Last-Minute Financial Aid Tips

Mark KantrowitzBy:  Mark KantrowitzBy: Savingforcollege.com

Last-Minute Financial Aid Tips

Mark KantrowitzBy:  Mark KantrowitzBy: Savingforcollege.com

You just got your financial aid award letter, but the financial aid package isn’t enough. What can you do to bridge the gap between the financial aid you received and the money you need to pay for college?

Apply for Financial Aid

If you haven’t filed the Free Application for Federal Student Aid (FAFSA) yet, do so now. The FAFSA is a gateway to financial aid from the federal government, state government and most colleges.

You may have missed the deadlines for financial aid from the college and state grants, but you might still qualify for some federal aid.

The FAFSA is also a prerequisite for low-cost federal student loans.

There are several strategies you can use to increase your eligibility for need-based financial aid on the FAFSA. These strategies are based on income, assets and demographics.


Appeal for More Financial Aid

The financial aid package is not necessarily the college’s final offer. If your ability to pay for college is affected by special circumstances, appeal for more financial aid.

Special circumstances include anything that has changed over the last two years and anything that differentiates the family’s financial circumstances from those of the typical family.

Examples of special circumstances include a change in income, high unreimbursed medical/dental costs, high dependent care costs for a special needs child or elderly relative, private K-12 tuition for siblings and one-time events that are not reflective of ability to pay during the academic year.

Even a mid-year change in financial circumstances, such as job loss, can justify a change in the financial aid package. Most colleges have contingency funds available for mid-year appeals for more financial aid.


Search for Scholarships

Students should still search for scholarships, even late in the school year. Many deadlines have passed, but there are still hundreds of scholarships with April, May and June deadlines. Examples include the Stuck at Prom Scholarship (for making a prom costume out of duct tape) and the Collegiate Inventors Competition.

There is also military student aid, such as ROTC Scholarships. You can participate in ROTC and receive a ROTC scholarship for one year before you must commit to serve in the U.S. Armed Forces.

Parents should ask their employer’s HR staff (and unions, if applicable) about employer-paid tuition assistance programs. Most such programs are just for the employee’s education, but some cover college costs for the employee’s children or even (rarely) grandchildren.

Examples of large employers that have provided scholarships for children of employees include Humana, Intel, Oshkosh, Siemens, Smuckers, Thermo Fisher Scientific, Verizon, Walmart and Wells Fargo. Companies that hire many high school and college students also offer scholarships, such as McDonalds, Starbucks, and UPS.

If the student plans on pursuing a career in teaching, ask the college financial aid office about the federal TEACH Grant, which provides $4,000 per year. Note, however, that if the student fails to fulfill the teaching requirement (teaching for 4 out of 8 years after graduation), the TEACH Grant retroactively turns into an unsubsidized Federal Direct Stafford loan, with interest accruing for the original date of disbursement.


Claim Tax Breaks on Your Income Tax Return

Parents can claim the American Opportunity Tax Credit (AOTC), a partially-refundable tax credit worth up to $2,500, based on up to $4,000 in college tuition and textbook expenses.

There is also a Student Loan Interest Deduction, where up to $2,500 in interest paid on federal and private student loans may be deducted on your federal income tax return. The student loan interest deduction is claimed as an above-the-line exclusion from income, so you can claim it even if you choose to use the standard deduction.

While it may be a bit late to start saving for college for a high school senior, every dollar parents save is a dollar less they'll have to borrow. Now is a good time to get started with a 529 plan for younger children. Also, if the parents live in one of the more than 30 states that offer a state income tax deduction or tax credit based on contributions to the state’s 529 plan, the state tax break can function like a discount on tuition.


Choose a Cheaper College

Compare colleges based on net price. The net price is the difference between the cost of attendance and gift aid (grants and scholarships). The net price is like a discounted sticker price, reflecting the real cost of a college education.

But, first check whether the college practices front-loading of grants, which can lead to increases in the net price in subsequent years. Also, if you’ve won a lot of scholarships, review the college’s outside scholarship policy, to see if the college reduces loans or reduces grants when a student wins a scholarship. Reducing loans causes the net price to decrease, while reducing grants does not.

Generally, an in-state public college or one of the colleges with generous, no-loans financial aid policies will be the least expensive option.

About 300 colleges have full-tuition merit scholarships. These are usually based on the student's grades and test scores, as reported on the application for admission. If you did not originally make the cut, but your grades and test scores have improved since then, appeal to the admissions office to see if you can qualify for the merit aid now.


Cut College Costs

Aside from choosing a less expensive college, there are several tips for ways to cut college costs:

  • Live at home and commute to college, if your parents live nearby. Or, split housing costs with a roommate.
  • Minimize the number of trips home from college to cut back on travel costs.
  • Buy used textbooks and sell your textbooks back to the bookstore at the end of the semester to save about half on textbook costs.
  • Graduate on-time, or even early. Each additional year it takes to graduate can add significantly to the cost of a college education. Plan a path from matriculation to graduation, to avoid missing prerequisites, and register for classes on time.
  • Live like a student while you are in school, to avoid the need to live like a student after you graduate.

Get a Part-Time Job

Part-time jobs are also an option. Even if you don't get a Federal Work-Study job, part-time jobs are plentiful on and near college campuses.

If you have a car on campus, you can drive for Uber or Lyft, a great way to fit part-time work in around your academic schedule.

But, be careful to not work more than 12 hours a week, because every additional hour takes away too much time from academics. Students who work a full-time job are half as likely to graduate within six years as compared with students who work 12 hours or less a week.

An added benefit of a part-time job is it gives you work experience which will help you get a full-time job after you graduate.


Beg or Borrow the Money

Tuition installment plans are an option if you can afford to pay for college, just not in one big lump sum. A tuition installment plan breaks up the college bills into equal monthly payments over the course of the semester. Tuition installment plans are less expensive than long-term student loans.

Borrow federal and private student loans and income-share agreements as a last resort. They are among the most expensive ways to pay for college.

If you must borrow, borrow federal first, as federal student loans are less expensive and have better repayment terms than private student loans.

If you have to borrow private or parent loans, it may be a sign that you are borrowing more money than you can afford to repay.

Nevertheless, parents might want to apply for a Federal Parent PLUS loan if they expect that they may be rejected. If a parent is denied a PLUS loan, the student will qualify for the higher unsubsidized Federal Direct Stafford loan limits available to independent students. That provides an additional $4,000 or $5,000 in federal student loan limits, depending on the student’s year in school.

Some lenders will provide interest rate reductions or other discounts to borrowers who sign up for auto-debit or who agree to make interest-only or fixed payments during the in-school and grace periods.

Finally, ask friends and family for financial help. Ask them to give the gift of college instead of the usual holiday and birthday presents.

Plan Ahead for Next Year

You can also get a head start on searching for scholarships that are available during your freshman year in college. Many families assume that scholarships are available only for high school seniors. But, there are many scholarships you can win only after you are enrolled in college, as well as scholarships available to students in younger grades.

Make sure you get an early start on applying for financial aid in subsequent years, by filing the FAFSA as soon as possible on or after the October 1 start date.


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