Money Matters: Know your assets when filling out FAFSA forms
If you think you make too much money to qualify for college financial aid, experts say think again. YNN's Tara Lynn Wagner filed the following Money Matters report.
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Let's start with the bad news. College costs are sky-high and growing faster than the rate of inflation. Now for the good news: There's over $100 billion of aid available, and you don't need to be destitute to qualify for assistance. What you need to be is savvy.
Kalman Chany, president of Campus Consultants and author of the book, "Paying For College Without Going Broke" says even families making over $150,000 can qualify for need-based aid, provided they fill out the FAFSA and fill it out strategically.
The biggest mistake, he says, is offering too much information. For instance, the value of your home -- even if it's paid in full -- does not need to be reported, since it's not considered an asset by the department of education.
"If you list your equity on that application it's probably going to knock you out of the box for a lot of money," says Chany.
The same goes for the money you have squirreled away in a retirement fund.
"If you were to say report $50,000 that you have in an IRA that you're not required to list, that may result in the reduction of aid for the student at about $5,500 for the year. So that's not something you want to do," explains Chany.
While money in your IRA doesn't count, money taken out does. Let's say you withdraw funds from your retirement account to cover the cost of college.
"Whatever the money that's withdrawn is going to be considered income that the next year will be assessed up to 47 cents on the dollar to reduce eligibility for aid," says Chany.
Similarly, if you get a big refund check from your state or local taxes, that too will count as income the following year. If that's the case, adjust your withholdings so you get a small or no refund in April.
And finally, if you've been carrying around debt, Chany says now's the time to pay it off.
"Let's say you have $10,000 in the bank and $10,000 that you owe to a credit card company. If you were to pay off the credit card debt and the check cleared the bank before you complete the FAFSA form, you wouldn't have to report that $10,000 that you have in the bank," says Chany.
To find information about FAFSA or to fill out the form, visit fafsa.ed.gov.