As we approach the end of the year, there are a series of events that many college-bound students and their parents will face. This can be a very stressful time for many, and the best college decision needs to include a proper analysis of academic programs, campus environment, and financial aid. The increased cost of college has made the issue of college affordability a growing concern for many families. At the same time, paying for a college education has become more complex. It is one of the most complicated financial decisions parents and students will make in their lifetime.
To lower a family’s cost of education, you need to bring together the financial aid process, merit aid opportunities, college saving plans, education tax strategies, various financing options, and student loan repayment. Due to increased complexity, college financial aid offices are legally unable to answer some of the questions a family may have about maximizing their financial resources. So here are a few strategies that may help you avoid costly mistakes and make college more affordable.
1. Look Beyond Your SAI When Planning for College Costs
The Student Aid Index (SAI) is useful, but it shouldn’t drive every financial decision. Families sometimes shift or liquidate student‑held assets expecting a better aid outcome, but depending on the parent contribution and each college’s cost, removing those assets may have no effect on eligibility. Because those assets legally belong to the student, changes can also trigger tax and legal consequences. A broader view of your family’s finances—not just the SAI—leads to smarter, more sustainable college‑planning choices.
Related: What Does Need-Blind Really Mean With Financial Aid?
2. Know that timing is critical
The school’s financial deadlines are important, but there are three major timing issues in the college affordability process: financial aid positioning, family timeline, and FAFSA submission.
Financial aid positioning
When the school year and tax year do not match, it can be a very confusing issue for many families going through the financial aid planning process. The best time to review a family’s financial aid position is when the student is in their second semester of sophomore year of high school and first semester of junior year. This is the last tax year before the financial information is used to complete the FAFSA.
Family timeline
If the family has multiple children, college affordability issues can be more important. By creating a family timeline, you can see how having multiple children in college will affect your financial aid position. By matching this with the various colleges’ gifting policies, a more expensive college may become affordable due to the change in a student’s financial need. This is another reason to create a four-year plan. Proper planning for the financial outcome of the education is often overlooked in the college planning and decision process.
FAFSA submission
The last timing concern is the FAFSA submission process. With the FAFSA/IRS verification process, colleges can verify financial information much more easily. By late February, entering freshman and transfer students should try to have a final FAFSA submitted with actual tax information. This minimizes the family’s risk of the financial award letter changing after the verification process. Parents should be aware of this risk early on so that they can properly plan for the FAFSA submission.
3. Consider your family structure
For divorced or separated families, the FAFSA now determines the correct parent contributor based on who provided the most financial support in the past year, not which parent claims the student on a tax return. The student does not need to appear on that parent’s tax return, and separated parents are not required to maintain different addresses. Because the FAFSA uses IRS Direct Data Exchange, colleges can more easily identify inconsistencies between reported contributors and tax data. Non‑traditional families may still encounter unique situations, but all FAFSA rules are federal and do not vary by state.
4. Maximize your family’s resources
The increased cost of education has created a need for a variety of financial strategies that can help families find better ways to pay for college. These strategies vary by family and depend on their financial strength and the colleges the student is considering. For middle- and upper-income families, these strategies can generate the most benefit since they are expected to pay the most for college.
Related: How to Pay for College When Your 529 Plan Takes a Hit
The financial aid process can seem overwhelming for college-bound students and their families. But with proper planning using tax strategies, college savings plans, and various financing options, you can save thousands of dollars per year. That's worth it, don't you think?
Visit our Financial Aid section to learn about other college funding strategies, and use our Scholarship Search tool to help your student find free money for college.
