Help Your Child Get the Most State Dollars for College
By Kathryn Hauer, EA, CFP
Learn more about Kathryn on NerdWallet's Ask an Advisor
If your child is heading to college, you’ve probably heard how important it is to submit your Free Application for Federal Student Aid (FAFSA) form early. That advice is valuable when it comes to securing federal aid, but there are other key steps you can take to help your child nail down more financial aid from the state in which your child will be attending school.
Federal and state aid
College students may be eligible for two types of need-based financial aid: federal and state aid. In almost all cases, both types are awarded based on the FAFSA and how much the family will be able to contribute toward the child's education expenses.
The federal government provides more than $150 billion in grants, loans and work-study funds each year to more than 13 million college or vocational students. To clarify the types of FAFSA financial aid, a grant is money that doesn’t need to be paid back, while any loan — whether it’s subsidized or unsubsidized, a Perkins loan or Parent PLUS loan — must be repaid. Students earn work-study funds by holding on-campus jobs. Many students receive some sort of financial aid in the form of loans, grants, work-study and scholarships. Far fewer receive Pell Grant money, which provides college dollars for those with low expected family contributions (EFCs) — below $5,198 in 2016 — indicating that the family has a low adjusted gross income and/or a lot of children.
The federal government also provides each state funds to administer to students with financial need through the Federal Supplemental Educational Opportunity Grant (FSEOG). This federal aid is awarded by the college your student attends, and because it's in the form of a grant, it doesn't need to be paid back. The FSEOG doesn't require residency and can be for both public and private universities.
Some states also have their own need-based grants, which students can receive in addition to federal aid. Each state calls these grants something different and may have different eligibility rules and application requirements. State grants may require residency and may be restricted to students at public schools. If your child does not qualify for these state need-based grants, you may want to look into merit-based aid opportunities. This type of aid isn't awarded based on family finances and varies by school and state.
No matter the type of aid, it's better to submit your application early. The 2016-17 FAFSA deadline is June 30, 2017. You can learn more about federal aid and file your FAFSA form at fafsa.ed.gov. States and colleges might have their own, earlier FAFSA deadlines. And if you need to submit any additional paperwork to qualify for FSEOG, you'll want to submit it as early as possible. State funds are more limited than federal aid and tend to run out early in the award year.
How to maximize state aid
Each college can require different steps for students who want to qualify for FSEOG need-based awards. But the following tips apply to every school:
- Make sure your child has formally enrolled at his or her college of choice.
- Call the college’s financial aid department and get to know the counselors there. Write down their names and contact information for future reference.
- Have your child set up and check his or her college-issued email account regularly. Some colleges use these for key communications as soon as students are enrolled.
- Have your child enroll in the electronic system the college uses to post financial aid status, and check it regularly to see if you're missing any documents. Requirements are very school-specific. Ask the college if you have any questions.
- Make sure the college has your FAFSA on file. Clear up any problems as quickly as possible.
- Do your taxes as early as possible in the tax season. If you have investments and won't have all the documents you need to file until March, ask the college if you can verify your income with current-year W-2s. And be sure to let the school know if you plan to file a tax extension request — again, your current-year W-2s will be used to determine eligibility.
- Submit your tax return to the college as soon as possible using the IRS Data Retrieval Tool. You'll need to do this in both your FAFSA online account and your child's.
- Ask to receive financial aid documents via email or fax. You should also email or fax your responses, rather than mailing them, to speed up response times. It’s probably worth the cost to scan or fax at an office supply store if you can't access the technology at work or home.
- Find out the college's priority date for financial aid if it's not readily available on its website. It'll be different from the application date and enrollment date. Then beat the deadline if you can.
The early bird gets the worm
If you don't submit all of the documents required for state aid — such as residency forms and acceptance documents — by the priority date, your student will probably not receive state need-based grants. You'll have to try again next year.
Complete college financial aid action items as early as you can, even if you aren’t sure your child will qualify for state need-based funds. This will help ensure that your student ends up with the greatest amount of financial aid possible.
Good luck in this worthwhile effort; before you know it, you’ll be paying the matriculation fee in preparation for your child’s college graduation!
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