Tag: financial aids

Why is Household important?

Financial Aids

The student’s household is important because it decides whose income and assets are reported on the FAFSA, and if the student really qualifies as a dependent or independent student.

If the parents are married, their income and asset both need to be listed on FAFSA application. If the student has a stepparent, the stepparent’s income and asset will also need to be included. If the parents are divorced or separated, the income and asset of the parent with whom the student lived with the most during the last year must be listed. If the student live with both parents equal time (joint custody), the income and asset of the parent who provided the majority of financial support during last year must be listed. If the parent is widowed or single, only that parent’s income and asset is listed. The surviving parent must list only his/her income and assets. If both parents passed away when student signs the application, the student is considered “independent student.” Adoptive parents are treated the same as biological parents. Foster Parents‘ income and assets are not report.

Number of Household Members: 1) Student 2) Parents 3) Siblings 4) Student’s children, if any 5) Parent’s unborn children.

Number of Household Members in College: If you have additional Household Members currently enrolled in college, it will reduce EFC greatly.

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What is a 529 Plan?

Financial Aids

Families that save early pay less for school, reduce their needs to borrow and have more funds available later in life. How you save, where you save, when and who do you save for are big questions.

529 plans are the best way to save for college. It’s an investment account that has Tax Benefits. You can use it to pay for college, k-12 tuition, even student loans repayment. Your state have tax breaks as well (Besides the federal tax benefits, over 30 states offer a full or patient tax deduction or tax credit for 529 contributions). 529 are low maintenance accounts, yet highly flexible. You can also roll 529 funds into a Roth IRA.

Here are the best plans of 529 in 2023.

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What are Grants?

Grants/Scholarships

Grants is also a source of Financial Aids. However, it doesn’t have to be paid back unless you withdraw from school or do not fulfill service obligation that the Grants require.

There are many Grants from Federal government, state government, the school you are applying or various private/nonprofit organizations. For example: Pell Grants, FSEOG (Federal Supplemental Education Opportunity Grants), TEACH (Teacher Education Assistance for College and Higher Education Grants) and Iraq and Afghanistan Service Grants.

Apply for any and all Grants that you think you may be eligible for and make sure to submit applications before the deadline.

For Federal Grants, FAFSA form is where you start. A lot of Grants are yearly basis. In order to receive them every year of the college, you will need to apply every year when you are in school.

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How much financial aids can I receive for school?

Financial Aids

Parents often ask, “How much financial aids can my son/daughter receive for school?” 

First thing you will need to do is to: fill out your FAFSA Form (Free Application for Federal Student Aid). Once the Office of U.S. Dept of Education process your application, they will send your info to all of the schools you listed on FAFSA. It’s kind of like a One-Stop Shop, each school will use the FAFSA information to make decision on how much financial aid you are eligible. Each school’s schedule is totally different. You must check with each school to find out when you can expect to receive a financial aid offer.

Different schools have different formulas, but basically, they use these three factors:

1. Status: Your status of school enrollment (FT – full-time, HT – Half-time, LHT – less than half-time, etc.)

Your status of school enrollment will impact the dollar amount you qualify for. For example, certain student loans are available only to students enrolled more than half-time.

2. COA: Cost of Attendance (👍metrics to compare schools)

COA is usually available on the school’s website. COA usually includes: a) Tuition and Fees, b) Room and Board, c) Books, supplies, living expenses, transportation, loan fees, and more. COA varies from school to school and it’s a very realistic metrics when comparing schools in a whole. Some schools may have lower tuition, but living expenses are much more higher.

3. EFC: Expected Family Contribution ()

EFC is the main piece of the puzzle. It’s the main info you wrote on FAFSA. The EFC is not necessarily the amount of money your family will have to pay out of pocket for college. It’s not just income and it’s not the financial aid you will receive. However, it is a main # used by your school to calculate how much financial aid you are eligible for at that school.

If you have questions about your EFC, contact the financial aid office at your selected college.

Schools then use this formula to determine your financial need:

Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Need

Once the school determined your needs + accepted you, you will receive financial aid offers from the schools. All your financial aid offers will be different. Different schools have different aids programs and even same school has different aids available in different years. So you have to be in it to win it.

Different offers can come from different sources: school itself, private foundations, state or federal level. Make sure you understand the type of funding and if you will need to pay back or not.

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