Let’s continue our series on searching for the right college with the good stuff – college scholarships and grants. It’s tempting for parents to put off saving for college with the hope that their child will get a college scholarship, but the reality is that only a tiny portion get athletic scholarships or “full” merit scholarships that go to the top tier of students. Even full merit scholarships rarely cover room and board which can be around $10,000 per year. Nevertheless, most students do get some type of financial aid. College scholarships are based upon merit or qualification and can come from colleges or private organizations. Grants are based upon financial need and can also come from the federal and state governments.
Of course we all hope our students will get big scholarships and grants. While this is unlikely to cover most of your college expenses, there is a surprising number available for a wide variety of qualifications. Your best chance results from applying early and to as many as you can. Most scholarships are small, but many small amounts could add up to a significant amount. Submit your financial aid applications to colleges as soon as you can – do not wait until the student is accepted. Larger scholarships tend to have the earliest deadlines, as early as November 1. Private scholarships have their own deadlines and rules.
The first step is to apply for the “Free Application for Federal Student Aid” (FAFSA) which is the basis for need-based aid, federal loans, and sometimes for schools’ merit scholarships. Submit it every year between January 1 and March 1 – the earlier the better, but do your taxes first if possible, although estimates are acceptable.
http://www.fafsa.ed.gov/ – Get information and apply online for financial aid.
The FAFSA is used to determine the student’s need for financial aid and is based upon the family’s income, assets, and information for the calendar year prior to the year the FAFSA is submitted. The first FAFSA can be submitted after January 1 of the student’s senior year so its income is based upon January 1 of the student’s junior year. In some states the FAFSA is reviewed by “first-come/first served”, but in most states and private colleges, it’s not reviewed until the college’s “priority deadline”, usually February 15 or March 1. Doing your taxes beforehand helps ensures your FAFSA will contain accurate data.
The FAFSA is used to calculate financial aid and the amount the family is expected to pay which is known as the “expected family contribution” (EFC). In addition to family income, the amount of financial aid depends upon such factors as family savings, student income and savings, and how many siblings are in college. 5.6% of parents’ assets are counted towards the family’s EFC including college savings accounts, but not retirement accounts. However, some assets are excluded based upon the oldest parent’s age. This means that for each $1000 of parent’s assets, aid may be reduced by $57. Students are expected to pay more, so 20% of savings in their name are counted, and earnings that exceed certain amounts reduce aid, although federal work-study earnings do not. Coverdell Education Savings Accounts are counted as student’s assets. Grandparent’s 529 savings do not need to be reported on your FAFSA, but any payments they make from their 529 accounts are counted as student income for that year. When grandparents pay college expenses directly to the college, it might reduce aid dollar for dollar.
If parents are divorced, the parent who has had custody of the student for most of the prior 12 months is the one whose income and assets are listed on the FAFSA, along with the step parent if remarried. Some colleges do also require financial data from both divorced parents when determining their own aid, even though the federal aid does not.
Nearly everyone should submit a FAFSA, at least the first time, even if you think your family’s income or assets are too high to qualify. Even if your student won’t qualify for grants based upon need, you may still be eligible for subsidized Stafford or Plus loans, or merit scholarships. Colleges may also have their own financial aid forms to submit with their own qualifications in addition to the FAFSA. Check with each school you are interested in for their deadlines and requirements.