As we have discussed in previous articles, your EFC is your Expected Family Contribution toward college expenses. This is a calculation based on a number of factors. Changing some of those factors can help reduce your EFC and increase the amount of financial assistance you can receive. Is there a legal way to change your EFC? Of course! Here are a few tips to help you get more free money for college.
- Savings accounts – Whatever you have in savings will be counted as an asset. However, money that is in a student’s name will weigh heavier against your financial aid than money in the name of parents, so be sure that all the family’s savings accounts are in parent names, at least until you graduate.
- Non-Assessed accounts – A lot of things count toward your assets for the FAFSA that don’t count toward your taxes. However, there are still some account types that are not assessed when determining family assets for financial aid. These include retirement accounts, annuities, and life insurance policies. That makes these safe places to keep family assets while kids are in college.
- Avoid IRA withdrawals – Taking money out of your Roth IRA won’t raise your taxes for next year, but it will reduce how much your kids get in financial aid, so be sure to wait until the last of your children graduate before withdrawing IRA funds, even if you are past the penalty age.
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