This Financial Aid Test Could Save You Money

Test Your Financial Aid IQ Before Accepting a Financial Aid Offer

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The last thing most parents and high school students want to hear about is yet another test. It feels like it has been nothing but a test of your ability to persevere since your child first said the words, “I want to go to college.” But the financial aid test is one test you really need to take and pass. It could mean the difference between being able to send your student to a good college with minimal family financial difficulties, or consigning your student and your family to a lifetime of debt.

Check your financial aid IQ by answering the following questions:

 

1. True or False: It is not worth filling out the FAFSA if you know you do not qualify for financial aid.

This is false. It is always worth filling out the FAFSA. There are several types of financial aid from the federal government, your state government, and the college itself. Some may be based on your financial information, but others have different criteria. Even if you don’t qualify for some types of assistance, you still need to have a FAFSA to qualify for some scholarships and federal student loans.

 

2. True or False: In some cases, it might actually cost less to send your student to a larger college.

This is true. Financial aid is a tricky business. Some larger colleges with supposedly higher tuitions have access to grants and scholarships which they can use to keep costs down. Conversely, some smaller colleges with lower-appearing tuition might not be able to offer as much financial assistance.

Don’t apply to colleges solely based on the lowest advertised cost. Apply to those that are a good fit, and wait for the financial aid determination before making a final decision.

 

3. True or False: All student loans are the same.

This is false. There are many types of student loans and you need to understand the differences before taking out any loans.

There are different types of federal student loans that can assist students and parents. They usually have lower interest rates and more flexible repayment options. If you still need to borrow more money, you need to carefully research the private student loan industry. Read the loan materials carefully to make sure you understand interest rates, payment terms, and co-signer responsibilities.

 

4. True or False: The time to discuss finances with your student is now.

This is true. Many parents think they are doing their child a favor by keeping him or her out of the financial loop. Or they let their child look at student loans as some type of “free money” and don’t worry about how they will be repaid. Your student should be involved in every step of the financial process. Explain the cost involved in attending different colleges, and set clear expectations as to who will be responsible for repaying any loans after graduation.

 

5. True or False: At least I’m done with the FAFSA for this year, and don’t have to worry about it again until next January.

Unfortunately, this is also false. Due to changes in the FAFSA timing structure, the Free Application for Federal Student Aid for the 2017-18 academic year will be online beginning October 1, 2016.

This is designed to bring the financial aid process more in line with the college application process. The good news is that you will be able to use financial information from your 2015 tax return, which should be completed by then.