Successful FAFSA Strategies – Use Them Or Pay More For College

Expert Author Keith Maderer

If you are the parent of a high school student that is planning to go to college, you need to understand how the FAFSA works and how it can help your family qualify for more financial aid. There are several very specific strategies that you can use to help reduce your EFC (Expected Family Contribution) and increase your student aid. But you need to get started now, before your child graduates, if you plan to take full advantage of your opportunities.

Here are three simple strategies that you can use right now to help restructure your financial aid efforts.

Strategy 1: Reduce Student Savings – If your child has been fortunate enough to earn or save in their own name, this is great. Unfortunately, if your student has savings or investments in their own name, the college financial aid formulas will add 20 percent of those savings to your EFC. Parent’s savings and investments are also added, but only 5 percent of a parent’s includable assets are added to the EFC. So it is smart to keep the student’s savings out of their own name or redirect them into non-includable areas.

Strategy 2: Reduce or Restructure Parent Savings – While parent savings are treated better than student savings, it is still very important to take appropriate measures to reduce the amounts that are used for financial aid purposes on the FAFSA. Retirement plan savings, tax deferred accounts and small business assets are not included for financial aid purposes. If you can reposition some of your assets into these areas, you will usually get an income tax break as well as a lower EFC and higher financial aid award.

Strategy 3: Reduce Parent’s Taxable Income – Another area where many families can make big financial aid progress is by reducing your family taxable income. By maximizing 401K, IRA, HSA and other income tax-deductible savings and making full use of your itemized deductions, you can reduce taxable income significantly which lowers your EFC and can increase your student aid.

Summary: By working on these three strategies now, you will see a direct financial benefit for your efforts. You will need to take care of these actions by December 31st of your student’s senior year in high school (sooner if possible) to maximize the benefits during their first year of college. If you can make these a priority in your overall financial aid strategy, you will be further ahead than most incoming freshman families and your efforts will be rewarded for the next four years.

Keith Maderer is a financial expert and father of five. He has been a financial adviser in the Western New York for over 30 years. He is the owner of SENIOR Financial and Tax Associates and is the founder of the Maderer Foundation, a private scholarship program for area youth since 2006.

Keith is the author of “How To Get Your College Education For Less”. Available on Amazon.com – ISBN No: 978-1-4538-2053-7. This book is filled with practical strategies you can use right now to save money on college.

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