Financial Aid Optimization For Your High School Sophomore Starts In 2020!

Have you started planning how you will pay for your high school sophomore’s college yet? It might seem early to have a college funding plan in place if your daughter or son is only 14 or 15. College is still three years away, but the time to start detailed planning is now.

The Free Application for Federal Student Aid (FAFSA) and the CSS Profile are the core applications for all government and institutional financial aid. Both applications ask for information related to the “base year” of income from two years before a student enrolls in college. The FAFSA and CSS Profile consider the base year to be from January of your student’s sophomore year to December of their junior year. In other words, if your student is a sophomore now (fall 2020) the base year for the FAFSA they’ll need to file on January 1, 2023, will be the 2021 income year.

Eight Tips To Maximize Financial Aid Eligibility

With a two-year lookback at income for financial aid eligibility and economic and educational uncertainty during the global pandemic recession, the financial aid process may seem overwhelming. Our advice hasn’t changed, however: Plan now and file early. These eight tips will help.

1. Know your Expected Family Contribution (EFC). The FAFSA4caster is a good starting point for calculating your EFC. You can also run your numbers through a college net price calculator like this one from the University of California. If your EFC is lower than the cost of schools you’re considering, plan for a need-based financial aid strategy. Strategies for reducing 2021 income (e.g., pulling income into 2020) will improve financial aid eligibility for your sophomore.
2. Educate yourself. Staying up to date on the range of colleges and college costs will help determine the maximum you’ll contribute toward college and where it will come from (e.g., lifestyle changes, parental versus student income, assets, student loans or private loans).
3. Watch the calendar. If your plan includes selling investments with capital gains (including UTMAs and UGMAs) to help pay for college expenses, do so before the end of 2020. Any capital gains earned in the base year (2021) will be counted by the FAFSA and CSS Profile formulas as income when it comes to determining the student’s need. To avoid this, investments must be sold before the end of December of the student’s sophomore year in high school.
4. Watch the calendar, part II. If you or your spouse is self-employed, make every attempt to close business and earn income this year, as opposed to postponing it to 2021. Conversely, consider pushing expenses into the 2021 calendar year.
5. Talk to the boss. If your company typically offers year-end bonuses, ask your employer if you can be paid in December 2020 instead of January 2021.
6. Pay off debt. Increase your family cash flow by paying off debt now, before college expenses start.
7. Reduce spending. If your college funding plan includes cutting back on lifestyle spending, start now. Saving even $500 a month could add $18,000 to college funds in just 3 years.
8. Get help from a college funding advisor. Westface College Planning helps navigate the financial aid process from start to finish, including creating a clear plan.  To learn more, call us at 650-587-1559 or sign up for our How to Survive Paying for College webinar.

At Westface College Planning, our services include preparing you NOW to optimize your financial aid eligibility for your student’s college years. We are happy to help! Contact us for a complimentary college funding consultation.