A column on personal finance prepared by the Virginia Society of Certified Public Accountants


(August 20, 2003) – Is there a high school senior in your house who is planning to attend college next fall? If so, it’s not too early to start thinking about financial aid. According to the Virginia Society of CPAs, the Free Application for Federal Student Aid (FAFSA) cannot be submitted until January 1, but there are steps you can take now to familiarize yourself with the process.

Don’t Assume You Won’t Qualify

Since most families qualify for some financial aid, you should apply even if you don’t think you are eligible. Families earning more than $100,000 have been known to get aid, particularly if there are two or more family members in college at the same time.

Even if you don’t qualify for federal income grants, your child may be eligible for work-study programs or scholarships. You may also need to file a FAFSA to qualify for federal low interest loans, such as the PLUS (Parent Loan for Undergraduate Students) loan that is available to any family regardless of income.

Understand the EFC

The amount of aid you receive depends on the cost of attending a particular college minus your expected family contribution (EFC). The key factors used to determine your EFC are your family’s income and assets, the student’s assets, and the number of children in college. Unusual circumstances such as a death, loss of job, or high medical bills can also impact the aid formula. In such cases, you should submit a letter directly to the school’s financial aid office explaining the situation.

Tackle the Paperwork

The deadlines vary from school to school, but the earlier you apply, the better. The Department of Education requires parents to complete the FAFSA in order to apply for federal aid, and all state student-aid agencies require this form as well. FAFSA forms are available from your student’s high school or by calling 1-800-4 FED AID. You may also complete the FAFSA online at As its name implies, there is no charge for filing this form.

Within four weeks of completing the FAFSA, you should receive a Student Aid Report (SAR) in the mail. The SAR contains important information including your EFC. Read the form carefully to verify that all the information is correct.

In addition to the FAFSA, some private colleges require you to complete a second form called the CSS Financial Aid Profile. The CSS Profile is a more in-depth analysis of your financial need, taking into account such factors as the equity you have built up in your home. In general, the CSS Profile asks for more detailed information than the FAFSA. It can be completed on paper or online

Spending Assets Wisely

When your family’s financial need is evaluated, your child’s savings are given more weight than parental assets. It therefore makes sense to purchase big-ticket college-related items, such as a computer, from the student’s savings before filing the financial aid forms. Lower assets generally equal more aid.

You might also consider building up your retirement savings accounts. Retirement savings usually aren’t counted as an asset when calculating your eligibility for aid. And, what’s more, contributions to your 401(k) reduce your taxable income, which could increase the amount of aid you qualify to receive.

Carefully Evaluate Offers

The financial information provided on the FAFSA and on other financial aid forms are sent to the colleges you indicated and processed by those schools that accept the student. The school’s financial aid officers will prepare an aid package, most likely a combination of scholarships, grants, work-study programs, and loans. In most cases, a description of the financial aid package is included with the student’s acceptance letter. Be sure to evaluate these financial aid packages carefully. Obviously, scholarships and grants that do not need to be repaid are preferable to loans.

Consult with a CPA

A CPA can provide you with additional college financing strategies and assist you in preparing for the financial aid application process.

The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at

Lifetime Financial Planning, LLC

2325 Dulles Corner Boulevard, Suite 500, Herndon, Virginia, 20171

208 South King Street, Suite 201, Leesburg, Virginia, 20175

Phone: (703) 779-0515 - Fax: (703) 779-7815 - E-mail:

Hourly Fee Only | Financial Planning | Investment Advice | College Savings Plans |
College Financial Aid | Tax Planning & Prep | Planner Profile | Media - LFP in the News | Links to Financial Info | Questionnaire | Contact Us | Home |

©2001-2003 Lifetime Financial Planning, LLC All Rights Reserved