My daughter will be starting college next year, and we already spent many hours filling out applications. I know that financial aid forms are due soon, too, but we're wondering whether it's really worthwhile to submit those forms -- I really don't think we'll qualify for any need-based aid, although it would be nice if we did!
It's definitely worthwhile to submit the financial aid forms. Almost $135 billion in financial aid was distributed in the 2005–2006 school year, according to the College Board. Full-time students, on average, received $5,144 each in federal loans and $4,433 in grants.
Some pricey private schools give out more money than you might expect. For example, 93% of students at Princeton in the class of 2008 who applied for financial aid and whose families earned between $120,000 and $139,999 a year were eligible for aid. The average grant was $14,000 (grants are higher for families who earn less). And two-thirds of the undergraduates at Harvard receive some form of financial aid, with half receiving need-based Harvard scholarship aid. One-fifth of the families receiving need-based scholarships from Harvard have family incomes of more than $130,000. And Harvard is among a growing number of schools that now meet the full need -- through grants and work-study -- for families earning about $60,000 or less. See Special Deals on College Tuition for more information about several of these programs.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To see if you're likely to qualify for need-based aid, run your numbers through the expected family contribution calculator at Finaid.org (which is also filled with a lot of great financial aid resources). You'll get an estimate of how much your family will be expected to pay for college expenses. But even if aid doesn't look likely, it's still worth the effort to fill out the forms, which are often a starting point for merit-based aid, too.
Also find out if your state offers money for students with high grade-point averages or standardized test scores. Georgia residents who earn at least a 3.0 grade-point average in high school and college qualify for free tuition at Georgia state colleges or a $3,000 discount at private schools in the state. Louisiana, Massachusetts, Nevada, New Mexico and several other states offer sizable scholarships to residents who attend state colleges and had good high school grades or scores -- regardless of financial need, but you may need to submit the Free Application for Federal Student Aid (FAFSA) to apply. For more information about the FAFSA, see the U.S. Department of Education's Student Aid Web site.
Now is the perfect time to apply for financial aid because some schools award aid on a first-come first-served basis, even though their aid application deadlines may not be until February or March or later. It's best to submit them as early in January as possible. Don't worry if you haven't filed your taxes yet -- you can estimate the information now (you should have most of the information from your December pay stub and year-end statements) and then can make revisions on your student aid report after you complete your tax return. For more information about applying for financial aid, see Early Birds Grab the Financial Aid.
-
You Don’t Want to Retire in Portugal: Here Are Three Tax Reasons WhyRetirement Taxes With the NHR benefit retiring and pension taxes increasing, you might rethink your retirement plans in Portugal.
-
Home Depot's Winning Ways Fueled Its 100,000% ReturnHome Depot's wide moat leaves little room for competition – and shareholders have profited as a result.
-
How Intrafamily Loans Can Bridge the Education Funding GapTo avoid triggering federal gift taxes, a family member can lend a student money for education at IRS-set interest rates. Here's what to keep in mind.
-
How an Irrevocable Trust Could Pay for EducationAn education trust can be set up for one person or multiple people, and the trust maker decides how the money should be used and at what age.
-
UTMA: A Flexible Alternative for Education Expenses and MoreThis custodial account can be used to pay for anything once the beneficiary is considered an adult in their state. There are some considerations, though.
-
Coverdell Education Savings Accounts: A Deep DiveWhile there are some limitations on income and contributions, as well as other restrictions, a Coverdell can be a bit more flexible than a 529 plan.
-
529 Plans: A Powerful Way to Tackle Rising Education CostsContributions to 529 plans grow tax-free and are not taxed when they are used to pay for qualified educational expenses for the beneficiary.
-
Are Student Loans Being Forgiven or Not?Student Loans The House and Senate voted to repeal President Biden’s student loan forgiveness plan, but does it even matter?
-
Are Scholarships Always Tax-Free? What You Need to KnowEducation Scholarships are generally tax-free if certain IRS and other requirements are met.
-
Student Loan Forgiveness Blocked For Now Due to Court RulingsBiden's student loan debt forgiveness program is on hold until the U.S. Supreme Court weighs in.
