Q. If my father has savings in the bank, more than $100,000, do i qualify for financial aid?
A. There is no easy answer to your questions because there’s a lot that comes into play for qualifying for financial aid.
Your parents’ financial assets and income, as well as your own, will be considered when filling out the Free Application for Federal Student Aid (FAFSA), but having savings doesn’t necessarily mean that puts you out of the running to receive financial aid, said Anthony Benante, a chartered financial analyst with Baron Financial Group in Fair Lawn.
He said the first thing you need to do to see if you qualify for financial aid is to fill out the FAFSA form.
There are certain criteria to first apply for financial aid, and you can read those details at studentaid.ed.gov.
Then you need to understand that colleges and universities often use different criteria than the federal governments to see if you qualify for aid.
Federal student aid defines “financial need” as “the difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC),” Benante said, while schools will have their own financial aid formulas.
He said your COA, a calculation of your tuition and fees, room and board, books and supplies as well as other education-related expenses, will play a big factor in how much money you receive.
Your Expected Family Contribution (EFC) also is considered.
“Your EFC is the number that college financial aid staff uses to determine how much financial aid you would receive if you were to attend their school. It is calculated with a formula established by law,” he said.
The formula includes your family’s taxed and untaxed income, assets and benefits, such as unemployment or Social Security. Your family size as well as the number of members who will attend a college could affect the formula, he said.
“The financial aid office then subtracts your EFC from your COA and that determines your financial need and therefore how much need-based aid you can get, which can’t exceed more need-based aid than the amount of your financial need,” he said.
If you’re a dependent student, you will need to include your parents’ and your own information on the FAFSA.
“The FAFSA form asks for various financial information, such as information from tax forms as well as balances of savings and checking accounts,” he said. “Assets such as these as well as investment accounts, 529 accounts, etc. will be considered.”
Note that the family’s primary residence and retirement savings are not considered.
Take a look at the questions you’ll need to complete on the FAFSA here.
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.