5 Common Myths about Financial Aid

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Now that many public colleges and universities have an annual cost-of-attendance exceeding $25,000 and a few private institutions have exceeded a $70,000 annual cost-of-attendance, financial aid has become an essential element of a family’s college planning campaign.

Don’t rely on anecdotal information; get the facts!

Consider the following five myths:

  1. My child won’t qualify for financial aid because we earn too much money.

Yes, it’s true that income is the main factor in determining “need-based” aid. However, the number of children you have in college at the same time significantly affects the amount of aid for which you might qualify.

Even if you believe your family won’t qualify for “need-based” aid, file the FAFSA. Do so because it is the prerequisite for eligibility for an unsubsidized Stafford Loan and it is often a prerequisite for “merit-based” aid.

Yes, even if you make too much money, your child may still qualify for awards and scholarships issued from the coffers of the schools.

  1. The form is exceptionally confusing.

While it may have been an incredible burden years ago, it is much less so now. It’s now online, easier to navigate with detailed instructions, and it relies on your tax information from two years prior rather than your most current return.

  1. Applying to a more expensive school will result in more financial aid.

Maybe…maybe not.

The greater the financial need doesn’t mean you’ll receive a larger financial aid package. Schools are not obligated to satisfy your entire need. Each school has its own financial aid formula and method by which it develops an individual student’s award package.

  1. We own our home, so we won’t qualify.

Home equity is not requested on the FAFSA, nor are the value of retirement accounts, cash value life insurance, or annuities.

  1. Our circumstances have changed, but nothing can be done.

If your circumstances have changed since you filed the FAFSA and you have supporting documentation, you can ask the financial aid officer to review your aid package. Adjustments can be made if there have been material changes to your income or assets.

 

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