Five Surprising Facts About College Financial Aid

As the cost of college continues to skyrocket,  you4. Your Student's Grades Have Little-to-Nothing To Do
should take heart – if you plan properly, you won'tWith Her Financial Aid Award.  Many parents think
have to pay "sticker price" for your son or daughter'sthat their child must have good grades to qualify for
college of choice.  Here are five facts about collegefinancial aid, but this is not correct.  Most financial aid is
financial aid that could help you slash college costs:based on financial need, not merit.  Although a minority
1. Some Colleges Have More Money to Give Thanof colleges will award merit-based financial aid, most
Others.  Most schools use the same financial aidaid is issued on a need-blind basis.  In other words, if
formula to determine your financial need.  However,your child is good enough on paper to get into Harvard,
they differ vastly in how they apply that formula.   InMIT or some other competitive school, she'll be issued
other words, different colleges meet differentaid based on how her family's finances look on
percentages of your financial need.  The older,paper.   That's the way most colleges award
prestigious private colleges – Ivy League and similarfinancial aid.
– tend to have large endowments.  This5. Although Two Families Can Have the Same
endowment money fuels the financial aid awards thatAmount of Money Saved, One Will Receive Far More
these colleges and universities dole out.Financial Aid Because of Where They Saved it.  It's a
2. Private, High Sticker Price Colleges Can Actuallylittle known fact, but some assets count against you in
Cost You Less Under Some Circumstances.  Eventhe financial aid formulas more than others, and some
though one year of college at a state university candon't count against you at all!  In general, money
run around $20,000-$30,000 (tuition, fees, room andsaved in your child's name will penalize you more in the
board, etc.) and a private college can top out overfinancial aid formulas than money held in your own
$50,000 per year, the more expensive college canname!  (This is because the Department of Education
cost you less!  Why?  Because state universitiesreasons that you're going to tap money in your child's
very rarely award significant financial aid packages, soname for her education – this makes sense, but it
many families float the entire cost.  On the otheralso penalizes you for being thrifty…I'll stop her before
hand, private colleges and universities with largeI feel a political rant coming on!)  So even though your
endowments regularly meet 90%, 95% and evenstock-broker or CPA recommended you establish an
100% of financial need.  So don't rule out expensiveUTMA account (Uniform Transfer to Minors Account)
private institutions until you examine their financial aidfor your child, this could penalize you to the tune of
awards!20-25% in the financial aid formulas.   You could be
3. Even if You Earn Six Figures, You Can Still Receivebetter off holding this money in your own name, or in
Substantial Financial Aid.  This may be the mostan asset class that's entirely exempt, such as
surprising fact of all – colleges and universities haveretirement accounts, insurance, some annuities and
courted the "forgotten middle class" in the last fewsome business assets.
years, regularly giving five figure awards to parentsClearly this brief article will fall way short in making you
earning six figure incomes.  Just because you thinkan expert in financial aid. For more information, please
you make too much does not mean that you shouldvisit our website and sign up for our newsletter –
blow off filling out the FAFSA and other financial aidThe College Success Bulletin - and receive five free
awards – you may be pleasantly surprised!reports worth more than $200 for the month of May.