June 1, 2010
If you think you're too rich to be eligible for college financial aid, think again.
The Wall Street Journal offers numerous important tips to upper-middle-class families who might feel they cannot possibly qualify for significant financial aid. "While the money is supposed to go to the people who need it, the reality is that it goes to the people who navigate the process and understand the ins and outs of the formula," noted Kalman Chany, author of "Paying for College Without Going Broke."
For families of students attending private colleges, The Journal recommends applying for help under the College Board's CSS/Financial Aid Profile. The CSS/Profile takes into account factors not considered by the Free Application for Federal Student Aid, such as private school tuition for younger siblings, medical expenses and home value.
"If you can document that the value of your home has decreased by 20 percent to 50 percent, it has the potential to make a difference of a few thousand dollars," noted Mark Kantrowitz, founder of FinAid.org, who was quoted by the Journal.
Investing in 529 savings plans for college is also an important strategy. Lynn O'Shaughnessy, who writes for CBS MoneyWatch.com, notes that contrary to popular belief, money in such plans rarely hurts a family's chances for financial aid. That's because every family receives an asset allowance through the FAFSA for non-retirement money based on the age of the oldest parent. A parent who is 45, for example, receives an asset allowance of $46,600.
Even if money saved in a 529 exceeds the FAFSA's asset allowance, the maximum amount that is assessed is 5.64 percent. O'Shaugnessy cites the following example: A 55-year-old parent with $100,000 in a 529 account would receive only $2,244 less in financial aid.
FinAid.org offers an even better way to shelter 529 investments: Make sure it's owned in a grandparent's name. Having such a fund will not impact financial aid at all.
Finally, the Journal notes that perhaps the best tactic is to "find a school that really wants your child." Barry Evans of Carmel Valley, California, told the Journal, for example, that his daughter received a generous financial aid package from Southern Methodist University in Dallas which covered slightly less than half the annual cost of $50,000.
"My perception is that early on in the process, SMU decided they really wanted her," Evans said.
Compiled by CityTownInfo.com Staff
"Financial Aid 101: How to Get More," The Wall Street Journal, May 22, 2010, Jane J. Kim
"Maximizing Your Aid Eligibility," FinAid.org
"The No. 1 Fear of 529 Plan Investors," MoneyWatch.com, May 27, 2010, Lynn O'Shaughnessy