Getting any financial aid can help make it easier for you to attend the college of your dreams without falling too deep into debt. With several financial aid opportunities that you can pursue, your goal should be to get the maximum financial aid that you are eligible for. Unfortunately, many students lose out on financial aid simply because of a few mistakes they, made either during the planning process or while applying for aid.
When it comes to financial aid, it pays to do your research, understand the eligibility criteria, what you are required to do, and make a note of the deadlines.
These are some mistakes families tend to make that adversely affect their financial aid opportunities:
Mistake #1: Failing to explore and apply for scholarships
Scholarships are free money. You don’t have to pay it back neither do you have to pay any interest. What’s more, there is no limit to the number of scholarships you can apply for or the amount of scholarship money you can accept. The only requirement for getting scholarships is that you need to meet the eligibility criteria.
This is where most students make a mistake. They hesitate to apply because they presume that scholarships are only awarded to students who have obtained high academic scores. They couldn’t be more wrong. Organizations offer scholarships for reasons that range from being taller than a certain height to making the most creative peanut-butter-jelly sandwich. With such a wide and diverse range of awards available, you are sure to find at least a few that you are eligible to apply for. All you need to do is spend the time to look for them.
The more scholarship money you win, the lower the loan amount you need to apply for. It’s definitely worth it.
Mistake #2: Not filing the FAFSA
You cannot get any student financial aid if you do not apply for it. It all starts with filing the FAFSA. Submitting the FAFSA allows you to get financial aid from the federal government as well as universities and colleges.
While it sounds straightforward enough, many families do not file the FAFSA because they assume that they won’t be eligible for financial aid. Making such an assumption could prevent you from getting any financial aid and is a big mistake.
The formulas and criteria that are used to calculate eligibility and amount to be awarded are highly complicated. Even if you are not eligible for one type of financial aid, you maybe eligible for another.
Mistake #3: Taking your time to file the FAFSA
There is a pretty long window within which students are required to file the FAFSA. However, the results from previous years show that students who file the FAFSA as soon as possible after January 1st and before the end of March, are more likely to get substantially higher aid as compared to students who file after April 1st. This is because several colleges and states have very early FAFSA deadlines.
Some states take it one step further, awarding state grants on a first-come, first-served basis until the allocated funds are depleted. If you are one of the early few to apply, you stand a much higher chance of getting some of those funds.
Mistake #4: Saving for college incorrectly
It is important to start saving for college as early as possible but it is even more important to make sure you save strategically.
When saving for college, saving in the student’s name instead of the parent’s name could affect your financial aid opportunities. This is because any money that is held in a student’s name in an UGMA or UTMA account is considered a student asset on the FAFSA. These student assets reduce the eligibility for need-based financial aid by as much as 20% of the net worth of the asset. Saving in a parent’s name offers some benefits and is a far better option.
Saving for college in a grandparent-owned 529 college saving plan is another mistake. Although these savings are not reported as an asset on the FAFSA, there are other tax-related factors that could reduce your eligibility for need-based financial aid considerably.
Mistake #5: Not appealing an award letter
Many families are unaware that they can file an appeal for additional financial aid under special circumstances such as salary reduction, loss of job, disability, or death. If any of these are applicable to you, you can ask for a professional judgment review that allows you to apply for more financial aid.
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