If your accountant showed you a legal way for you to save $4,000 on your income taxes this year, would you do it?
The parallels between the two are interesting. Both have loopholes that regularly get exploited by the people who know about them. But more important, both also involve adversarial relationships. In the case of your taxes, the IRS wants as much money from you as it can get. You, in turn, want to give the IRA as little as possible. This is a time-honored tradition, a system of checks and balances that everyone understands and accepts. If everyone sticks to the rules, the system works as well as anyone can expect.
In the case of the colleges FAO, it is his job to get as much money from you as he can. In pursuit of this task, he will be much more invasive than the IRS ever is, demanding not just your financial data but intimate details of your personal life such as medical problems and marital status. He wants to protect the college’s assets and give away as little money as possible. Let him do his job, believe me he is good at it. But in the meantime, you have to do your job – and your job is to use the rules of financial aid to make your contributions to college as small as possible.
Parents who understand these rules get the maximum amount of financial aid they are entitled to under the law. No more, and no less.
It is not in the College Financial Aid Officer’s best interest for you to understand the aid process. The more you know about it, the more aid they will have to give you form the school’s own coffers.
Unlike the tax code, where everyone believes that the rich are the only ones able to take advantage, the financial aid strategy if for everyone. Whether you are just getting by or are reasonable well off, you still want to maximize your aid eligibility.
Depending on which survey you read, between 70% and 80% of all college-bound high school students were accepted by their first-choice college last year. Nowadays, the problem is not so much how to get into college, but how to pay for it once you are there.
At the minimum you need to fill out the FAFSA (Free Application for Federal Student Aid). Many private colleges require the CSS/Financial Aid PROFILE (FAP) form as well. Two methodologies are used: Federal and Institutional. These are filled out to determine the following: parent’s available income, parent’s available assets, student’s available income and student’s available assets. This will determine your Estimated Family Contribution (EFC).