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Money Matters :  Paying for College

In theory, financial aid funds are supposed to go to those who need the money the most. In reality, financial aid dollars flow to those students and families who best understand how the financial aid process works. Here are some key points to remember:

1) Don't forget your consumerism. Higher education in America is big business. The college is trying to get you to pay the most money; you are trying to pay the least amount.

It can be very costly to assume that the college is going to show you how to get the most aid. As a college financial aid administrator quoted in the New York Times once said, "Parents and students sometimes forget that we work for the school, not for them."

2) Don't initially rule out any school as being too expensive. The amount of financial aid you receive is based on the relationship between two items: the "cost of attendance" and the "family contribution." The cost of attendance represents the sum of tuition and fees, room and board, books, transportation, and an allowance for personal expenses. The family contribution is the amount of money the college expects from the family for the student's education in a particular year. If the cost of attendance is greater than the family contribution, you have demonstrated "need" and are eligible for financial aid. So in theory once the family contribution is met, the greater the cost of the school the more aid you are eligible to receive.

3) Plan ahead. Eligibility for financial aid for a student's freshman year in college is based in part on the parents' and student's taxable and untaxed income received during the calendar year beginning January 1 of the student's junior year in high school through December 31st of the senior year. To increase your chances of getting the most aid, as early as tenth grade you should determine your "family contribution" by using worksheets in financial aid guidebooks or by hiring an aid consultant. If appropriate, make the necessary changes to lower your family contribution. Certain reductions in discretionary income items could increase your "need". You should also consider making the appropriate changes to assets, debts, certain expense items, and retirement accounts.


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