Financial Aid: Save Thousands. Avoid Major Errors.
In paragraphs A. - E. above we have discussed ways to get the most value out of college courses towards a good job offer, and to build your resume so you will have the experience and performance to maximize scholarship opportunities and admittance to your priority colleges. Beyond that, maximizing financial aid is important because the interest rate and payoff terms for such loans are better than private non-subsidized loans. The FAFSA application process is meant to determine your ability to pay based on a legal definition of measuring your income and assets so that "wealthy" people get less (subsidized) financial aid than less affluent people.
Within your non-college priorities, we can help you position your assets and liabilities, optimally time your income and college admissions, and structure ownership designations of assets along with other steps to maximize financial aid and work-study opportunities based on your particular family profile.
The core purpose of this planning is not to squeeze through an unintended loophole in the law but to recognize that some incentives to position your finances to maximize aid does itself serve a public purpose. For example, liquid investments are counted for and reduce financial aid. However, if these assets are in retirement accounts like 401(k)'s or permanent life insurance, they are considered earmarked for long-term security that prevents poverty in retirement which is a public good. Thus, they are not counted as "wealth" that reduces financial aid. Equity in your home is also not counted (though it is for typical institutional aid) because it too seems to serve a public good; i.e., long-term family stability in the community and in retirement. The key is to calculate financial aid with and without repositioning scenarios in order to determine what marginal benefit will accrue to you.
Action Items For Some People: (there are others)
1. Use some liquid assets to pay down mortgages or buy a car.
2. ... or to contribute to retirement type assets.
3. Pay down the credit card or other debt.
4. Expand your business to reduce base year net income.
5. Family members benefit by going to school at the same time.
6. Use parent-owned 529's (simplicity) or life insurance (flexibility, dual-use).