7 things you need to know about financial aid for college

College can be costly, but help is available.

by Jane Haskins, Esq.
updated May 11, 2023 ·  3min read

If you are the parent of a high school student, you've probably seen news reports of millennials struggling with student loan debt. You've heard that college costs have gone up dramatically. And you may be wondering how you'll afford your child's education.

The first step in getting financial aid for college is completing the FAFSA—the Free Application for Federal Student Aid. The FAFSA is an online form that colleges use to decide whether you qualify for grants—which do not have to be repaid—or federally guaranteed student loans. These loans usually have better terms and interest rates than private loans.

Some colleges (mostly private ones) also require a second, more in-depth form known as the CSS Profile, specific to the awarding of non-federal aid.

Here are seven things you need to know about applying and qualifying for financial aid for college:


1. Deadlines are important

For the 2018-19 school year, the FAFSA became available on October 1, 2017, and the government's final filing deadline is June 30, 2019. However, every college has its own deadlines.

These may be as early as January or February 2018 for students applying for regular admission in the fall of 2018, and even earlier for students applying for early decision or early action.

If you file your forms after the deadline, your child may receive less aid or none at all. You can find deadlines and requirements on the schools' financial aid webpages to which your child is applying.

2. Aid is based on current assets and income from two years ago

This means that, for the 2018-2019 school year, your financial aid will be based on income and other information from your 2016 tax return.

Assets such as bank accounts and investments are also considered, but about $30,000 to $50,000 of your assets are “protected" and won't affect your aid eligibility. Also not considered are the house you live in and your retirement accounts and pensions.

3. Your child's money counts more than yours

After you submit your FAFSA, the government calculates your “expected family contribution" or how much it thinks your family can spend on a year of college.

Your college-bound child is expected to use a higher percentage of his or her money—about 20 percent—than you are, and this means you may receive less aid if your child has a lot of money in his or her own name.

Consider moving your child's money into a parent-owned 529 college savings account or asking Grandma to delay sending college money until your child's last year of school.

4. If you are divorced, it matters where your child lives

When the parents are divorced, the FAFSA only asks for information about the custodial parent—the one your child lives with the most.

The other parent's income and assets are irrelevant. If you and your ex have wildly different incomes, you may be eligible for more financial aid if your child lives with the lower-earning parent at least 51 percent of the time.

However, if your child applies to schools that also require the CSS Profile, those schools will usually also consider the noncustodial parent's income and assets.

5. Stepparent income counts

If you are the custodial parent and you have remarried, you will report your spouse's income and assets, too—even if your spouse doesn't intend to contribute anything to your child's college education.

6. Beware of raiding retirement accounts

If you withdraw money from a 401(k) or IRA to help pay for college, it will be considered income in the year you take it out. This means that making such a withdrawal could reduce your child's financial aid eligibility in future years.

7. Don't let the sticker price scare you

Private colleges can cost upwards of $60,000 a year, but they also can be generous with financial aid. Don't assume you can't afford a school until you have submitted the required forms and received a financial aid offer.

Applying for financial aid can seem complicated, but the time you spend filling out forms can make an enormous difference in the amount you pay for college and your child's ability to get student loans. To maximize your aid eligibility, stay on top of individual school deadlines and requirements, and file your form(s) as soon as you can.

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Jane Haskins, Esq.

About the Author

Jane Haskins, Esq.

Jane Haskins is a freelance writer who practiced law for 20 years. Jane has litigated a wide variety of business dispute… Read more

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.