Financial Aid 101

Sharpen those pencils, charge those laptops, and listen up because it’s time to talk money. If you’re headed to college this year, you might be wondering how in the world you’re going to pay for it. To make the bills bearable, many families take advantage of financial aid. With $150 billion available in student aid annually, it’s a valuable resource for those who know how to capitalize. Below are three key ways to secure financial aid like a pro.

1. Assume nothing.

No matter what you and your family’s financial situation, financial aid is almost always worth applying for. It has less to do with income level and more to do with total assets, and how many of those assets are deemed available for tuition payments. Although the FAFSA form does require you to gather lots of info and can be time consuming, virtually all schools use it to decide how much, and what type, of aid you receive. This makes it an incredibly valuable tool for scoring grants (money you never have to pay back), subsidized loans (government loans you do have to pay back, but with a more forgiving rate than private loans), work-study opportunities, and tuition discounts. Long story short, if college tuition is more than a drop in the bucket for you, the FAFSA form is worth the effort. And the sooner you submit your form, the bigger the pool of available aid.


Your Expected Family Contribution, or EFC, is the golden number institutions use to decide if you’re worthy of aid. It represents how much money the school believes you (and your family if you’re under 24) can contribute toward your education. It’s a dollar amount, and the lower it is, the more likely you are to receive aid. Knowing what goes into the EFC can help you impact your score, and could save you thousands.

Some key things to understand about how the EFC calculation is made:

  • 20% of your assets are considered “available for college,” whereas only 5.6% of your parents’ are. So, if you’re still a dependent (under 24, unmarried, and you have no dependents of your own), having your parents keep college funds in a custodial account can really help your case. And remember to help educate your parents about assets that “count.” If they have cash or investments that aren’t in a retirement account, or even a second home, that will count toward your EFC.
  • Any gifts from grandparents should be paid directly to the school in your name, so they don’t increase your total assets and hurt your score.
  • When it comes to college savings accounts, 529 plans have an advantage over UGMA or UTMA trusts, which are assessed four times higher in EFC formulas.
  • One snag that affects many families is that debt is not considered when calculating the EFC.
  • You can estimate your EFC using an EFC calculator, like this one.

3. At the end of the day, remember you’re still dealing with people.

Believe it or not, one of the most valuable things you can do is develop a relationship with the employees at your school’s financial aid office. They see thousands of forms every year, but as soon as they know a bit more about the person behind the form, they can become an incredibly valuable source of information, and an insider who has your back. For example, if you experience an employment change or other asset shift after you fill out your FAFSA, knowing who to call can help expedite the appropriate update to your form.

Despite the fact that so much of this is a numbers game, financial aid officers often have the authority to adjust the numbers, make exceptions, and edit your EFC. Whether it’s on the campus tour, over the phone, or once you’ve started classes, it’s never too early to get on a first-name basis with someone in the financial aid department.

Lastly, remember that another great way to save money on your education is to earn college credit simply by taking tests. DSST tests let you skip the credit hours for subjects you’ve already mastered, and can help you save thousands along the way. Learn more here.

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