Since my first financial aid post two weeks ago, several people have asked me some variation of the following question: “Mike, why should I complete the FAFSA form if I am not going to get any financial aid anyway?”
First, are you sure you won’t get any financial aid for college? I know your income is too high to qualify for a Pell Grant and that you have piles of cash stashed for your student’s college education, but are you absolutely certain, beyond any doubt that your student won’t need or qualify for any financial aid at all?
What about student loans? Yes, they qualify as financial aid for college.
The Federal Direct student loan is the basic student loan that students take out in their name. They are also the least expensive loans to take and offer more flexibility when it comes time to repay them. Students do not have to have a demonstrated financial need to qualify for these loans. But they must complete the FAFSA form in order to get them.
According to Trends in Student Aid published by the College Board, over $62 billion or 34% of all undergraduate student financial aid for college during the 2014-2015 school year was Federal student loans. In Minnesota over 70% of our kids take out student loans. Yours probably will too.
No FAFSA. No Federal student loans.
Second, you might qualify for institutional, need-based aid at some schools. Financial “need” for college is defined as the difference between what a school costs (total cost of attendance usually includes tuition, fees, room and board, books, and other miscellaneous items) and your Expected Family Contribution or EFC.
Even if you are completely convinced that there is no way you would qualify for any type of need-based aid, consider this possibility: you could be wrong, especially at private colleges and universities.
If a school costs $48,265 (the average total cost of a private, 4-year, nonprofit college in MN) each year, and your EFC is $40,000, then you are said to have “financial need”. $4,826 in this case. This amount of need may not qualify you for a Pell Grant or even the MN State Grant, but it could make you eligible for institutional, need-based financial aid from the school your student attends.
Considering that some private colleges and universities now top $60,000 in annual costs, most families would have at least some financial need at the most expensive schools. If your student is looking at private colleges, odds are good that you may qualify for this type of financial aid.
No FAFSA. No institutional, need-based financial aid.
Third, financial aid can be merit-based. Your high income may disqualify you for institutional, need-based financial aid – even at the most expensive schools. However, a lot of financial aid is based on the academic merit of the student without regard to a family’s financial status or the student’s ability to pay.
You can make an unlimited amount of money or own an unlimited amount of assets. Your student could even be independently wealthy in their own right and still qualify for a merit-based scholarship based on their grades, ACT or SAT scores, and their unique characteristics, abilities and achievements. In fact, many schools offer institutional, merit-based grants to their most talented students.
Merit-based financial aid can shave thousands of dollars off your tuition bill every year. According to the National Center for Education Statistics, the average grant/scholarship aid at a 4-year, private college in 2016 was $14,566.
Unfortunately, even though merit-based aid is supposed to be allocated on a need-blind basis, the process for applying for this type of aid usually starts by submitting the FAFSA form.
No FAFSA. No institutional, merit-based financial aid.
Financial aid – a missed opportunity? Last year over $150 billion in financial aid for college was awarded to 15 million students. Yet a lot of financial aid went unclaimed.
Research from the financial website, Nerdwallet, found that over $2.7 billion of Federal grants for college financial aid were unclaimed.
The number 1 reason why? Students never submitted the FAFSA form. Surprisingly, 44% of Minnesota high school graduates did not complete the FAFSA form either.
Don’t let your student be one of them.