If you make any one of these mistakes, it could end up costing you thousands, or even tens of thousands of dollars by way of lost funding that you might have been eligible for.

I don’t want you to make these “unforced” errors. So that’s why I’ve devoted this chapter to teaching you how to avoid these common mistakes, so you can obtain the maximum amount of money from each school your child applies to.

Mistake #1: Most middle and upper-middle class parents assume they won’t be eligible for financial aid because they own a home and make too much money.

The Reality: Most families with incomes ranging from $40,000 – $120,000 per year who own homes are eligible for some form of financial aid. There is billions (with a “b”) of dollars available each year from the Federal Government, the states, colleges and universities, and private foundations and organizations.

You have to know how to get your “share”. Unfortunately, most parents give up before they even start and assume they won’t be eligible. This is exactly what the government and colleges hope you will do so they can keep more of these funds.

Don’t make the mistake of not applying for aid! If you fall into a “high earner” category, make sure you apply; you’ll probably be eligible for SOME money.

Even high-earning families (those making six figures and more) can get a ton of money for college. Many make the mistake of not applying!

Mistake #2: Focusing your time and energy on a private scholarship search instead of spending your time trying to qualify for “need-based” financial aid.

The Reality: Private scholarships make up only a percentage of the money available to you to help pay for your child’s college education. Funding also comes from the Federal Government, the state you live in, and the colleges and universities your child is applying to.

Mistake #3: Assuming only minority students, athletes, and academically gifted students get financial aid.

The Reality: Nothing could be further from the truth! “Need-based” financial aid is solely awarded based on “financial need” which is calculated by taking the cost of attendance at a school and subtracting the family contribution (which is the minimum amount the government determines you can afford to pay based on your income and assets and your child’s income and assets). Whatever is left over after you subtract these two numbers is your “financial need” or eligibility for financial aid at a particular school. If you haven’t noticed, this has nothing to do with a student’s ethnic background, athletic ability, or grades. It’s based on this simple formula:

COA (Cost Of Attendance) – EFC (Expected Family Contribution) = FN (Financial Need)

Mistake #4: Picking colleges and universities without paying attention to where your student lies in relation to the rest of the student body.

The Reality: To increase your chances of getting the best possible financial aid packages, it is imperative that you pick schools where your child lies in the top 10% of the incoming freshman class with respect to their GPA and SAT/ACT scores. Although schools give financial aid based on your calculation of “need” at their school, they will definitely give preferential packaging (i.e., more FREE money, less loans) to students who lie in the top 10% of the incoming class.

The reason they do this is to attract the better students to their school. Use this to your advantage and apply only to those schools where your child would fit into the top 10% category.

Mistake #5: Assuming all schools are created equal and will be able to give you the same amounts of money.

The Reality: All schools are not created equal and will not be able to give you the same financial aid packages. Some schools are well endowed and get a lot of money from alumni and corporations. These schools have more money to give out and are generally able to meet most or all of a student’s financial need at their school. Other schools, like state universities, get no private funds and rely solely on state and Federal funds to help fill a student’s need at their school. In many cases, these schools leave students short and give them less money than they are eligible to receive. It can actually end up costing you more to send your child to a “cheaper” school if they don’t have the money to meet your need. It is very important that you know each school’s history of giving money before you ever apply, so you’re not blown away when you get a bad financial aid package from your child’s top school choice.

Here’s the important idea to take away – It can actually cost you LESS to send your child to a ‘more expensive” school! Don’t rule out the big ticket private schools!

Mistake #6: Not understanding the difference between “included assets” and “un-included assets” for purposes of filling out financial aid forms.

The Reality: Certain assets are counted much more heavily in the financial aid formulas than others. For example, savings accounts, CD’s, stocks and bonds are all included and asked about on the Federal Financial Aid form. However, it does not ask about the value of annuities or cash-value life insurance anywhere on that same form.

Mistake #7: It doesn’t matter where you keep your money; it’s all counted in the same way.

The Reality: Nothing could be further from the truth. Where you keep your money could mean the difference between you getting $10,000 in financial aid or getting nothing! For example, money in the child’s name is weighted much more heavily than money in the parent’s name. If you don’t know how to legally and ethically position your money properly for purposes of financial aid, you could end up losing thousands in financial aid that you otherwise deserve!

Mistake #8: “My CPA or tax preparer is qualified to fill out my financial aid forms – I’ll have him/her do it.”

The Reality: Unfortunately, CPA’s and tax preparers are experts at tax planning and preparation – not financial aid planning. For example, a CPA or tax preparer might suggest that you put some or all of your assets in your child’s name to save money on taxes. While this advice is well meaning, it will usually kill most or all of your chances of getting financial aid. Also, CPA’s and tax preparers are not trained in filling out financial aid forms. In many cases, they will unknowingly fill out these forms improperly (i.e., using pen instead of pencil, omitting social security numbers, etc.). These “minor” mistakes will bump your financial aid forms back to the “bottom of the pile.” If this happens, you will have to re-submit these forms all over again, and you will likely lose thousands in financial aid since it is awarded on a first come, first served basis. The students with properly filled out, “top of the pile” forms will be considered for aid first!

Mistake #9: Waiting until January or even worse after January of your child’s senior year of high school to start working on your college financial aid planning.

The Reality: Since financial aid is based on your previous year’s income and assets, it is imperative to start your planning as soon as possible before January of your child’s senior year. If you want to legally set up your income and assets so you can maximize your eligibility for financial aid, you must start working on this, at least, one year in advance – preferably in the beginning of your child’s JUNIOR year of high school. The longer you wait and the closer it gets to your child’s senior year, the tougher it gets to set up your financial picture without creating a “red flag” for the colleges and universities. It is also important for you to know what your “Expected Family Contribution” is so you can start saving for it. And, you should also know which schools can give you the best packages before you start visiting and applying to them. If you haven’t started planning, DO IT NOW!

Mistake #10: Going Through The Financial Aid Process By Yourself Because It’s “Cheaper”.

The Reality: If this describes you, the colleges and Federal Government are going to have a field day with you – they’ll love you! Here’s why. This attitude allows them to keep control over the process instead of you, the parent, understanding how the game really works and taking back control from them. It always amazes me that people will readily use a doctor when they get sick, a lawyer when they get sued, but suddenly when they are going to send their child to college and spend between $10,000 – $45,000 per year, parents want to save themselves a couple of dollars and do it themselves.

What do I mean? Well, thanks to the complicated system that includes federal and government bureaucracy, mixed in with involvement of private, for-profit and non-profit enterprises, a maze of rules, deadlines, regulations and other complications resulted. Bottom line: it’s not easy to figure this stuff out!

Unless you spent the last 5 – 10 years of your life studying and understanding the financial aid process, there is no way you are going to know how to get the maximum amount of money from each school. And, if you do try it yourself, you’ll probably spend countless hours trying to figure it out. It can be done, sure. But you might have to quit your day job!

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