August 11, 2011 8:00 AM PT

5 Ways to Maximize Your Financial Aid Eligibility

Read more about Student

If the thought of paying for higher education seems overwhelming and quite daunting, you’re not alone. Many families across the country are being faced with rising college tuition rates and either stagnant or falling family income.

With that in mind, you want to make smart financial moves to ensure you maximize your financial aid eligibility. Although any attempts to defraud the government to increase your chances of getting financial aid and student loans is not only morally wrong, but illegal, there are a number of ways that you can legally maximize the amount of financial aid and student loans available to you:

  1. Reduce Your Savings – If you have credit card balances, consider using the cash in your savings to pay them down. Credit card debt is not figured into the equation when determining your financial aid eligibility, but your savings are. Therefore, it may be a good time to lower your savings by paying off those high credit card balances. While you’re reducing your loans, consider paying off other consumer debt as well, such as car loans and personal loans, to further reduce your savings balance.

  2. Students Before Parents – If you are a student, always remember it is best to spend down your savings before tapping into your parents’ savings, as the government requires parents to contribute about six percent of their assets. Students, on other hand, are required to contribute much more of their savings and assets.

  3. Several Kids in College – Enroll more than one of your children in college. The bottom line is that you will have a greater likelihood of being eligible for financial aid and student loans if you have more than one child in college at the same time. Some parents, in order to achieve the maximum in financial aid eligibility, will wait to enroll an older child in college until their sibling is ready to head to college.

  4. Keeping Retirement Separate – Remember that retirement funds are not counted toward parents’ assets, so use other types of liquid assets and savings first to fund your child’s college, as this will reduce your income and assets, thereby allowing you to receive more in terms of financial aid and student loans. Also, it never pays to reduce your retirement savings to pay for college. Remember: your college-aged student has many years of employment ahead of him or her to repay student debt – you don’t.

  5. Save Only in Parental Accounts or 529s – Avoid saving money in your child’s name. If you are saving for college for your child, save it in your name (or put it into a 529 account). Because the government expects the college student to contribute nearly five times as much as parents, it only makes sense to keep money or assets out of the student’s name as to increase financial aid eligibility.

Your child’s college education is his or her launching pad into the professional world, and by taking advantage of these tips, you can maximize the help the government provides in furthering your child’s future.

More Articles in Money Tips

Student Credit Cards

Infographics: Build Credit for Students

How to Build Credit for Students

Building credit as a student is important, but luckily it is not as intimidating as it sounds. Just follow our step by step infographic guide.

Comments about 5 Ways to Maximize Your Financial Aid Eligibility

  • squirrelers.com
    on August 16, 2011 3:02 AM pingback:
    Festival of Frugality #293 – Money Quotes Edition

Comments may be filtered for language. CreditDonkey makes no guarantee of comments' factual accuracy. These responses are not provided or commissioned by bank advertisers. Responses have not been reviewed, approved or otherwise endorsed by bank advertisers. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered. Visitors may report inappropriate content by clicking the Contact Us link.


Discover Student Card Review

College students looking to build credit, earn cash back, and pay no annual fee should consider the Discover It Student Cash Back. With the combined generous rewards program, intro APR on new purchases and no late fee on the first late payment, ...
More Articles in Money Tips






About CreditDonkey®
CreditDonkey is a credit card comparison website. We publish data-driven analysis to help you save money & make savvy financial decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.