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Single Largest Financial Aid Mistake
Single largest financial aid mistake is saving money in the student’s
name. Here’s why:
Money held in a student’s name will only serve to reduce his/her
eligibility for need-based
scholarships. Between
30-35% of student savings are expected to be used to pay for college
each year; the viewpoint of colleges and Federal and State governments
is the more money in student savings, the less scholarship and grant
money needed by the student.
Example: For the past three years Jordan, a high school
student, has saved almost every dollar from his part-time job to help
pay for college next year. He managed to save $5,000, but still
has a great need for scholarship money to help pay for college expenses. His
top choice college considered his family’s financial situation
and his savings and awarded Jordan $8,500 per year in need-based scholarships.
Another high school student, Michael, has an identical family financial
situation and also needs scholarship money to pay for college next
year. His savings account contains $100. His top choice
college is the same as Jordan’s; the college considered Michael’s
family’s financial situation and his lack of savings and awarded
him $10,000 per year in need-based scholarships.
NOTE: Approximately 6% of parent financial assets and savings
are expected to be used for college expenses. 0% of grandparent
and other non-immediate family member financial assets and savings
are expected to be used for college expenses.
Evaluate your family’s financial situation and take action to
maximize your potential to receive need-based scholarships and grants. REMEMBER
TO MINIMIZE ALL MONEY HELD IN THE STUDENT’S NAME.
If your family has a tax-deferred college savings account (such as
a 529 account), evaluate advantages of long-term, tax deferred savings
vs. the potential for receiving need-based scholarships. |
