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Can You Influence Your Financial Aid Award?
Right now, the pandemic is causing chaos and uncertainty for colleges and students. But it won’t always be that way. And if you have children who will be heading off to school in the next few years, you’re probably thinking about more typical concerns – such as expenses. How will you pay for the high costs of higher education?
Most colleges do offer financial aid packages that can greatly help with these expenses. But it pays to know, well in advance, how financial aid works. And the key platform for determining much of your child’s financial aid is the Free Application for Federal Student Aid (FAFSA). In fact, if you have children starting college next year, now is the time to get going on the FAFSA, which became available Oct. 1 for the 2021-22 award year.
Filling out your FAFSA will provide you with what’s known as your Expected Family Contribution (EFC). The EFC calculation takes into account four separate areas: parent income, parent assets (excluding retirement funds, such as 401(k) plans and IRAs, home equity and small family businesses), student income and student assets. The EFC does not calculate the exact amount you must pay for college – rather, it’s an estimate, and the amount you pay can be below or above this number.
Nonetheless, the EFC is important in determining your financial aid package, and your actions can influence the results. Here are a few suggestions for future years:
Not all these suggestions will be appropriate for everyone, but they’re worth thinking about. You might also want to consult with a college’s financial aid officer before you complete the FAFSA, as aid calculations can be complex. An investment of your time and effort early in the process may pay off when the aid packages are finally delivered.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. This content should not be depended upon for other than broadly informational purposes. You should consult your attorney or qualified tax advisor regarding your situation. Make sure to discuss the potential financial aid impacts for your specific situation with a financial aid professional.
Can You Influence Your Financial Aid Award?Short /Radio version:
PSA: Can You Influence Your Financial Aid Award?
TBA: Oct. 5, 2020
Words: 181(excluding FA’s name, address/phone number)
The pandemic is causing chaos and uncertainty for colleges and students. But still, plans must be made. In fact, the federal financial aid application, or FAFSA, becomes available Oct. 1 for the 2021-22 award year.
But if you have younger children, still years away from college, you may want to take some steps to improve their chances for financial aid.
First, think about saving money in your name, not your child’s. The FAFSA looks at 20 percent of a student’s assets, but less than 6 percent of yours.
Also, be aware that recent contributions to your 401(k) and traditional IRA can be counted on the FAFSA as untaxed income, which may affect financial aid eligibility.
Furthermore, withdrawals from these accounts in the year during which you’re applying for aid, and the prior year, may work against you.
You should consult with a college’s financial aid professional for guidance about your specific situation, as aid calculations can be complex. In any case, learn as much as you can about the process – because the more you know, the better prepared you will be.
This is (FA’s NAME), your Edward Jones financial advisor at (Branch address or phone #).
Number of Words:181