How to Fill Out Financial Aid Applications

3. Apply Early

You and your child will need to have the previous year's tax returns completed in order to receive a final determination of your EFC. Prepare your tax returns as soon as possible (even if you don't mail them in yet) so you can complete the FAFSA and get the ball rolling. You want to be at the head of the line when financial aid is distributed.



4. Study Financial Aid Packages Carefully

Once you receive offers of financial aid from the schools (usually in April), compare the packages. Money you don't have to repay (scholarships, tuition discounts, grants) is much more valuable than loans. Subsidized loans (the interest is paid for you while the student is in school) are worth more than unsubsidized loans (the interest starts accruing immediately).

If your child has her heart set on a school that offered a less attractive aid package, don't be afraid to negotiate. Call or meet with the financial aid officer and explain the situation in a calm, non-threatening way and be sure to mention any other circumstances that might bolster your case.

5. Fill In the Gaps

If you can't afford the EFC amount or the school can't fund your entire financial need, you'll need to turn to alternative sources. Parents can borrow the complete cost of college minus any financial aid awards under the PLUS program (Parents' Loans for Undergraduate Students). The interest rate is capped at 9 percent, and repayment usually starts 60 days after the money is disbursed.

Home equity lines of credit and loans from 401(k) or 403(b) plans can bridge the gap. Relatives might be able to help out as well. Any person can give a gift of up to $10,000 a year to any other person without incurring gift tax. Amounts paid directly to a college for educational expenses are not subject to gift tax no matter what the amount.

Finally, remember that few people actually write a check each year to cover all college costs. Most families have to put together a combination of aid, loans, savings and current income to meet the expense of educating their children.


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