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The Financial Aid Puzzle

Avoiding Financial Aid Foibles

By Alice Patenaude

• Failure to believe that you qualify for financial aid. Many people are under the misconception that if your family income is more than $50,000, you will not be eligible for federal aid. This is often not the case. Assuming ineligibility may cost you thousands of dollars for every year your child is in school. "Because the formula takes into account the cost of the school, sometimes a family can receive a greater portion of an aid from a private or an Ivy League school," Daly says.

• Failure to correctly identify and establish the value of your assets. Overstating asset values or including assets on the financial aid form that are legally excluded may either reduce your financial aid eligibility or result in receiving no financial aid. According to Daly, two common mistakes that parents make are including assets from their 401(k), which are not required, or listing savings bonds at their face amount, rather than their current value.

• Failure to fill out the financial aid forms accurately. Omissions, incorrect answers or misinterpretations can eliminate or reduce your ability to receive aid.

• Failure to fill out the financial aid forms in a timely manner by filing too early or too late. Check the filing date for your school. The FAFSA cannot be filed before January 1 for the subsequent academic year. The school's filing date may be as early as January 15 or as late as May. Missing deadlines often results in aid reductions.

  

• Failure to have assets positioned properly to avoid potential large reductions in aid. "Sometimes having savings in the child's name can affect financial aid," Daly says. "But there are things that you can do, such as repositioning money into another account for the child's welfare, such as an IRA account. It's important to look at family assets as a whole."
  
  
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