Financial Aid for those Whose Parents Make Too Much Money

Financial aid award letters

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This interview is part of a weekly series that publishes every Saturday. If you enjoy, please join us next week or check out past interviews.

Only .2% of those who’s parents earn more than $100,000 will receive federal PEL grants. It isn’t much better for those who’s family earns between $50,000 to $75,000, your odds improve to a mere 3.5%.

The need-based priority that comes with some financial aid funding can be frustrating to prospective student’s whose parents make too much money. Federal grants are based largely on the entire family’s income, not just the student’s. It all means that a student can look well funded on paper, but without actual family support, they are as broke as your average 18-year old.

Funding for college is daunting enough without a handicap. There is now more in student loan debt than there is in credit card debt. The career future for college grads is not as rosy as it once was. The college students of today are walking into more debt than ever before and only 30% of 20-somethings find jobs in their desired field.

While some funding may not be available for those whose parents make too much money, it is important to avoid a fatalistic outlook. When students assume that all college funding is out of reach because of their parent’s income, they are likely to miss possible sources of funding that are available to them. Here to help sort out the myths and realities about family income and financial aid is the author of the blog The Money for College Project, STRONGside.

The Money for College Project was started with one goal in mind: to help people find ways to pay for college. MfCP is published by STRONGside, a career professional working in student financial services at a large (19,000+) research university. At MfCP you can find easy to understand explanations of financial aid awards, creative ways to make money for college students and working adults, and also sound financial literacy principles.

(ME) The procrastination voice in most people’s head tells them to avoid taking a good look at financial aid, because their parents make too much money. Are these just excuses or does the procrastination voice have a point? Are some student’s doomed because of their parent’s income?

(STRONGside) A large portion of financial aid is designed specifically for people who have a financial need. Specifically, federal grant programs such as the Pell Grant and FSEOG are designed only for students who have financial need as determined by the FAFSA. I would recommend completing the FAFSA forecaster at http://fafsa.gov to get a quick glance of any federal grant programs you may qualify for. The good news however, is that virtually all of the private scholarships that are offered by businesses and private organizations place much more importance on factors other than financial need.

(Me) What are some of the “what not to do”s that prospective college students fall victim to when they believe that they won’t qualify for financial aid. How can these be avoided?

(STRONGside) Many college students do not fill out a FAFSA. This is a mistake b/c many students do qualify for financial aid that they did not realize they would, and many schools use the FAFSA as the basis application for their awarding of all institutional awards. Also, if you find yourself in a situation where you need to take out federal student loans, you must complete a FAFSA. Another big mistake is not applying for any scholarship a student qualifies for. Every scholarship application will take some work, but the more you do the easier they become. I have sat on many scholarship awarding panels where we had to give a scholarship to a candidate that was less than stellar. I don’t believe the claim that billions of dollars go unclaimed every year, but I know for a fact that billions of dollars in scholarships do not go to the best applicant because they simply do not apply.

(Me) Is the FAFSA still important when your parents make too much money? What are the consequences of not filling out the FAFSA?

(STRONGside) Seems like I jumped the gun a bit, but the FAFSA really is used as a basis application for most types of institutional financial aid. Many financial aid offices collect the information on the FAFSA and use that to populate their databases as well. If you have private scholarships that will cover your entire tuition, and you do not plan to take out student loans then you will not need to submit a FAFSA. If you do not fit in that category, I would highly recommend submitting one. There are no direct negative consequences of not completing the FAFSA. However, it does limit your options.

(Me) Could you list, from most likely to receive to least likely to receive, some sources of college funding that families can tap into, even though they make “too much” money?

(STRONGside) The most likely to receive are state supported scholarship programs. Many states sponsor academic scholarships through their state lottery programs. Next, will be private scholarships that would come from a private organization. Finally, the school that you attend will likely be able to offer scholarship for athletics, academics, science and technology, unique genetic heritage, or even ROTC.

(Me) What proactive steps can students and parents take to overcome the parental income level?

(STRONGside) I would highly recommend keeping a “scholarships folder” beginning with the student’s first year in high school. In this folder I would keep records of all activities, skills, awards, accomplishments, school related trips, classes taken, and any records broken. Also, your student should identify 3-5 teachers or administrators who would be willing to write excellent reference letters on their behalf. This “scholarship resume” will be invaluable once the scholarship applications begin at the end of their junior year in high school. Many people may advise you to try and move money around, and may offer extremely creative (and ethically probable) solutions for making your financial situation appear less than it really is; but in the end you are only cheating yourself and others. For instance, if you qualify for the maximum Pell Grant you would receive $2775 per semester. This might sound like a lot of money, but this would not even cover ⅓ of the average cost of a public university per semester. Even if you somehow alter your financial situation to appear more financially needy, you will still have to come up with thousands of dollars per semester. Save yourself the trouble, don’t get caught by the IRS, and encourage and support your student while they apply for scholarships!

(Me) If financial aid were like giving directions to your house, what would be your instructions? Where should families start and where should they end?

(STRONGside) This is an excellent question, and an analogy I have used myself in the past. Families should begin in the freshman year of high school. This is where the data collecting and academic prowess will begin. Junior year should be spent identifying scholarships, colleges, and mastering standardized tests. Senior year of high school should be spent applying to all of your top colleges, applying to every scholarship you can possibly find, and enjoying the last few months of your childhood! Once your college days start many people believe that the scholarships dry up. This is certainly not the case. In fact, many students find that once they get deep into their majors, their departments are able to offer stipends or scholarships for stellar academics. Many departments also offer internships or externships which are paid. Most colleges have honor colleges and academic success organizations that offer excellent scholarships. Students should continue to seek these as they progress through their degree. The end result will be to graduate with a college degree and zero debt!

(Me) Are there any questions or comments you’d like to add?

(STRONGside) One important thing to note for parents and students are the resources available through your high school guidance counselor. They are often times your best source for college scholarships. You might also try your local library. Many local organizations post their scholarships applications and notices in the entry way to local libraries. It is often a much more productive use of your time to apply for local scholarships than it is to apply for nationwide scholarships.

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