These are a few notes I took from a recent article Gateway to College Aid by Jerilyn Klein Bier. Please pass this information along to friends and family facing college tuition payments.
The author quotes Mark Kantrowitz, co-author the of book Filing the Fafsa and publisher of Edvisors.com, a website focused on planning and paying for college. The book may be downloaded for free in PDF format at Edvisors.com.
"It is very difficult to predict how much aid a student might get from year to year."
- one big factor is the number of siblings enrolled in college,
- another factor is the price of a particular school.
Make sure assets and income are positioned before the year your student is a Junior in the spring and a senior in the fall. Fafsa works on the calendar year Jan. - Dec. not the academic year.
He urges families to file as soon as possible after January 1 as many states and schools have deadlines in early 2015 and award aid on a first-come, first-served basis.
He encourages families to file the form online because of faster processing, built-in edit checks and the skip-logic functionality. This means respondents are not asked questions that don't apply to them.
One big change for 2015 is there is little differentiation for parent relationships. Parents who live together, married or divorced, or never married are now treated as married and both must report income and assets on the Fafsa.
Grandparent owned 529 plan distributions reported as untaxed income to the beneficiary (the student) can reduce need-based aid eligibility. A parent owned 529 is treated as a parent asset and is assessed, at most, by 5.64%.
If grandparents do hold 529 plans, it's best to hold off on withdrawing assets until the student will no longer be applying for financial aid - like their senior year.
For example, a $10,000 distribution from a grandparent owned plan could reduce aid eligibility by as much as $5000, while $10,000 in a parent-owned plan could reduce eligibility by a maximum of $564.
Parents of younger children should tune in. Understanding what goes into the expected family contribution and how schools consider this can help them position their assets and steer their kids toward institutions that may offer more attractive aid. It can also help families to better balance the triple threat of saving for education, a home and retirement.
No one will give you a loan or scholarship for retirement!
Be $ smart - plan well in advance to qualify for financial aid.
