Top College Financial Aid Tips

The U.S. Congress overwhelmingly approved a complete overhaul of the country's higher education law in August 2008, which added dozens of provisions and programs to help combat skyrocketing college costs.

The bill requires colleges and universities to report more information about their costs and prices (to be released by the Dept. of Education in user-friendly lists). Those schools with the largest percentage of tuition increases will have to disclose why they were needed and what will be done to keep costs down.

It also simplifies federal financial-aid forms and makes Pell grants for low-income students available year-round, rather than during the academic year. Colleges are now required to disclose all relationships with student lenders and bans all gifts and revenue-sharing agreements between institutions and lenders who offer federal and private loans.

Educate Yourself About the Financial Aid Options

You should know what you are about to get into and how to best plan what is likely to be one of your life's largest purchases. Let's set the record straight up front. There is no panacea for everyone to ensure they will not have to pay for their college educations.

There is a good chance that the equity in your home and/or some other components of your net worth and income will be held against you in the calculation of your SAR (summary of the financial aid you can expect to receive) of your Free Application for Federal Student Aid (FAFSA). This does not mean, however, that there are not ways to reduce the financial burdens of the college education expenses.

Research Your Tax Options

There are many potential tax benefits that are available to most tax payers. These include Section 529 college tuition savings plans. Additionally the interest on student loans is sometimes tax deductible. While we are not attorneys or CPAs, and hence do not wish to dispense tax advice, we have included some general information on the tax ramifications of financing a college education. This should certainly help you get on your way to optimizing your tax situation.

Get to Know Your Financial Aid Administrator

Establishing a healthy relationship with your financial aid administrator will help ensure that he or she does everything to help you out. Additionally, this may help if you have any atypical expenses for which they may be able to make an allowance.

Start with Uncle Sam

The first financial aid form you complete should be the FAFSA. Even if you know you won't qualify for any aid, filling out this form is often the first step to applying for many types of aid including federal loans, state grants, and college scholarships.

Apply Early

Apply as soon after January 1 as possible. You can use estimates for items such as income if you have not completed your tax returns. Financial aid is partially given out on a first-come, first-serve basis.

Apply for Everything

You'll never get the grants or scholarships if you don't apply. There are many good scholarship search engines as well as many different types of scholarships out there. Chances are you will qualify for a number of these.