- 1. You Have Too Many Assets
The office of Federal Student Aid provides over $150 billion in grants, loans and other funds each year to more than 13 million college students. However, more than 22 million students apply for these funds through the Free Applications for Federal Student Aid (FAFSA). The applications are assessed by the college financial aid office based on a student’s financial need, the expected family contribution, the amount a family can pay based on a calculation, the school year a student is in and the tuition costs.
Sean Moore, a certified financial planner and the founder of SMART College Funding, said the family’s expected contribution is based on its income and assets. If a family is considered to have too much income or too many assets, which he said was a subjective measure that varied, then receiving aid is unlikely. So families that saved diligently for their children’s education may receive less financial aid due to those savings.
Tayne also pointed out that the FAFSA formula doesn’t take into consideration a family’s expenses, need for retirement savings or ability to save for the education of other kids in the household. “This is what makes families too rich for financial aid,” she said.
Micah Fraim, a certified public accountant and personal business advisor, said that financial aid calculations take assets into consideration, including illiquid assets like home equity. “Even families with very low earnings can be denied aid due to having these assets,” he said.
- 2. Financial Aid Distribution
- 3. You Were Convicted of a Drug or Sex Offense
- 4. You Are Not a U.S. Citizen
- 5. Your Academic Performance Falters
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