Whats The Maximum Amount Of Money Fafsa Gives
FAFSA has a maximum threshold for each of its three aid options. With Pell Grants, you can get up to $6,195 per year, while Federal Supplemental Educational Opportunity Grants offer up to $4,000. With federal loans, you can get anywhere from $5,000 to $20,500 per year, depending on where youre at in your school education and whether youre a dependent or not.
Strategically Save For College
Generally speaking, the more money you have available already to you to pay for college, the less assistance youre eligible to receive through financial aid.
That raises the questiondoes saving for college mean youll get less financial aid? If so, does that mean you should avoid saving for college altogether if you want to get the most from FAFSA?
Saving for college is always a good idea since it can mean far less stress overall. Luckilyas discussed aboveassets dont impact Estimated Family Contribution as much as income does, and that includes student savings account.
However, you can make saving for college even more beneficial by going about it strategically.
Save in the Parents Name
One way to save more strategically for college is by investing in an account that belongs to the parent or parents, rather than to the student. The student can be named as a beneficiary on the account, but should not be the owner.
Assets in the students name count much more heavily against financial aid than those in a parents name. Student-owned financial assets count against financial aid at a rate 20%, while those in a parents name are assessed at only about 5% 6%.
College Savings Account
One exception to the rule stated above is designated 529 college savings accounts. A 529 college savings account is calculated as a parent asset, whether its in the parents name or the students name.
Shift Reportable Student Assets Into The Parents Name
Money in an UGMA or UTMA account is reported as a student asset on the FAFSA. If the student is a dependent student, moving the money into a custodial 529 plan account will cause it to be reported as a parent asset on the FAFSA. This will reduce the assessment rate from 20% of the asset value to at most 5.64% of the asset value, thereby reducing the expected family contribution and increasing aid eligibility for need-based financial aid.
Another option is to spend the money in the UGMA or UTMA account on necessary expenses for the students benefit. For example, suppose the student will need a computer or car for college. Using UGMA or UTMA money to buy it before filing the FAFSA, as opposed to afterwards, will increase eligibility for need-based financial aid.
Even if student assets, such as a savings account, cannot be shifted into the parents name, the family should spend down the student assets to pay for college before using the parent assets.
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Considering Student Loan Refinancing
If you take out student loans, refinancing them once you graduate can be a way to save money when it comes time to repay. Refinancing involves taking out a single new loan and using it to repay all your existing loans, which can include federal loans, private ones, or both. However, keep in mind that refinancing your student loans with a private lender means forfeiting federal loan benefits like deferment, forbearance, or income-driven repayment plans.
A new refinanced loan comes with different terms and a different interest rate, which can typically be either fixed or variable. If youre able to get a lower interest rate than your existing loans, that can save money over timedepending on your new loan term, of course.
Among other factors, private lenders might take into account your credit history and income when determining your refinanced interest rate and loan terms.
After Filling Out The Fafsa
Once youve filed FAFSA®, be patient, as it takes some time to process and for the schools youve specified on the application to receive your information. Youll shortly receive your student aid report , which is a paper or electronic document that lists your questions to the FAFSA® as well as yourExpected Family Contribution . Read your SAR carefully and make any needed corrections as soon as possible.
Locate your EFC at the top of the first page of theSAR beneath your social security number. This is a measure of your and/or your parents financial strength, which considers taxed and untaxed income, benefits, assets, family size, and how many people in your household will attend college during the upcoming year. The EFC is not necessarily how much money you will have to pay the school, but it is a figure the schools financial aid department uses to determine how much financial aid to award.
On the last page of your SAR, youll find a review of your financial aid history. This is a good way to keep track of your previous student loans and their interest rates, helping you get a better idea of how much youll owe after youre finished with school.
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Can I Use My Student Loan To Pay Off Credit Cards
If youve covered education expenses with a credit card while waiting for your student loan funds, you could pay off your card with those once youve received them. But in other cases, it could be considered an improper use of your student loan funds to pay off credit card debt.
Keep in mind: Using your student loan to pay off other debt could lead you to need more student loans in the future meaning you could end up with more debt than what you started with.
If you decide to take out a private student loan for living expenses, remember to consider as many lenders as you can to find the right loan for you. This is easy with Credible: You can compare your prequalified rates from multiple lenders in two minutes without affecting your credit.
Compare student loan rates from top lenders
- Multiple lenders compete to get you the best rate
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Take Out Student Loans
If you are still looking for how to get more financial aid money, then consider federal student loans if they were included in your award letter. Compare federal student loans to private student loans and choose the loans that best fit your needs. Both federal and private student loans offer in-school deferment, so payments won’t be required until 6 months after you graduate . Just remember that interest may continue to accrue even if payments aren’t due, so if you can make even small monthly payments, it will help reduce the overall loan cost.
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How To Borrow Responsibly For College
When youre borrowing money for college, its important to . We recommend these three steps:
Other tips for borrowing responsibly: Consider what your salary will be after you leave school, remember that youll have to pay back your loans with interest, and dont borrow more than youll need for school costs.
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This completion service is not affiliated with or endorsed by the US Department of Education. The FAFSA® form is available for free at studentaid.gov.
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Why Your Age Matters For Eligibility
Your age may affect how much aid you can receive. Thats because your age largely determines if youre an independent or dependent student and thus whose information you report on the FAFSA.
Federal aid programs assume dependent students have the financial support of their parents.
» MORE: Am I eligible for financial aid?
By age 24, youre considered independent. For the 2022-23 school year, youre independent if you were born before Jan. 1, 1999. Independent students have higher borrowing limits than dependent students.
Youre also considered independent if youre married, a veteran, in a graduate program or have dependents of your own.
If youre dependent, include both your information and your parents on the FAFSA. If youre independent, report only your information. If youre independent and married, include your spouses information as well.
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Free Fafsa Help: Heres Where To Get Advice From College Aid Experts
- Joanna Nesbit
Every year, community forums on Facebook and Reddit are flooded with exasperated parents wondering how to answer questions on the Free Application for Federal Student Aid . Some are fairly straightforward, such as can my student qualify as independent if were not paying for college?
But many other questions revolve around an unusual domestic or financial situation, especially this year, when many families are dealing with reporting income from unemployment benefits.
If youre one of those exasperated parents, you may be able to find your answer in the governments thorough guide on the FAFSA website.
The online experience is designed to answer a ton of questions built in with chat and email support, says Brian Walsh, senior manager of financial planning at the private student loan company SoFi. This years form offers more help throughout, particularly with tax questions, and the FAFSA website also offers a FAQ page for some more general scenarios.
But lets say youve exhausted the online resources and youre tearing your hair out over unanswered questions. Or, alternatively, youre feeling intimidated and dont even know how to get started. Heres what to know about finding free, reliable help:
Appeal Your Award Letter
If your circumstances have changed since you submitted the Free Application for Federal Student Aid , you may be able to get more financial aid money. You have options to appeal your award with the school. Job loss or a change in income, divorce or separation, high medical expenses or other special circumstances that affect your family’s finances are worth discussing with the school. You’ll likely have to submit additional documentation, but it could mean that you end up getting more financial aid.
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What Happens If You Use Student Loans For Something You Shouldnt
Financial aid offices dont track exactly how students use their funds, so its unlikely that youll get in trouble for using your financial aid or student loans in cases where you shouldnt. But if you spend more money than whats budgeted in your schools official cost of attendance, you could end up with fewer funds than you need to pay for other expenses such as college textbooks or fees.
Additionally, if your financial aid office finds out that youve spent funds inappropriately, you could:
- Be reported to the Department of Education
- Have your funds taken back retroactively
- Be responsible for paying back what youve already used to the school
Theres also a slim possibility that you could be investigated and prosecuted for abusing student loan funds if your financial aid office finds out so be sure to spend your funds appropriately.
If youre worried that youve already used some of your funds in the wrong way, chalk it up as a lesson for how not to spend funds in the future. You could also consider saving money from a job or other income source to replace those funds.
Learn More: How Do Federal and Private Student Loans Work?
What Are Private Or Alternative Loans
Alternative loans are private loans. The terms vary widely as do the eligibility criteria.
You should carefully research the options and apply for the alternative loan that best suits your needs. Keep in mind that usually your best option is to pursue federal loans. Be sure you have applied for all of the federal loans you are eligible for before you consider private loans. If you do wish to take out a private educational loan, you need to provide any documentation requested by the sponsor of the loan and follow the application procedure that is specific to that loan.
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Skip The Paper Application
New legislation making its way through Congress is designed to shorten the process of applying for federal financial aid. While the Department of Education works out the kinks, borrowers have three application options: paper-based, online, or via a mobile application. If you want to speed up the process and reduce the chance of making mistakes, experts say to choose the online or mobile application options. The best perk of the online application is it includes skip logic, says Jill Desjean, a policy analyst at the National Association of Student Financial Aid Administrators . On the paper FAFSA it might say jump to a question if you answer this and that gets complicated. If the question doesnt apply to you, the online and mobile application automatically skips it. That cuts down on time spent trying to figure out which question to answer and reduces the likelihood of providing the wrong information. Another handy tool is the digital help feature, which enables you to click on a question mark to get further explanation. I think the vast majority of people use the online application. Its a better choice if you have broadband access. Theres a mobile app if you dont have a computer, says Desjean.
Strategy #: Use Cash To Pay Down Debt
Having debtlike , a car loan, or a mortgagedoesnt reduce your eligibility for financial aid, but having cash does. So using a reasonable amount of cash savings to pay down debt, or accelerating necessary purchases, is a smart move to make before you submit the FAFSA. However, be sure you dont drain all your cash reserves because you still want to keep enough cash on hand to maintain a healthy emergency fund.
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Inform The College If Your Circumstances Change
Sometimes unexpected life changes happen. For example, if you or your parent loses a job or needs to take a pay cut, inform the college. They might adjust the award, even in subsequent years. The worst thing that can happen is denial, and if you dont attempt to ask, you can be sure you wont get a better award.
Higher education can seem prohibitively expensive, but its a worthwhile investment. With some careful planning and the use of these FAFSA strategies, you can increase your chances of getting money for college that you need to satisfy your expenses.
If My Appeal Is Denied What Other Options Do I Have
You may contact a private alternative lender. The loan will require that you or your co-signer complete a credit check. You also have the option of the use of general deferments with Student Account Services. Federal financial aid can be awarded when you are meeting all of the overall progress standards again.
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Even Wealthy Students May Get Some Aid
Financial aid is based on financial need, which is the difference between the colleges cost of attendance and the expected family contribution . So, there are two ways to increase financial need and thereby increase financial aid. One is to file the FAFSA in a way that minimizes the EFC. The other, however, is to increase the COA. Wealthier students may qualify for aid at higher-cost colleges or when multiple children are enrolled in college at the same time. Unless a students parents earn more than $350,000 a year, have more than $1 million in reportable net assets, have only one child in college, and that child is enrolled at an in-state public college, they should still file the FAFSA.
What Happens After Ua Receives My Fafsa
Once your FAFSA is received it will be processed for a financial aid award or we may request additional information or documentation. It is important to monitor your myBama account and check your Crimson email for updates. Once your financial aid file is complete, you will receive an award notification. Please be aware that awarding for new students does not begin until the December before the fall semester begins and returning students are awarded in June/July.
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How Does Fafsa Work
Every college-bound person and their parents need to know how the Free Application for Federal Student Aid process works. Some may dismiss the idea of applying for financial aid for college because they think they make too much money to qualify. But regardless of their family earnings, they may be eligible for some form of financial assistance, including federal, state, and school-based aid and merit-based scholarships.
In fact, it makes sense for almost all families with a college-bound kid to fill out the FAFSA.
What If I Made Even Less Money This Year Than In 2020
“Some people may already know that their income will be lower in 2021,” Kantrowitz said.
But, he warns that borrowers cannot substitute 2021 income for 2020 on the FAFSA form.
Instead, you’d file the FAFSA form as required based on 2020 income and then, if your income is lower in 2021, file an appeal with the college financial aid administrator who can choose to substitute income from any 12-month period, Kantrowitz said.
The college aid administrator, he said, could choose to use your 2021 income or an estimate of income in 2022 or even income during a 12-month window for the 2022-23 academic year.
Boucher said it’s important that students review their financial aid offers if they’re high school seniors who plan to go to college next fall and even see whether other schools might offer more aid based on another school’s offer.
“We know that the pandemic is not over and the impact on the economy is not over,” Boucher said.
A point to remember: You do need to apply for financial aid each year and the amount you get can vary if a family’s income goes up or down in future years when the student is in school.
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