Comments on: Help a Reader: Can Saving Money Hurt Financial Aid?

By: J. Money

J. Money — Mon, 06 Apr 2015 17:28:14 +0000

In reply to marie. Ack, so sorry to hear :( At least you'll have good work experience under your belt, eh? Maybe you'll meet your spouse in grad school now that you waited 4 years :)

By: marie

marie — Sun, 05 Apr 2015 16:14:24 +0000

I took the smart saving approach and got punished. Took 4 years off between undergrad and graduate school, worked and paid off my loans. The financial aid office told me that I won’t get any aid because I have less debt than my classmates going from college straight into graduate school and because I have worked full time (never mind that I have no savings because all the salary from that full time work went into paying off loans). So, essentially, I’m in the same amount of total debt I would have been had I jumped straight into grad school, but I’m now 4 years older and effectively setting my life back those 4 years for nothing. Kids, a house, a wedding? Right when I graduate I’ll be 30 and not able to afford any of those things.

By: Ginger

Ginger — Sat, 26 Feb 2011 22:58:21 +0000

If you are applying to grad school, talk to your department. Ask if the department has TAs or RAs, that can really help your budget. Also, TAship can be considered work study so it is not counted against you for financial aid. You can also come over to my site, it is for frugal students. I would also recommend paying down any debt you have and maxing out your Roth IRA before grad school.

By: Mary Johnson

Mary Johnson — Wed, 23 Feb 2011 19:26:06 +0000

This is a great question. As the financial literacy program manager for Higher One, Inc., I get a lot of questions related to student aid and have learned that a lot of myths exist, especially around whether or not savings will impact the amount aid received. While there are many sources of financial aid, eligibility (for both grants and subsidized loans) is based on what is called your Effective Family Contribution, or EFC, which determines how much a family should be able to pay toward college. To determine your EFC, you are required to submit the Free Application for Federal Student Aid (FAFSA). While your assets are taken into account, it is only a percentage of them and some assets – such as retirement plans – are sheltered.
Also keep in mind that a good portion of financial aid comes in the form of student loans which must be paid back with interest, so the more you are able to save, the less you will have to borrow and eventually pay back. You should try and limit your loans and take out only what you need, and saving is a great way to do that.

By: Sandy @ yesiamcheap

Sandy @ yesiamcheap — Mon, 21 Feb 2011 02:08:50 +0000

Yeah, with everyone else I make sure to not have any money in my accounts, well I DIDN’T have any money anyway to make sure I qualified. It’s ass backwards but unfortunately that’s how it is.

By: J. Money

J. Money — Sun, 20 Feb 2011 22:21:40 +0000

Again — You guys are AWESOME!!! All great info for our boy to consider, THANK YOU :)

By: Kim

Kim — Sun, 20 Feb 2011 05:34:28 +0000

Grants for education are not nearly as common as they used to be. My parents didn’t have savings for my education. My savings were worth about $400 total. As the oldest of 6 children, and with low enough income, I got considerable financial aid… but it was predominantly in Stafford Loans, Perkins Loans, and Work-Study. The little bit I had in Pell grants did not go far, and I can remember being in college and reading news as the Legislature cut back funding and eligibility for grants even more.

So I will reiterate what others have said, please do not count on Financial Aid to allow you to graduate debt-free. These days, most aid comes in the form of loans which must be repaid (they can garnishee your wages if you don’t!)

Do file the FAFSA as early as possible, as there is an element of first-come, first-served to it. (If you ever find yourself starting college late in the year less-prepared, do file the FAFSA “late” anyway, just be early the next year.)

By: Chris @ My Money Mess

Chris @ My Money Mess — Sat, 19 Feb 2011 19:20:02 +0000

“In a perfect world I’d be able to save up all the tuition and housing up front, but I’d like to get as close as possible. At the very least I’d like to put money away to at least take care of the books and other basic living expenses to minimize the amount of student loans I’ll need.”

Part of the confusion and the mixed up advice he was getting has to do with the terms. Financial aid is a broad term that includes grants as well as loans. Money in savings and so forth should not affect how much you’re able to borrow as has been covered by others. My big question is why borrow at all? Unless you’ve got some assurance of being hired almost immediately upon completion of your degree, in the long run you’d be better off financially saving enough to pay the tuition in cash.

By: Monroe on a Budget

Monroe on a Budget — Sat, 19 Feb 2011 17:11:25 +0000

Following up on the reader who said use savings to pay down / pay off debts and stockpiling or buying ahead for your needs: I’ve heard that from other financial aid experts. It’s worth considering. Nobody will ask on financial aid applications how much you owe on credit cards, so you may as well pay those bills down before filing and lower the balance of the accounts that do need to be reported.

To answer the overall questions, go to http://www.finaid.org – lots of practical FAQs for college financial aid on that site with topics ranging from divorced parents to the fact you should file FAFSA even if you (think) you won’t get any grant money. Reason: the fact that you filed FAFSA is expected by many other programs. Very few agencies or sponsors will pay your entire college bill, so they want to make sure you are seeking out all available funds.

Really fantastic article here: http://www.finaid.org/fafsa/maximize.phtml

Also be aware that in addition to FAFSA, many colleges also request the CSS Profile, which asks far more detailed financial questions. The nice thing about the otherwise annoying CSS application is that there will be a section in which you can write a couple of paragraphs to explain extenuating circumstances or numbers that wouldn’t make sense at first glance.

By: Olivia

Olivia — Sat, 19 Feb 2011 13:41:17 +0000

@Bellen,

Very true! My parents have plenty of friends who engaged in “FAFSA avoidance plans”–i.e. “It’s the perfect time to buy some big, new, expensive toy that I buy for only cash!”