Think You May Not Qualify for Financial Aid?

What’s one of the best ways to qualify for financial aid? Fill out the FAFSA.

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Sallie Mae’s study, How America Pays for College 2009, found that nearly one in four families didn’t qualify for financial aid (federal grants or student loans) because they didn’t complete the FAFSA. They disqualified themselves solely on assumption! 30% of lower-income families did not fill out the FAFSA because they didn’t think that their family would qualify for aid. There is no excuse this year – the FAFSA has been simplified, the Department of Education has increased federal financial aid amounts, and the process is free. You have nothing to lose.

Edit 04/07/10: The San Francisco Chronicle recently reported that community college students in California are leaving up to $500 MILLION in federal financial aid on the table because they simply having applied for it.

Lauren Asher, associate director for the Project on Student Debt, recently told the LA Times, “…the people who are most likely to underestimate their ability to qualify for aid are the people who are most likely to qualify.”

The LA Times also reports that many low-income students limit their college search to community colleges and in-state colleges and universities, rather than high-priced private schools, because they assume they can’t afford it. The thing is, many distinguished (and high-priced) private schools often provide much more aid than less prestigious colleges, making them more affordable to lower-income families.

Zac Bissonnette of WalletPop (one of my favorite personal finance websites), offers caution:

That’s true for a very small number of schools: If your student is smart enough to get into Harvard, Yale, Princeton, etc., and you have a low expected family contribution, you will, in all probability, get something close to a free ride.

But after that, there’s a steep, steep drop-off. New York University graduates, for instance, leave college with an average debt load of $34,850, compared with just $14,541 for SUNY Binghamton grads.

What’s worse, over-reliance on financial aid can make students vulnerable to cuts, and, because of the complex way financial eligibility is calculated, options like working part-time or selling stock that has appreciated are often not practical because they decrease financial aid eligibility… If you pick a school with a low sticker price, your options for covering the cost are much less restricted.

At any rate, you won’t know what your options are unless you fill out the FAFSA. We’ll give you an update tomorrow on the FAFSA deadlines to be aware of.

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