Three Reasons Why You Should Apply for Financial Aid

Wondering if you should apply for financial aid.

Here’s the answer: Yes.  You should file for financial aid.

During the past few hours, I heard that advice over and over. I was on the phone for a good part of the day interviewing financial aid experts for a story about the upcoming changes to the FAFSA or Free Application for Federal Student Aid.

The article doesn’t address whether parents should file for financial aid, but two experts, Marie Bennett, a director of the National Association of State Student Grant and Aid Programs and Lauren Asher, president of the Institute for College Access & Success both steered the conversation toward this very important question of filing or not filing for financial aid.

Here are three key reasons why they insisted that families of any income level should apply for aid:

It’s free. The FAFSA won’t cost you anything but the time it takes to complete it. Okay, it can be a pain. By some estimates, it can take 10 hours to gather documents and fill it out.  The federal government, however, is in the process of simplifying the FAFSA so if you’ve previously struggled with the FAFSA, this year’s version should be more user friendly.

You may qualify for financial aid. Most people are clueless about whether they are eligible for financial aid or not. The biggest factors are a family’s income and the size of the household. Another huge factor is the price of the school. You might not qualify for financial aid  if your child is going to attend a state university, but you might if he’s got his heart set on an expensive private college.

If you’re worried that your home equity or  your retirement accounts will hurt your chances for financial aid, don’t be. The FAFSA doesn’t even ask about your primary home or your IRAs and other retirement cash.

Even if you don’t qualify for grants from the federal government — the big program is the Pell Grant — states and schools themselves often offer need-based grants.

You can obtain federal student loans. Without filing the FAFSA, you can’t borrow through the federal government, which has the best student loan terms and rates. For many people , a home equity lines of credit will be the best way to borrow for college because the rates are low, but federal loans are the next best thing. Your absolute last resort should be private loans.

FYI: You can begin completing the FAFSA for the 2010-2011 school year beginning on Jan. 1. Have fun. I know I will.

Further Reading:

A New and Improved FAFSA

Fill Out the FAFSA

Take the Financial Aid Test