College is an important step in fulfilling your child’s successful career life. Education is a valuable legacy that you, as a parent, can impart on your child. It is true that due to the rising inflation, college fees have become more and more burdensome for parents. College can put a huge dent in your family savings if you are not ready to face the expenses that go with it.
One of the ways that you can make your child’s college education affordable for you is to apply for student financial aid. Although many turn to this solution especially if money is tight or if they have not saved enough, many of them they simply do not know how to maximize their eligibility. They will end up being denied of the financial aid or lessening the amount they will get. Do not let this happen to you.
What are the factors that adversely affect your chances of getting financial aid?
Liquid assets are anything you own that you can easily sell or transform into cash. This will negatively impact your chances of getting a loan. This will be perceived as a way for you to pay-off the college fees on your own.
Money in the Bank
Money in your bank account, like savings or current accounts, lessens your chances of getting a loan. Only if the money is invested in a retirement account will it be exempted from being scrutinized.
You Child’s Money
If your child has a bank account in his or her name, colleges usually consider this as additional money for tuition fees.
College Saving Plan
If you have a college saving plan like 529, you may not be eligible to get financial aid.
Overall, any extra money or assets will be considered as a way for you to pay for the tuition fees without the help from any financial institution, thus, are counted against your chances of getting a financial aid.
What can you do to improve your chances of getting financial aid for college?
The best way to improve your chances of getting financial aid for college is to divert your money and assets. This does not mean that you should go on a spending spree. This just means that you cannot keep your money in accounts that will hurt your chances of getting financial aid.
- Use your child’s money to buy school items or any necessity that your child needs. In this way, there will be less in the accounts under your child’s name that will be counted against your chances of getting financial aid.
- If you have too much extra income that will lessen your chances for approval of financial aid, you can contribute the maximum amount to a Roth IRA. It is best to choose Roth over other retirement accounts since you can withdraw your contributions anytime even before the retiring age.
- You can also move your liquid assets into retirement accounts or life insurance so that they will not be counted as a way that you can pay for college tuition fees. You may also choose to use your liquid assets to pay off an existing loan or debt.
Putting your children through college should remain a responsibility and not a burden. The continuous rise of tuition fees and other expenses make it harder these days to fulfill this responsibility. Financial aid continues to be the help you in this dire times when college seems unaffordable. It is best to reorganize your finances to increase your chances of being approved.
Have you taken any steps to make your finances more applicable for college financial aid?