5 Ways Grandparents Can Avoid Hurting Financial Aid Chances

It’s always wonderful when grandparents can help with college costs, but they have to be careful to avoid hurting their grandchildren’s chances for financial aid.

Here are five things that grandparents (or other relatives and friends) should be aware of when helping to pay for college.

8 Things to Know About the New College Borrowing Season

Most families end up borrowing to cover college costs.

More than 70 percent of college students rely on loans when pursuing a bachelor’s degree and many parents borrow as well.

The college loan season starts on July 1 when the federal government makes federal loans available for the 2016-2017 school year.

With the college loan season upon us, here are eight things you should know about college loans:

Saving for College: Account Ownership

There are two main ways that today’s families save for college costs: one is the 529 savings plan, and the other is through a custodial account, typically an UTMA account (Uniform Transfer to Minors Account.) In the past, clients may have used Uniform Gift to Minors Accounts (UGMAs) but most custodial accounts are now titled as UTMAs, and for all practical purposes, there is little difference. Another vehicle no longer much used is the Coverdell ESA (Education Savings Account) which has a contribution limit of $2,000 per year.

An End to a Rushed Financial Aid Season

Faced with challenging aid deadlines, parents are forced to file for financial aid using estimated tax return information; but families who do this will receive a financial aid package contingent on a school receiving their final tax numbers. And sometimes those finalized figures will result in schools reducing their aid packages.

Why You Should File the FAFSA

Most parents with college-age children should complete the Free Application for Federal Student Aid, but many families never bother.

According to the U.S. Department of Education, less than 55% of families with high school seniors submit the FAFSA. That’s a low statistic when you consider how important this document is to millions of Americans. Low and middle-income students, for instance, have a 25% to 30% greater chance of enrolling in college if they file the FAFSA.

Discovering Your Expected Family Contribution

How much will you have to pay for college? The answer will depend heavily on your Expected Family Contribution. If you missed it, our last post explained what an EFC is and why it’s important to know what yours is.

Will Saving for College Hurt Your Financial Aid Chances?

Will your investments hurt your chances for financial aid?

Many parents worry about this, but investment accounts rarely impact financial aid awards. It’s been estimated that only 7% of families who complete aid applications are penalized for their savings.