How to Get the Most Financial Aid for College

students graduating college

According to CNN Money, the average four-year public college for residents costs $14,210[1] per year for tuition, room and board, though schools may cost more or less, and financial aid varies widely. Also, most people pay less than the “sticker price” for college, according to the College Board.

If you are a parent to kids nearing college age, the cost of higher education is no longer a concept; it’s quickly becoming a reality. Here’s how to get more financial aid for your child.

1. Understand how a 529 plan affects financial aid

As you save for education, every dollar your child has or earns in her name can reduce the chances of getting aid. Money saved in a 529 plan will reduce eligibility only slightly, by about 5.64 percent according to Saving for College. However, if a grandparent or other family member establishes a 529 and the child uses the money, it’s considered income and could reduce eligibility by a greater degree. Every family should evaluate whether the benefits of a particular savings option are worth it.

2. Reduce income during the base year

Financial aid offices look at your family’s income and tax information from the most recent tax year, also known as the base year. So if you can make any adjustments to income—delaying bonus at work or a large capital gain, for example—plan to do it in your base year. Don’t attempt to hide income however. Any attempts at dishonesty could hinder your chances of getting aid.

3. Estimate your student financial aid

Get a real sense of how much you can contribute to college costs each year. To get an accurate assumption, use an Expected Financial Contribution calculator, such as the one found on or the government Federal Student Aid website.

4. Fill out the FAFSA

The Free Application for Federal Student Aid or FAFSA should be taken as seriously as any other college application. Complete and send the FAFSA as soon as possible after January 1 of your child’s start year. Take the time to read and answer questions carefully and get the information right. The online form is easy to complete, but it is useful to fill out the recommended worksheets beforehand and have them as a reference.

Don’t worry about whether you qualify.

The FAFSA provides access to the largest source of potential aid dollars via grants, loans and work-study programs—$150 billion, according to the Department of Education. So don’t avoid it because you assume you are ineligible. There is no income cutoff for financial need. It’s based on the cost of attendance at the school minus the expected family contribution. FAFSA also helps you tap opportunities for aid that aren’t based on need, such as PLUS loans and unsubsidized Stafford loans. If your child does get offered loans, Federal loans are best. Rates from private lenders may be slightly lower, but the terms could be trickier over the long run.

Be sure to look into loan forgiveness programs from agencies such as the U.S. Department of Health and Human Services. Tax credits such as the American Opportunity Tax Credit and the Lifetime Learning Credit also make paying for a degree easier. You may also qualify for grants and scholarships that do not need to be paid back.

Talk to the schools

Contact the schools and ask whether there is room for more aid. Especially if your child is weighing several acceptance letters, see what each school may have to offer. Just be sure to move quickly to secure aid while it’s available.

Do it all again each year

Remember you must fill out the FAFSA form every year, the earlier the better after January 1. Even if you didn’t get aid in freshman year, you may qualify in subsequent years.

A college education can enrich your life financially and widen your opportunities. Planning for how you will pay for it and exploring your options will help get you on the right path. Keep in mind that a life insurance policy can help fund education needs. Learn more about saving for college with life insurance.