A frequent question that I get from families is, “Where is the cutoff when we will not get financial aid”? The answer to this is simple: There is no cutoff. Everyone is eligible for financial aid. Now relax. I am going to explain just how that works.
There are two kinds of financial aid: need-based and merit. Not everyone is eligible for need based aid because your need is based primarily on income and assets. But even here, there is not an income “cutoff” for determining how much need-based aid you might be eligible for. There are many other factors involved.
The second type of financial aid is merit aid. Merit aid is based on the merit of the student with grades and test scores typically being the primary factors considered. Athletes and artists may also receive merit aid because of their skills. But colleges are looking for an eclectic group of freshmen each year, so any talents that make the student more desirable may motivate the college to award a merit scholarship.
But there is another way that families who will not likely get need based aid can pay for college. In her book Never Pay Retail for College, my friend Beth Walker explains that families can have more money available to pay for college with a proper tax strategy. Ideally during the student’s sophomore year, with an analysis of potential tax strategies, a plan to keep more money that has been going to the IRS is developed. There are also strategies for a household to qualify for education tax credits that you may not be taking advantage of because of income limits.
In addition, Beth teaches how to solve the cash flow riddle that many parents face when trying to navigate the challenge of paying for college. By analyzing what comes in and what goes out (financial perspective)she is able to help families construct a plan that maximizes cash flow for college.
In her book Beth, compares herself to a general contractor managing a building project. She explains, “I’m an experienced project manager that approaches the project called college with the heart of a mother and the mind of a financial planner.Most parents I work with come to me with an existing board of advisors – investment advisors, CPAs, insurance agents, family and friends who have gone through this process before.
My job is to step back, see the BIG picture, coordinate the efforts of every family’s current roster of expert sub-contractors and integrate their knowledge and experience in a manner that reduces stress, improves efficiencies and saves the family both time and money on their college project”.
So if you think you make too much money to get financial aid for college, think again. With good grades and test scores, choosing a college that “wants” them, and getting tax advantages and a good cash flow plan, you CAN get financial support to pay for college.
