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Planning Beginner: Education Planning

Introduction to Education Planning Education Planning: Getting Started The College Cost Environment College Still Pays Financial Aid Misconceptions about Your Income Is All Financial Aid a Loan That Must Be Repaid? Are There Really Hundreds of Millions of Dollars in Unclaimed Scholarships? Financial Aid: Determining the Student Aid Index Financial Aid: Contributions from Parental Income and Parental Assets Independent Student Status in Financial Aid Coverdell Education Savings Accounts Qualified Tuition Plans (529 Plans) Summary of Education Planning
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Financial Aid Misconceptions about Your Income

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Financial Aid Misconceptions about Your Income

Many families fail to get all the financial aid for which they are eligible simply because of myths and misconceptions about financial aid. These lead a family to believe that they do not qualify for financial aid, or send them searching for some arcane scholarship. As a result, they spend time chasing myths rather than focusing on the main sources of financial aid: Uncle Sam, their home state, their college, and their employer.

Things To Know

  • Misconceptions about financial aid keep many families from getting the help they need.
  • You may complete a financial aid form based on estimated tax information rather than a completed tax form.

Misconception: "I don’t qualify for financial aid because I make too much money"

This could not be further from the truth. If you made too much money, you probably wouldn’t need, want, or consider financial aid. However, most people do need financial aid to supplement the family budget for higher education. The fact is that the major factor in determining financial need is the actual cost of education for all family members. While family income and assets are factors, so are family living expenses, future retirement needs, and the current costs to educate family members.

Misconception: "You must complete your income tax return before applying for financial aid."

You will need the information from an IRS 1040 form to complete most financial aid forms, so gather that information in December. However, you may complete a financial aid form based on estimated tax information. Most colleges require the forms to be sent in no sooner than January 1, but by April, most of the grants and scholarships are gone. It is okay to file an "estimated" financial aid form; you will have an opportunity to amend it later.

If you do not prepare your own income tax returns, many tax professionals will be happy to help you prepare an estimate for financial aid applications.