How to Increase Odds of a Successful Financial Aid Appeal

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Mark Kantrowitz

By Mark Kantrowitz

May 9, 2020

During our webinar about How to Appeal for More College Financial Aid, participants asked dozens of questions about when and how to appeal for more financial aid for college, as well as questions about specific types of special circumstances. This article covers questions on increasing the odds of a successful financial aid appeal. 

Does early decision affect a financial aid appeal?

There’s a myth that applying for early decision causes you to get less financial aid. It certainly sounds plausible that colleges could be less generous to early decision applicants because they are committed to enrolling if admitted. Plausible and wrong.

Colleges use the same criteria for awarding need-based financial aid to early decision students and regular admission students.

While students who apply early decision tend to get less financial aid, that’s because the students tend to be wealthier. Low-income students are less likely to apply early decision because they need to be able to shop around for the college with the lowest net price.

If a family cannot afford to pay for an early decision school after the student is admitted, they should appeal for more financial aid, especially if the family’s financial circumstances have changed. If a college cannot address the student’s financial need, they will release the student from the commitment to enroll.

The nature of the admissions application, early or regular, does not affect the amount of financial aid the student will receive. It does not affect the consideration of a financial aid appeal.

If anything, students who apply early may get more grant aid because they are applying for financial aid and appealing for more financial aid earlier in the financial aid cycle, when the college has more money available.

Even at colleges with need-sensitive admissions, appealing for more financial aid does not cause the college to rescind the offer of admission.

What counts against you on the FAFSA, making you get less or no financial aid? What can you do to qualify for more financial aid?

The expected family contribution (EFC) is based on the income and assets of the student and parents, the age of the older parent, family size and the number of children in college. Income is based on federal income tax returns from the prior-prior year and assets are based on the date the FAFSA is filed. Artificially increasing income by realizing capital gains and exercising stock options can reduce a student’s eligibility for need-based financial aid. There are many strategies for increasing aid eligibility, such as using assets to pay down debt, since assets count against you but debt is often ignored.

Does a custodial parent who is a beneficiary to a trust of the grandparents, and the grandparents are still alive, need to list the value of the trust as the custodial parent’s assets?

Yes. A trust fund must be reported as an asset on the FAFSA, even if access to the trust fund is restricted or it won’t be available until after a future date. Most trust funds were voluntarily established by the grantor of the trust, even if the restrictions are involuntary from the perspective of the beneficiary.

The Higher Education Act of 1965 explicitly includes trusts within the definition of assets.

The main exception to reporting a trust as an asset is if a court-ordered trust has been restricted by court order, such as a trust to pay for future medical expenses of a car accident victim.

Another exception occurs when the beneficiaries of a trust are unaware of the existence of the trust. You can’t report an asset on the FAFSA if you are unaware of the existence of the asset.

Use our Financial Aid Calculator to estimate your expected family contribution (EFC) and financial need based on student and parent income and assets, family size, number of children in college, age of the older parent and the student’s dependency status.

A good place to start:

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