Even High-Income Families can Qualify for Aid

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Most families believe that financial aid is need-based.  Thus, many families mistakenly believe they won’t qualify for financial aid, basing that belief on the fact that they make a ton of money or have quite a few assets.  Unfortunately, they fail to apply for aid.

As a result, they lose out on money for which they otherwise would qualify. 

They lose out on merit-based aid because they failed to file the Free Application for Federal Student Aid (FAFSA) and, where applicable, the College Scholarship Service Profile (CSS Profile) Application.  Merit-based aid includes athletic scholarships, art and music scholarships, STEM-based (science, technology, engineering, and mathematics) scholarships, community-service based scholarships, religious-affiliation scholarships, and more.

Even high-income families may qualify for need-based aid.  A school may not consider the non-custodial parent’s income and assets.  The actual cost-of-attendance may be higher than the Expected Family Contribution, allowing the family to qualify for need-based aid.  Likewise, the number of students a family has in college can result in qualifying for need-based aid.

File those financial aid forms.  If you fail to do so, it’s a sure bet you won’t receive the money that your qualified to receive.

Contact us for help in developing your college planning campaign.

Disadvantages of 529 Plans

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Introduced in the mid-1990s, 529 Plans remain the flavor of the day.  Touted by Wall Street, financial advisors, and the main-stream media, families that try to save typically utilize a 529 Plan.

While the positives of a 529 Plan are the ability to invest in “high-return” assets, to avoid taxes on gains, and to use money tax-free for qualified education expenses, there are major downsides…

Any vehicle that has the greatest odds of having the money you need when you need it, also has the greatest odds of having less than what you need when you need it.  Where there are odds, there are no guarantees.

529 Plans can differ in the investments offered, the costs of those investments, the amount that can be contributed, the way the money can be used, and plan administration fees.  529 Plans, creatures of legislation, are ripe with restrictions. 

These plans also reduce the financial aid for which a family may qualify.  The greater the amount held in a 529 Plan (and that includes 529 plans for all kids in the family), the less aid available in the form of grants, scholarships, and loans.

Accordingly, it’s important to find the plan that fits your needs.  But, should it be a 529 Plan?

What’s the alternative?

We can share with you strategies that will allow you to save your money, that will not impact eligibility for financial aid, and that will provide greater access to and control over your money.

Whatever choice you make when saving for college, be sure to start today.  Be sure to give your money time to compound. Schedule your meeting with us and discover the right savings vehicle for you and your family. 

Save for College Now

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Earning a college degree remains a major achievement.  The greater the level of education, the greater the likelihood of a good job and decent income.

The clock begins at birth, providing 18 years to prepare.  Yet, families just aren’t preparing.  Of those that do, most have saved less than one year’s cost of attendance.

The cost, combined with lack of savings and the resulting economic benefit, leads to burdensome debt.  That debt rests not just on the student, but on the family as well.  And, it can sit there for decades.

If you haven’t started saving at conception, the time to start is now!

How much should you save? 

Clearly, as much as you possibly can.  Some experts recommend saving one-third the expected cost, allowing the remaining portion to be paid over a lifetime of loans and future income.  This doesn’t quite make sense to us, as we know there’s a better way.

Where should you save?

Many families resort to traditional savings accounts.  While safe, though earning interest, these accounts don’t work for you.  Plus, money in a savings account will be assessed and likely reduce potential financial aid.

Other families utilize 529 plans.  While touted as savings plans, we see them as investment plans, a place where families gamble on having enough money when they need it.  Sure, they’re tax-advantaged, but they’re tied to the market, with restrictions on how the money can be invested.  You lose control of your money.  The money can be used only for qualified education expenses; if used otherwise, a penalty applies. 

Some families use Roth IRAs.  While there is tax savings, the money is also invested in market-based instruments.  Just like 529 plans, it’s a gamble you may not be able to afford.  And, there are restrictions tied to your money – contributions, access, use, etc.

Thought the above options are those most often touted by the media, Wall Street, and financial advisors, they may not be the best place to store your savings.

Contact us for guidance on where and how to save for college, so that your family qualifies for the greatest amount of financial aid possible.