Mistake 2: Limiting financial aid award potential
It is impossible to overstate the important of financial aid, when it comes to saving for college.
40 percent of families feel as though they’re paying too much for college as it is, and that is why pursuing financial aid is imperative. In fact, 33 percent of families used gift aid, scholarships, and other forms of financial aid to afford the 2018-19 school year.
Free Application for Federal Student Aid (FAFSA) determines eligibility for aid, and it is important that your college savings choices don’t impact the view FAFSA has of your financial situation – which can at times appear misleading.
529 savings plan have little effect on financial aid reception. Due to the fact that student assets are sometimes assessed more highly than parental assets, the 529 is particularly helpful, because they were opened in the name of the parent and the assets are considered the parents. So the impact on determined financial aid is often minimal, in this case.
Of course, every school may assess financial need differently, but one of the best ways you can begin making your savings strategies FAFSA friendly it to explore the possibility of a 529 savings plan for your child’s future higher education funds.
Source: Journal of Financial Planning, FPAJournal.org “6 Steps Students Should Take Before Choosing a School” January 2020
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