FAFSA Tip: Should You Put Assets In Your Child’s Name?

BIGGEST FAFSA MISTAKE

Stocks, bonds, real estate investments, money in checking and savings accounts, and other assets are very valuable to have. I am a huge advocate of parents teaching their children early on about these things. It is even better if the children learn how to and actually invest in these assets themselves.

However, it is NOT a good thing when it comes to filling out the FAFSA and other financial aid forms for college.

 

Assets that are in the student’s name will get penalized heavily when it comes to the FAFSA and other financial aid forms. When it comes to financial aid from the FAFSA form, 20% of the student’s assets will be counted in the FAFSA’s financial aid calculations as opposed to only 5.64% of the parent’s assets being counted in the financial aid calculations on the FAFSA form. This is a difference of nearly 14%.
Also, parents can “protect” some of their assets. This means that the FAFSA form will not count a percentage of the assets at all when trying to determine the amount of financial aid that the student will qualify for.

Overall, putting assets in the students name versus the parent’s name could be the difference between your child qualifying for some financial aid through the FAFSA form and not qualifying for any financial aid.

Are You Like the Brady Bunch With More Than One Child Going To College At The Same Time?

Maybe you are like the Brady Bunch. With six kids, the Brady Bunch was bound to have at least two, if not more, kids in college at the same time. I wonder how the parents in the Brady Bunch coped with having to pay for two kids in college, while at the same time still having to pay for the four younger siblings as well. The costs can really start to add up especially when you have to pay for more than one kid in college at the same time. Luckily for the Brady Bunch, I think the oldest children were only in high school, but they were bound to go off to college some day.

Or maybe you aren't like the Brady Bunch and only have two kids, but they are close in age: like only a year or two apart. Or could you imagine having three or more kids all a year apart in age? Or maybe you have twins. They will definitely be going to college at the same time.

Families--- whether big, like the Brady Bunch, or small--- can end up with the same question if they have kids that are close in age: How will I be able to afford to pay for my children's college costs at the same time?

Well parents, you can get some help if you have two kids in college at the same time. If you apply for financial aid and show that you have two kids in college at the same time, you can get a break. For example, say you have only one child attending college. Your household income is $150,000 and you have assets totaling $500,000. With just one child in college, the way that the formulas are constructed, it says that you can afford to spend $50,000 (hypothetically speaking). So with one child attending a $40,000 school, you wouldn't get any financial assistance. BUT, if you have two kids in college at the same time, you would get $30,000 in financial aid versus getting $0 in financial aid.

So what should you do if your kids aren't twins and don't enter at the same time? If your kids are one, two, or three years apart, you might want to ask the oldest child to take a year off after high school so that your children can be in college at the same time (or so that you can at least have a few of their college years overlap).

If you have a question pertaining to college and paying for college, feel free to contact me at: shanicemiller1@gmail.com

By: Shanice Miller, Founder DebtFreeCollegeGrad.com

High Income Parents CAN Qualify for Need-Based Financial Aid

One of the biggest MYTHS is that students that have parents with high incomes (high incomes referring to parents making $80,000 or $100,000 or more!) cannot receive financial aid.

There are parents all over that do NOT fill out the FAFSA (Free Application for Federal Student Aid) because either 1) they think they won't qualify for financial aid because they make too much (or have a lot of assets) or 2) they filled out financial aid forms before and only qualified for loans. When high income earners don't know the "loop holes" that you can use when filling out your financial aid forms, they will only qualify for loans. Can you see why so many people that earn a lot of money think that it would be a waste of time to fill out financial aid forms? I sure can! It's all because they don't know the rules to the "FAFSA" game.

So GREAT news for Parents that are 6 figure earners: You CAN qualify for need-based financial aid. One of the ways that you can qualify for financial aid is by choosing a college that uses the Section 568 formula. With the Section 568 formula, you can take all of the money sitting in your bank account and pay down or pay off your mortgage. Doing this will help qualify you for need-based financial aid. Whereas, if you would have kept the money just sitting in your bank account, you most likely will have received $0 in need-based financial aid.

One thing to remember, the financial aid forms are always based on the previous year (just like your taxes) so you have to really think about the right time to do these things. For example, if you take all of the money out of your bank account in the beginning of the year, say January 2013, it will not be taken into consideration for your child's financial aid award letter for the 2013-2014 school year because the 2013-2014 financial aid award letter is based on your income and assets from 2012.

To find out more ways how you or your child can graduate college debt free and get financial aid, visit: www.debtfreecollegegrad.com

By: Shanice Miller, founder of DebtFreeCollegeGrad.com