I can hardly claim to know everything about financial aid, but in the days when I was filling out the FAFSA for my two children, I do remember feeling somewhat misled by the term. Most schools include loans in their financial aid packages, so even though “financial aid” sounds innocuous, you may want to think of it as a four-letter word: debt.
That’s just one “myth” that Savingforcollege.com tackles in a recent article, “10 Financial Aid Myths: What You Don’t Know Can Cost You.”
I’ve excerpted a few of its salient points below.
Costly myth #1: We make too much money to qualify for financial aid, so there’s no reason to waste time with the FAFSA.
Truth: Your Expected Family Contribution is based on more than just income. The amount of financial aid your child is eligible for depends on a variety of factors, including the price of the school they will attend and if they have a sibling in college at the same time. Every student should fill out the FAFSA, regardless of their household income.
Costly myth #2: Financial aid never has to be paid back.
Truth: Over 35% of financial aid awarded is given out in the form of student loans. With this type of aid, your child will have to pay back every penny they borrow, plus interest.
Costly myth #3 My child will be a sophomore next year, so we don’t have to worry about filling out the FAFSA again.
Truth: The amount of federal aid your child qualifies for in one year does not carry over to the next school year. What’s more, changes in your family’s financial situation could affect the amount of financial aid your child qualifies for in future school years.
Costly myth #7: There’s no rush when it comes to filling out the FASFA.
Truth: In most cases, the early bird gets more financial aid to pay for college. It’s important to pay attention to federal, state, and school application start dates, which are often as early as Oct. 1.
Costly myth #8: You’ll have to estimate your household income on the FASFA.
Truth: In previous years, families had to report the prior year’s income on the FAFSA. And since they weren’t able to apply for federal aid until January, they generally wouldn’t have filed their tax return yet for that year. Because of this, they had to estimate their income and make updates later. Now, the FAFSA requires you to report prior-prior year income. Since tax returns for the prior-prior year have already been filed, students can automatically transfer data using the IRS Data Retrieval Tool.
To learn more, visit Savingforcollege.com.