible, transferring them to a trusted friend or relative is an even better option. Of course, it only makes sense to do this if the transfer does not trigger the gift tax, since the transfer is technically considered to be a gift. Nonetheless, getting rid of $12,000 worth of student cash can increase a financial aid contribution by $2400.
After filing the FAFSA and receiving your federal award letter, call your school’s financial aid office. Ask about ways in which the amount of financial aid awarded can be increased. Do not hound the office or threaten to pull your enrollment unless the amount awarded is actually too low for you to continue your education. Instead, inquire about ways to qualify for private scholarships, work-study programs, and loan forgiveness programs.
Finally, look for unusual and hard to qualify for scholarship programs. Many well-known scholarships are applied to by thousands of people every year, making it next to impossible to actually get anything in exchange for the time and effort put into applying. Scholarships that are geared towards students in their final years of school, in a specific major, or working in a specific field, however, tend to have less competition.
