Are there Income Cutoffs for Financial Aid?
One of the most common questions we get from parents, is whether or not it's worthwhile for them to file the Free Application for Federal Student Aid (FAFSA), especially when they think their income is too high. And while it's true that if your income is high, you're unlikely to get much in need based financial aid, there are many other considerations when deciding whether or not to file the FAFSA.
Intuition is Often Inaccurate
Parents have a tendency to underestimate eligibility for need-based aid and overestimate eligibility for merit-based aid. Eligibility for need-based aid depends on more than just income. Important factors include the cost of the college, the number of children enrolled in college at the same time, family size, special circumstances that affect the family’s ability to pay for college and whether or not the student is a dependent student.
Academic performance is often no longer enough to distinguish a student from his or her peers, especially at the most selective colleges. There are more than 80,000 valedictorians and salutatorians each year. Grade inflation and weighted GPAs contribute to more high school students having a 4.0 (or better!) GPA on a 4.0 scale. Thousands of students get a perfect score on the SAT and ACT each year. Tens of thousands of students get at least a 1500 on the SAT and a 33 or better on the ACT. Bottom line, parents and students shouldn’t count on good grades to pay for college.
Apply for Financial Aid Every Year
It is important to submit a financial aid application every year, even if you did not get anything other than a student loan last year. There are subtle factors that can affect eligibility requirements for need-based financial aid. These factors can change from one year to the next. Congress tinkers with the financial aid formulas periodically. If you don’t file the FAFSA every year, you might miss out on financial aid.
Financial aid is based on financial need, which is the difference between the cost of attendance (COA) and the expected family contribution (EFC). Financial need increases when the COA increases and when the EFC decreases. Thus, a student who enrolls at a higher-cost college might qualify for some financial aid, while the same student might qualify for no financial aid at a low-cost college, such as an in-state public college.
Even if your family income is high and you think your student won't get any need based financial aid, there are many good reasons to apply for financial aid that need to be considered. A college funding advisor can help you determine if it makes sense for you to apply for financial aid, and the best approaches for your family to getting as much financial aid as possible. If you would like help developing a strategy to maximize your student's financial aid schedule a free call with our team today!
Mike Bink, AAMS®, CCFS®
Mike works with families to simplify the college funding process and is widely recognized as an expert in college planning. He is passionate about empowering families to become informed consumers of higher education so that they don't pay a penny more for college than they absolutely have to.