Five Reasons to Apply for Financial Aid
Parents grumble about applying for financial aid, but there are excellent reasons why most families should take the time to fill out the cumbersome financial aid applications.
If you are on the fence about filling out the FAFSA, here are five reasons to apply for financial aid.
1. You won't know if you qualify unless you apply.Most parents have no clue if they are eligible for financial aid. It's just about impossible for the typical family to draw any conclusions about their eligibility without actually going through the process. If you don't try, you could be shortchanging yourself tens of thousands of dollars or more.
2. You can't get the best student loans without applying for financial aid.Without completing the FAFSA, you won't be able to borrow through the federal government. That means you won't be able to access the federal Direct Stafford Loan, which is the superior loan for students. Parents also would be ineligible for the Direct PLUS Loan for Parents.
3. You could qualify for a state grant.About 17% of college grants come from state governments, but if you don't apply for financial aid you may not qualify. States routinely use FAFSA information when doling out their financial aid cash.
4. Your money is tied up in your house.Don't assume that you won't qualify for financial aid because you're sitting on a lot of home equity. The FAFSA won't even ask if you own a home. So if you are house rich and cash poor, the FAFSA will give you a break.
5. You have more than one child in college.Maybe you've decided not to apply for aid because you've been turned down before. Plenty of affluent families who didn't qualify for aid with one child in college, however, can qualify when they're supporting two college students. The amount a college will expect a family to pay at a minimum -- it's called the Expected Family Contribution - will drop by about half when parents have two students in college.
Here's an example: Let's pretend your EFC was $20,000 when you had one child pursuing a bachelor's degree. When your second child begins college, your EFC would drop to $10,000 for each child, which means you could qualify for assistance at many schools.
More on CBS MoneyWatch:Avoid These 4 Financial Aid Whoppers
What's This College Really Going to Cost?
Lynn O'Shaughnessy is the author of The College Solution and she also writes for TheCollegeSolutionBlog.
Financial aid image by Hownowdesign. CC 2.0.
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