Tips for Maximizing Financial Aid
Please note: This blog was originally published in August 2024, and has been updated in April 2025 to reflect recent data. Please visit the FAFSA Application Deadlines webpage to keep up with recent changes and for state-specific information.
College tuition is so expensive that even high-income families can get financial aid offers. Your first step is to complete the federal forms and then contact the school directly to negotiate a financial aid package further.
Every year, the
College Board (a not-for-profit best known for administering the SAT and ACT) faces a public relations challenge: accurately reporting trends in college pricing without discouraging high school students from going to college. In addition to its annual booklet, "Trends in College Pricing," the College Board publishes the annual report, "Trends in Student Aid," which describes the widespread availability of college money.
Additionally, to help students and parents understand why they should spend all this money or take out all these loans, the report "Education Pays" offers a comprehensive cost-benefit analysis.
According to a Bureau of Labor Statistics report, the typical bachelor's degree recipient can expect to earn about 60% more annually than the average high school graduate. To put it another way, by age 36, the typical college graduate who enrolled at age 18 has earned enough to compensate for the average tuition and fees from their degree.
The Average Cost of a College Education
So, what does it cost to achieve this lifetime enhancement? According to the College Board, the average cost for tuition and fees for full-time undergraduate students in 2024 was around $11,610 for in-state public schools and $43,350 for out-of-state private schools. It's important to note that these numbers only include tuition and fees: once you add the cost of room and board, these prices will jump even higher depending on area and type of housing.
Remember that these are averages and only amount for one year of college. To plan accurately for college costs, it's best to:
- Identify the college the student is likely to attend and use those numbers
- Multiply the one-year cost by 4 (or even 5)
- Add an inflation factor
Applying for Student Aid
Your income may lead you to think it's not worth the trouble of applying for student aid. But, because a more significant portion of institutional grants is now going to higher-income families, and because subsidized loans offer such attractive rates and terms, anyone with a child enrolling in college should fill out the
FAFSA (Free Application for Federal Student Aid).
Even parents with students several years away from college should become familiar with the FAFSA so they can rearrange their affairs if necessary.
Consider contributing more to retirement plans (considered exempt assets) or spending down UGMA/UTMA accounts so those assets won't raise the expected family contribution.
(Caution: UGMA assets must be spent on the child and may not be for necessities; summer camp, cars, and computers are OK).
Also, remember that the FAFSA must be submitted every year the child is enrolled.
Tips For Filling Out the FAFSA
File FAFSA Early
Many schools distribute financial aid on a first-come, first-served basis. Although the federal deadline on the form is
June 30, the aid deadline set by
individual schools
could be as early as the end of February.
State aid deadlines also vary. Although the application asks for the prior year's tax information (which may not be in yet), financial aid counselors advise using estimates or basing the figures on last year's tax return rather than waiting for the current year's information to be released.
Fill out the FAFSA Online
Because of the FAFSA's complexity, it's common for people to make mistakes when filling it out. Paper applications with errors or missing information will be returned for corrections (delaying processing).
The online version of the form issues an alert for missing information and even recognizes some of the more common and obvious errors.
Do Not Include Exempt Assets in Net Worth
Retirement plans and home equity are exempt assets and should
not factor in the net worth information on the FAFSA.
Keep All FAFSA & Financial Records on File
Make a copy of the completed application and save it, along with all records used to complete the FAFSA; not only will this help you file next year's form, but documentation may need to be presented if selected for verification.
The U.S. Department of Education checks FAFSA information against data from the Social Security Administration, the Veterans Administration, and the Internal Revenue Service. It also selects about one-third of all applications for verification.
Read all questions carefully. "You" and "your" refer to the student, not the parents.
Do not leave any answers blank. If the answer is "zero" or "not applicable," then enter "0" or "N/A."
Do Not Send Letters of Explanation with the FAFSA
Although it is a good idea to inform financial aid officers of any unusual circumstances, such as a job loss or reduced income, direct such letters to the
individual school. If they are attached to the application, they will be thrown away.
General Tips on Maximizing Student Aid
In addition to the FAFSA, parents may want to contact the financial aid departments at individual schools to increase their chances of receiving a favorable financial aid package.
Do Not Discount Expensive Schools
Some families automatically cross high-tuition schools off their list. But interestingly, those colleges may be more affordable because they are often well-endowed and can meet more of the need.
Reconsider Early Decision
Some schools allow students to get a jump on the application process if they commit to attending upon admittance. While this may help the student's chances of getting in overall, it reduces the student's bargaining position, potentially reducing the amount of aid offered.
Ask for a Review
Ask that the aid package be reviewed to try to receive a better one. However, avoid using the words "bargain" or "negotiate"; financial aid officers do not like to be put in this position, and they especially hate having offers from competing colleges waved in their faces.
Counselors advise thanking the school for its generosity and then expressing doubt about being able to meet the family's expected contribution as a way to ask for more aid.
If Outside Scholarships Come In, Ask That Loans be Reduced First
Some students have discovered that outside scholarships from community organizations such as the Rotary Club go straight to the college because the aid package's grant portion is reduced dollar for dollar by the amount of the scholarship.
In these cases, ask that the school apply for any outside scholarships against the loan portion of the package.
Work With Clayton Financial Group
At Clayton Financial Group, we help our clients achieve their life plans and take their growth and security seriously. We are an independent boutique advisory firm with national coverage and decades of industry experience.
Contact us today if you need help with investment, tax, risk management, estate, or other planning.
