Tips For Maximizing Financial Aid Eligibility

A highly popular subject among those in need of money for college is how to maximize financial aid eligibility. The truth is, that when it comes to maximizing one’s financial aid eligibility, there really are not any secret techniques or magic formulas. Everything (legal) that one can do to maximize their chances of receiving federal financial aid for college can be found through simple research. There have been many books written on strategies for good financial planning and management, which is what essentially will help to “maximize” your financial aid eligibility. It’s important to note that the federal financial aid system is set up to distribute its funds fairly, and any attempts to defraud the federal financial aid system carry heavy fines and punishments. The goal should be to make certain you are doing everything possible to ensure you get the financial aid that is honestly owed to you or your child. You should not be looking for opportunities to unfairly scam the federal financial aid system, and divert funds away from someone who has a greater financial need. Outlined below are a few (not all) tips you can implement to help ensure you are maximizing the amount of federal financial aid you are eligible to receive:

1. If you have some money saved away and also have consumer debt (credit card balances), you could consider paying these debts off or down. Credit card debt is not factored into the financial aid eligibility equation, but assets such as cash are. So by using some saved “cash” to pay off/down consumer debts (such as credit cards), you will be helping to “maximize” your federal financial aid eligibility.

2. When saving for college, save money in the parent’s name, and not the child’s name. Since parents only need to contribute around 6% of their assets, and you are expected to contribute more then 5 times that, having more assets in your parent’s names will help maximize your financial aid eligibility. Using a college saving plan that is treated like a parents asset (such as a 529 plan) can also work in a similar fashion.

3. The student should always spend down his or her income and assets before spending the parent’s assets. The student should also consider making any large purchases BEFORE he or she files the FAFSA, this way the reduction in cash will “count” towards maximizing your financial aid eligibility.