If you are the parent of a highschool student that is planning to go to school, you need to understand the way in which the FAFSA works and how it can help your family qualify for more financial aid. There are several very specific strategies you can use in order to help cut back your EFC (Predicted Family Contribution) and raise your student aid. But you want to begin now, before your youngster graduates, if you plan to take full advantage of your possibilities.
Here are 3 easy techniques that you can use at the moment to help restructure your financial help efforts.
Strategy 1: Reduce Student Savings – If your kid has been sufficiently fortunate to get earn or save in their own name, this is great. Unfortunately, if your student has savings or investments in their own name, the school financial support formulas will add 20 % of those savings to your EFC. Parent’s savings and investments are also added, but only 5 percent of a parent’s includable assets are added to the EFC. So it's smart to keep the student’s savings out of their own name or redirect them into non-includable areas.
Methodology 2: Reduce or Restructure Parent Savings – While parent savings are treated better than student savings, it's still crucial to take appropriate measures to scale back the amounts that are utilized for financial help purposes on the FAFSA. Retirement plan savings, tax deferred accounts and small business assets are not included for financial aid purposes. If you can reposition some of your assets into these areas, you'll often get a tax break as well as a lower EFC and higher financial aid award.
Strategy 3: Reduce Parent’s Taxable Earnings – Another area where many families can make gigantic financial aid progress is by reducing your folks taxable earnings. By maximizing 401K, IRA, HSA and other earnings tax-deductible savings and making full use of your detailed discounts, you can reduce taxable earnings noticeably which lowers your EFC and can increase your student aid.
Summary: By working on these three strategies now, you'll see a direct fiscal benefit for your efforts. You're going to need to take care of these actions by December 31st of your student’s senior year in high school (sooner if feasible) to maximize the benefits during their first year of college. If you can make these a priority in your general financial support strategy, you'll be further ahead than most inward-bound freshman families and your attempts will receive rewards for the following four years.
Mike Hoff mother and father died in a car crash. Mike started to work at a young age as a autos salesmen and moved on to do private loans in the car dealer after he got married as the hours were more regular. He discovered that many of us were not finance savvy, and moved on to be a finance advisor which gave him a better earnings and extra time for his family. His first son, James, was named after his dad James Hoff.