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College is not paid at sticker price!

Yes, you read that correctly. If ten students went to the same college at the same time…… I can safely say that all ten will pay a different price for the same college. Now, how is that even possible?

Welcome to the world of paying for college! It’s kind of like going shopping with sales and coupons, and every person can buy the same item at a different price.

If you know and understand the rules of college financial aid, it’s a game worth playing.

So, let’s take a look at some of the rules……

1. Fill Out and Submit the FAFSA (Free Application for Federal Student Aid) 

I can’t stress this enough. I hear from so many people that they didn’t get anything from the college, and I ask, “Did you fill out the FAFSA?” and they say “No, what’s FAFSA?”

Well, there’s your answer! You can’t win the lottery if you never buy the ticket.

So, the first rule of the game is……fill out the FAFSA! Even if you think that you will never qualify for any aid, still submit the FAFSA. You never know.

Submitting the FAFSA will open opportunities you may not have previously been aware of. Yes, you may qualify for federal loans or work-study — but did you know that many colleges require you to submit the FAFSA so they can determine what sort of merit aid package you are eligible for.

The FAFSA opens on October 1st of the student’s senior year in high school; a good portion of the free money is awarded on a “first-come-first-served” basis, so the sooner you apply, the better your chances. You will need to attach your tax return from the previous year and financial statements as of the date you fill out the FAFSA.

Remember, this is not a one-time thing. You must apply every year for which you are trying to receive financial aid.

2. Know What’s Counted and What’s Not

There are assets and liabilities that are considered assessable for the FAFSA (meaning they count in the financial aid calculation) and there are those that are not counted.

For example, equity in your primary home is not counted, while investment property is. Non-qualified money in the bank account and brokerage account is counted, while retirement assets are not. But the catch here is that the current year contributions to retirement accounts are counted.

Money inside a cash value life insurance and annuities are not counted. The Picasso on your wall and the Ferrari in your garage are not counted (personal effects), but your business is counted if it has 100 or more employees.

Knowing the rules and planning ahead of time helps tremendously.

Here’s a more detailed rundown of what’s counted and what’s not:

What is counted on the FAFSA?


3. Who Owns the Asset?

For the purposes of the FAFSA, a parent’s asset is counted at a much lesser percentage than the student’s asset. For example, a UTMA, which is seen as the child’s asset, would be counted much more heavily than a 529 Plan. So, who owns the asset is very significant in the calculation for financial aid.

Same goes for income: parents’ income has allowances that a student’s income does not have, and the student’s income is counted at a much higher percentage for FAFSA. So, if your child has a summer job, that income is counted against the child in the formula.

A better strategy may be to have your child apply for scholarships in the summer and learn a new skill, then take a job.

4. Grandparent’s Contribution

If grandparents have opened 529 college plans for their grandkids and plan to help pay for college, it’s better to transfer the accounts in the name of the parents or the student before the college year to avoid being counted as income for the student.

If the grandparents pay for college, it may count as the student’s income in the following year, and that will drastically reduce the student’s financial aid eligibility. The 529 Plan in the name of the parent, however, is considered an asset of the parent and is not counted as the student’s income in the following year.

5. Private College vs. Public College

Many parents have the view that their child can go to any college as long as it is public in-state because that’s cheaper.  This is not a bad view to take, but it is not always correct.

Many private colleges have large endowments, which means that if they really want to attract your student to the school, then they will open up their wallet. With more money to spread to fewer students, private schools tend to have a higher capacity to give scholarships and grants than public colleges.

So, if nothing else, don’t rule out private colleges. You may pay the same at a private university as a public one. Maybe even less.

Many schools have their scholarships and grants listed right on their website admissions page. So, if you think you can get in, it may be worth looking at less crowded, private colleges.

6. Negotiate with Colleges

Yes, in some circumstances, you can negotiate with colleges. If they want your child badly enough, they will offer better financial packages to win your child over.

In fact, I have seen colleges going all out to better their financial aid offers when shown the aid offer from a rival college.

But the catch is this: you have to take an active role in politely reaching out to the admissions office, talking to them, and then going back and forth with several colleges till you get an offer you can’t resist. For this to work, you have to be ready to walk away from a college if they don’t want to negotiate any further. Colleges can sense how far you are willing to go.

7. Professional Judgement Letter

If your financial circumstances have changed after you filed the FAFSA, then you can write a Professional Judgement letter to the admissions office and explain your situation and see if they would reconsider your financial aid package.

Things that constitute a change would be if your parent lost their job, died or became disabled. It has to be something where your situation is substantially different from others. The financial aid office would have the final say in this, but it does not hurt to write the letter.

8. Loans

Lastly, I would say that If the aid you got is not enough and you have to take student loans for college, look beyond the Parent Plus loan option that comes bundled in many college financial offers. It usually has a higher interest rate and has fees tied to it.

There are many loan options out there from private lenders that come at a lower interest rate if the parents have good credit. Check out Sallie Mae, Commonbond, or Simple Tuition.

Those who know the rules are better off than those that don’t. It’s never too early or too late to start. So, plan, plan and plan some more!

Check out our resources page for further information regarding student loans, college preparation and funding!


Zaina Bankwalla, CFBS

Zaina Bankwalla

Related Reading:

What Every College Financial Aid Officer Wants You to Ask

The FAFSA Verification Process and the Financial Award Letter

Understanding Your Student Aid Report (SAR)

The FAFSA vs CSS Profile for Divorced and Separated Parents

Educating Yourself When It Comes to Paying for College

Endowments: Finding Out Where the Money Is

A Peek Behind the Curtain of College Pricing


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