The new year is more than just a flip of the calendar. For families preparing to send a child off to college it's a time for shopping for financial aid – an increasingly critical factor in being able to afford higher education.
January 1 was the first day families could start filing their FAFSA forms, the financial aid forms the U.S. Department of Education uses to calculate and distribute more than $150 billion in grants, loans and work-study funds each year.
Abigail Seldin, VP of Innovation for ECMC and founder of College Abacus, helps students find the aid to make their school of choice affordable. She was perplexed to find that a lot of that money gets left on the table because students don't apply for it.
Why is that, she wondered? Seldin investigated and found 5 college aid myths that are widely believed and costing U.S. families a lot of money.
1. You can wait until the June 30th deadline to file FAFSA
Yes, it's true that June 30 is the deadline for filing a FAFSA form. But waiting until then would be a mistake, Seldin says.
Some schools and at least 9 states award financial aid on a first-come, first-served basis. To increase your chances of getting as much financial aid as possible, you should file as close to the January 1 start date as you can.
“I don't think this is widely known,” Seldin told ConsumerAffairs. “A lot of the financial aid process seems intimidating to many families, in part because there are so many different programs. Some are administered by the federal government, some by schools. The variability means that issues like first-come, first-served can get lost in the noise.”
2. My family is too well-off to be eligible for financial aid
In reality, family income and savings are just 2 of many factors considered in the FAFSA formula and by financial aid officers. Several other considerations go into this process, including family assets and the number of household members currently attending college.
As a result, many middle income and even upper-middle income families end up qualifying for some form of financial aid. That's because there are a lot more sources than just the federal government.
“Much of an individual's financial aid package could come from the school they've chosen to attend, or outside scholarships,” Seldin said. “And nearly all schools that award financial aid require you to have FAFSA on file.”
3. You only need to file the FAFSA once
Not true. There is no auto-renewal for FAFSA applications, Seldin says. Students need to file their FAFSA every year that they are in school in order to retain eligibility for aid.
The good news is that, if you submitted last year you can save time by completing a Renewal FAFSA, in which most of the questions are pre-filled with your prior information.
4. Only students with good grades can qualify for financial aid
“There are really 2 buckets – need-based aid and merit-based aid,” Seldin said.
Just because you weren’t class valedictorian doesn’t mean you won’t qualify for financial aid. The vast majority of federal and state aid packages are based on need alone. Many colleges have programs that reward scholarship.
5. FAFSA is the final word on what you’ll pay for college
Seldin calls this one of the biggest misnomers in the college financial aid process. The Expected Family Contribution (EFC) calculated on your FAFSA form is just a rough index number and not your individualized, baseline cost of attendance.
She developed an app called College Abacus that helps students and their families arrive at a more accurate cost, based on the selected college.
Families can reduce the cost of a college education by taking advantage of all the financial aid available. Seldin says that means starting the process in January by filling out a FAFSA form.
You can start filling out a FAFSA application here.