financial aid advice for the middle income family
Posted : February 2, 2006
Last Updated : December 17, 2015
College affordability is a major concern among middle income families. Low income families usually qualify for grants, and high income families have adequate resources to pay for college tuition. So, where does that leave middle income families? Those in the middle are caught in between. But don't despair; there are still options for the middle income family.
Financial Aid Applications
Be sure to file financial aid applications. Even if you think your child is not eligible for financial aid, you should still fill out the Free Application for Federal Student Aid (FAFSA). Since there is no income cutoff for eligibility, your child could still qualify for need-based aid, especially if he wants to attend a higher-cost school. Submit the FAFSA as soon as possible after January 1st of the year for which your child is requesting aid. Applying early improves the chances of receiving aid from as many sources as possible. (Please note: Students will be able to file a 2017–18 FAFSA as early as Oct. 1, 2016, rather than beginning on Jan. 1, 2017. The earlier submission date will be a permanent change, enabling students to complete and submit a FAFSA as early as October 1 every year. There is no change to the 2016–17 schedule, when the FAFSA will be available January 1 as in previous years.) In addition to filling out the FAFSA, you and your child may have to fill out other financial aid applications. Some private colleges require the CSS/PROFILE, while other schools have their own institutional aid application.
One of the best ways for middle income families to find aid is to research and apply for scholarships. Your child should learn the steps for getting a scholarship. Make sure your child talks with his school counselor about local scholarships. The more localized the scholarship is, the better your child's chances of winning. Your or your spouse's employer may also offer scholarships (or tuition-aid programs) to the children of employees. Check with your human resources department to see if your company offers such programs. Your child should also visit the library and/or browse the Internet to research national scholarships. To help middle income families afford college, private and public colleges have recently been offering more merit-based scholarships, so make sure your child checks on scholarships offered by the college he wants to attend. You should also check to see if your state offers merit-based scholarships. Make sure your child performs a free scholarship search and registers for a chance to win a $1,000 scholarship from eCampusTours.
If you find that your child doesn't qualify for need-based aid (determined by filing the FAFSA) or does not receive any scholarships, you should consider non-need based federal loans: the Unsubsidized Federal Stafford Loan for students and the Federal PLUS Loan for parents. Between these two programs, families can usually cover any portion of books, tuition, room and board, etc. not already covered by another form of aid. Keep in mind that because federal education loans have very low interest rates, they are a better alternative to credit cards, refinancing a home, etc. Furthermore, some or all of the interest on these loans may be tax-deductible.
From tax credits to tuition savings plans, there are several ways for middle income families to receive tax rewards for college spending. Middle income families reap the greatest rewards from college tax credits, such as the Lifetime Learning credit, because they meet the income requirements. Families who make over a certain amount do not qualify. These programs also exclude the lowest-income families because the tax credit can be taken only by those who earn enough to owe federal income taxes. Tuition savings plans also offer tax benefits to middle income families. Read Tax Rewards for Your College Spending for more information.
Out-of-State Private Colleges
For middle income families who are looking for more need-based financial aid, you may want to consider out-of-state private colleges. Colleges value cultural diversity, so having students from all 50 states is important to them. Because private colleges have a more flexible budget, they may try to entice your child, as an out-of-state student, with a substantial need-based financial aid package.
Some colleges and universities offer tuition discounts if more than one child from the same family is enrolled (some schools require more than two siblings to be enrolled). For a middle income family, these discounts can be a lot of help. If you have more than one child enrolled in the same college, be sure to check and see what that college's policy is on family tuition discounts.
If you have any questions about financial aid for your family, be sure to talk with your child's financial aid advisor.