The answer is you won’t know, exactly, how much aid you qualify for until you officially apply. But you can get an idea ahead of time. The federal government has an online tool called the FAFSA4caster that you can complete to see if you might qualify for financial aid. Then at college time, you can fill out the government’s official aid application, the FAFSA, which stands for Free Application for Federal Student Aid.
Your current income is the main factor that determines whether your child will qualify for aid, but it’s not the only factor. Other important considerations include the number of children you have in college at the same time, your assets, and how many years you have until retirement.
Regarding assets, a common misconception is that all your hard work saving for retirement will count against you come financial aid time. However, the federal government’s formula for determining aid eligibility specifically excludes retirement assets from consideration. The federal formula also excludes home equity (in your primary residence only), cash value life insurance, and annuities. Be aware, however, that a college’s own institutional aid application may include one or more of these assets.
The rule is “When in doubt, apply.” The federal government’s aid application, the FAFSA, is free, so all that you will lose if you discover your child is ineligible for aid is just a few hours of your time. Also, by filling out the FAFSA, undergraduate and graduate students who are enrolled at least half-time become automatically eligible for the federal Direct Unsubsidized Stafford Loan, a low-interest federal student loan that is not based on financial need.
If you have questions or need assistance, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
