Financial Aid - Who Is Eligible?

Let's talk about the myths versus the reality.

Okay, the first myth is "My income is too high. There's no way I'm ever going to be eligible for financial aid." This is, in almost all the cases I've seen, usually false. I've seen people with six figure incomes get aid.

I'm not saying that if you make several hundred thousand dollars a year, or if you have half a million or a million dollars in assets that the likelihood is you're going to get need-based aid. But if you're talking about incomes ranging from let's say a low $30,000 a year to a high of $100,000 to $125,000 and you want to send your child to a state or private university, I would say your likelihood is that there very well may be need-based financial aid waiting for you. You just have to know how to get it.

The second myth is "Well, my child's not an "A" student, so there's not going to be any financial aid. It only goes to the best students." It has absolutely -- unless your child is failing -- nothing to do with grades at all. It's 100% based on a formula that is based on income, assets, number of family members, etc. It has nothing to do with your grades.

The next one is "Well, I own a home and I hear if you own a home there's no way that you can get aid." Another huge, huge myth.

In fact, on the federal form for the federal formula, they don't even include the home when calculating eligibility anymore. Now, a lot of private schools will still ask about the value of your home, but for federal purposes and for federal funds, they don't even ask about it. So, that doesn't mean, in most cases, anything.

Okay, another one that I hear quite a bit is "Aid, and I’m talking about need-based financial aid, is only for special groups like minority groups, people of certain special talents, hobbies, minority status, etc." Again, it is purely based on a formula that has only to do -- and I'm talking about need-based financial aid -- it is purely based on income, assets, number of family members, where you're going to school, etc. It has nothing to do with these issues. So get this out of your mind.

Another thing that I hear, and again, it's a definite misrepresentation -- guidance counselors, financial aid officers, even other parents will say, "Oh, it's an easy process, you just fill out a form and you sit back and you wait." This is exactly what the schools are hoping you're going to do.

This is exactly what you should not do because it's a process that you have to understand that you have to take control of, or I can assure you, just like anything else in life, you sit back and wait for it to happen to you, you are going to lose thousands, maybe even tens of thousands of dollars in financial aid that you might have received if you had taken the time and energy to understand the process and to do everything within your power that's legal and ethical to get more funding.

The last thing that's a big misconception is "Okay, my guidance counselor or the financial aid officer at the college can definitely help." Yes, they can help. Unfortunately, if you plan on them being the only source of help, I can assure you that it's almost akin to you saying, "By the way, I hear the IRS does tax returns for free."

And I'm sure that for most of you -- unless you enjoy paying a lot of taxes -- you don't use that service. You will probably be much happier paying an H&R Block or a private CPA to teach you the legal and ethical loopholes -- to help you pay the least amount of taxes.

Going to a college and asking them to teach you how to get more money from them is basically the same thing as you going to the IRS and telling them to help you save money on taxes. It doesn't work. They will not do that.

Schools have a limited number of funds to give out to a lot of people and they are not going to teach you strategies to get more from them.

The same thing with guidance counselors. It's not that they have any reason not to have you get more money, it's just that, a guidance counselor is not trained to teach you how to get more funds from a particular school. They don't have time to devote individually to each and every student to teach them every potential strategy to help them fill out every form that has to be filled out.

They also can't help you negotiate, and they certainly don't know how to pick schools that will give you the most funding. So generally, they can be of limited assistance. There's nothing wrong with asking certain limited questions to your guidance counselor or to a financial aid officer, but don't expect them to teach you how to get more money.