Should You Apply for Financial Aid?

Are you wondering if you should apply for financial aid?

For most families, the answer will be yes.  You should file for financial aid.

Here are three key reasons why families of any income level should apply for aid by completing the Free Application for Federal Student Aid:

1. The FAFSA is free.

The FAFSA won’t cost you anything but the time it takes to complete it. Okay, it can be a pain. By some estimates, it can take 10 hours to gather documents and fill it out.  The federal government, however, has somewhat simplified the FAFSA so it might not be as tortuous an experience.

2. You may qualify for financial aid.

Most people are clueless about whether they are eligible for financial aid or not. The biggest factors are a family’s income and the size of the household. Another huge factor is the price of the school. You might not qualify for financial aid  if your child is going to attend a state university, but you might if he’s got his heart set on an expensive private college.

If you’re worried that your home equity or  your retirement accounts will hurt your chances for financial aid, don’t be. The FAFSA doesn’t even ask about your primary home or your IRAs and other retirement cash.

Even if you don’t qualify for grants from the federal government — the big program is the Pell Grant — states and schools themselves often offer need-based grants.

3. You can obtain federal student loans.

Without filing the FAFSA, you can’t borrow through the federal government, which has the best student loan terms and rates. For some parents, a home equity line of credit will be the best way for them to borrow for college. Your absolute last resort should be private loans.

Applying for financial aid…..

If your child is a high school senior, you can begin completing the FAFSA for the 2011-2011 school year beginning on Jan. 1.

Lynn O’Shaughnessy is the author of The College Solution and She also writes a college blog for  CBSMoneyWatch and US News. Follow her on Twitter.

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