20 ways to get federal money for college

11. Spend, spend, spend. Spend your child's money, that is. Because Junior is expected to pony up a higher percentage of income toward higher education, it's not unwise to blow student funds first on pre-college needs (such as dorm supplies, a computer if needed and books) before you apply for aid. To avoid gripes and groans from the peanut gallery, set aside an equal amount in one of your accounts and agree to reimburse your child at a later time.

12. Get personal in the financial aid office. Thomas from the University of Southern California warns parents to never underestimate the power of human resources. "Financial aid offices really do want to know if there's something different about the family," she says. "For example, there's no place on the FAFSA for high medical expenses, and usually that's not something families can control." For extenuating circumstances such as health emergencies, unemployment, divorce or loss of a home, aid officers can negotiate with the government on your behalf, potentially winning you a sweeter award.

13. Keep up the course load. Maximizing aid eligibility means not only scoring an award, but maintaining it. Federal programs such as the Pell Grant are tied to your child's student status, meaning that if he or she drops a class, it could wind up costing more than a blemished GPA. To keep the money coming in year after year, read the fine print and make sure that you and your child understand the course load and grade requirements.

14. Work it. In work-study programs, student earnings are exempt from the watchful eye of financial aid officers. By landing a work-study job, your child will not only be able to earn money throughout the school year, he'll also be gaining professional training, networking contacts and something to put on the resume besides "member of break-dancing club."

15. Reduce capital gains. Capital gains from stocks, bonds and mutual funds count as income and could stand between your child and a fat aid check. If you're thinking about selling your securities and redeploying that cash into your retirement fund, a new home or paying off debt, Kantrowitz recommends doing so no later than your child's sophomore year in high school. "Sell two years prior to going to college so that it occurs not in the base year, but the year before," he says. "Two years before won't count against you."

16. Test yourself. Parents whose combined gross income is at or near the $50,000 level, listen up: You could get free dough by proving it. Designed to benefit middle-income households and those with special circumstances, the simplified needs test ignores assets, as well as savings, when determining financial aid eligibility. To qualify for the test, combined wages reported on the W-2 must be less than $50,000, and every family member must be eligible to file a 1040A or 1040EZ form with the IRS. To get your hands on a copy of the test, consult your accountant or financial aid adviser.

17. Perk up. The higher the family income, the lower the financial aid eligibility, but nobody ever said anything about perks. Instead of a raise or bonus this year, try negotiating more flexible hours, subsidized meals, extra vacation time, gym memberships, loan forgiveness, tuition reimbursement or a better insurance package. Gifts that don't show up as income on your W-2 could wind up saving you and your boss cash in the end.

18. Report the support. One of the few items parents can deduct is child support; that is, if they remember to do so. "People tend to not read the (FAFSA) work sheets and omit things like child support that reduces their income," says Kantrowitz. "That can impact your financial aid." Child-support payments made for any student outside of the household are considered asset deductions and can be subtracted directly from a parent's total income. Likewise, any support received on behalf of the child must also be reported and counted as additional income.

19. Use the grandparents. Mom and dad are fair game for federal scrutiny, but Grandma and Gramps are a different story. Grandparents who hold 529 plans are not included when assessing a family's expected college contribution. But before you encourage them to contribute to a 529, make sure you understand that distributions from such an account will be considered a gift to the student and could impact financial aid eligibility.

20. Be honest. The fastest way to lose out on an aid package is by being deceitful. "The formula is so heavily based on income, it's really hard to think about ways to get around that," says Thomas. "You can really get in trouble if you try to manipulate the formula by hiding things." According to, schools are required to verify 30 percent of FAFSA applications, and many choose to verify all. Hiding assets or falsifying information can result in financial penalties, loss of aid and, in some cases, jail time.


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