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.

I’ve been following the high-stakes fight on Capitol Hill between the student lending giants and the Obama administration for some time, but I didn’t feel compelled to share the news until the legislation looked like a sure thing. The Democrats have tucked the federal student loan bill into the historic healthcare legislation, which Congress could vote on this weekend.

What I am most pleased about is the end of an obscene federal student loan boondoggle that private lenders enjoy. For years the federal government has poured billions of our tax dollars into the coffers of Sallie Mae and other student lenders when there was absolutely no need to do so! Private student lenders pocketed these huge subsidies for lending money to students even though the federal government assumed virtually all the default risk.

The end of the lender subsidies and a switch to direct federal student loan lending will free up $61 billion over the next decade, according to US Rep. George Miller (D-CA). Some of this money  will be used to fund the wildly popular Pell Grant program for low and middle-income families. I only wish the end of lender subsidies had freed up more money for higher-ed.

Federal Student Loan Repayments Will Get Easier

The legislation is also going to be great news for future student borrowers. Here’s why:

Under the current student loan repayment program, college grads, who meet the income qualifications, can request that their monthly student loan payments be capped at 15% of their discretionary income. The new provisions will lower this cap to just 10% for new borrowers after 2014. The student loan repayment program can save borrowers hundreds of dollars a month.

The legislation also directs that student borrowers using the federal student loan repayment method will have any remaining student debt forgiven after 20 years instead of the current 25 years.

The big flaw with the current student loan repayment program is that few student loan borrowers know about it. And they could use the help. Two-thirds of college students graduate with an average student debt of $23,000+.

Lynn O’Shaughnessy is the author of The College Solution, an Amazon bestseller, and she also writes a college blog for CBSMoneyWatch and TheCollegeSolutionBlog. Follow her on Twitter.

The reason why elite schools visit is because High Tech High has something that the prep schools in places like Greenwich, CT, Lake Forest, IL,  Scarsdale, NY and Mercer Island, WA, do not. The school is a melting pot that attracts affluent students and an even larger number of students of color, many of whom have parents who did not go to college.

In higher-ed circles, there has been a great deal of debate about the efforts of elite schools to attract minority students. Curiously, it’s private, less selective colleges, which don’t enjoy large endowments, that underwrite the education of more of these students. In my book, The College Solution, I quote the president of St. Lawrence University, who had this to say about the phenomenon:

“The wealthiest colleges and universities – those that can best afford the financial aid necessary to enroll a large number of low-income students — in fact enroll the smallest percentage of such students.”

Actually, Columbia does a better job than most in attracting these kids. Yesterday afternoon Johnson bragged that 17% of Columbia’s students receive federal Pell Grants, which is the proxy used to measure the number of low-income students.  US News’ recent ranking of the top national universities by economic diversity bears Johnson out.  Columbia has more Pell Grant recipients than any other private college. It beats out University of Southern California by one percentage point. On the flip side, candidates for the hall of shame would certainly include Washington University in St. Louis (7%) and the University of Virginia (8%).

By far, the two universities with the most Pell Grant recipients is UCLA (35%) and UC Berkeley (32%).

You can find a handy list of top national universities and their Pell Grant percentages by visiting a New York Times blog post in The New York Times entitled, Poor Students at Rich Colleges.

Lynn O’Shaughnessy is the author of The College Solution and the college blogger at CBSMoneyWatch.com.

1. If your adjusted gross income exceeds $120,000, you won’t be eligible for financial aid at any school.

A. True.
B. False.

2. After receiving a financial aid package from a college, the amount can only be increased for dire reasons such as a death, divorce or loss of job in a family.

A. True.
B. False.
3. Which assets aren’t included in federal financial aid calculations:

A. Retirement accounts.
B. Home equity.
C. Family-owned business with less than 100 full-time employees.
D. None of the above assets are considered in the calculation.
4. Which statement about private student loans isn’t true:
A  There is no interest ceiling on private loans.
B.  Unlike a federal student loan not everyone will qualify.
C. Private loans routinely have lower interest rates than other student loans.
D. It’s best to borrow through federal student loans first.

5. To be eligible for federal or state financial aid, you must fill out the Free Application for Federal Student Aid.

A. True.
B. False.

6. EFC stands for:

A. Estimated Financial Contribution
B. Expedited Free Choice
C. Expected Family Contribution
D. Equal Fiscal Calculation

7. Which are the best college financial aid opportunities, listed from best to worst.

A.    Grants
B.    Parents Plus Loans
C.    Subsidized Stafford
D.    Unsubsidized Stafford
E.    Private student loan

8. Suppose you graduate with $17,125 in federal students loans that carries a 6.8% interest rate. Which repayment option will cost the least amount of money?

A.    Paying $197.08 for 120 months.
B.    Paying $152.02 for 180 months.
C.    Paying $130.72 for 240 months.
D.    The total tab will be the same for all three.

9. Is a Stafford Loan or a Pell Grant at better deal for students?

A.    Stafford Loan
B.    Pell Grant

Answers: 1) B.  2) B.  3) D.  4) C.  5) A.  6) C.  7) A.,C.,D.,B.,E.  A.  9) B.

Not thrilled with your score? If you want to learn more about financing a college degree visit the financial aid and scholarships archives at TheCollegeSolutionBlog.com. Lynn O’Shaughnessy

That’s unfortunately happening too often as students and families try to figure out how to pay for college.

A recent study from the U.S. Department of Education concluded that nearly 40% of full-time students who attend community college don’t fill out the FAFSA (Free Application for Federal Student Aid). Even more amazing, 29% students with family incomes of less than $10,000 don’t bother.

Many community college students would qualify for federal Pell Grants — that’s free cash  –  if they just filled out the FAFSA.

Even if your family wouldn’t qualify for a Pell Grant — incomes typically can’t exceed $40,000–you might be eligible for state aid. Some states award cash grants for needy families, but others award money based on academic achievement.

A family can make more than you might think possible to qualify for some state programs. For instance, solidly middle-class California students can receive Cal Grants that pay for tuition at state schools or can pay for up to $10,000 for tuition at private colleges and universities in California. For a family of four, a student could be eligible if the household income doesn’t exceed the mid-to-high $70,000 range.

To qualify for state or federal aid, you should complete the Free Application for Federal Student Aid. Families with high school seniors will complete this form beginning January 1 or later. Once you file the form electronically with the federal government it will forward the information to your state.

Here is a list of state education departments from FinAid.org.

You can learn much more about financial aid by reading my book, The College Solution.

The college charges no tuition and only accepts low-income teenagers. Every student graduates with no debt. Not surprisingly, the school is mobbed every year with applicants.

Berea is dedicated to accomplishing what a lot of elite schools with multi-billion-dollar endowments give lip service to doing: providing promising teenagers from disadvantaged families a free college education.

Schools like Harvard, Yale and other elites have gotten kudos for providing free college educations for poor students, but the praise is misplaced. Why? Because most elite schools admit very few of these kids. The proxy used to measure how many lower-income students attend a school is the percentage who receive federal Pell Grants, which are usually awarded to families making less than $40,000 a year. According to the Education Trust’s figures, the percentage of students at Harvard and Princeton’s who receive Pell Grants is 8.4% and 8.5%. In comparison, 38.1% of UCLA’s students receive Pell Grants. At Berea, 81% of the students qualify for Pell Grants.

In discussing this phenomenon in my book, The College Solution, I quote the president of St. Lawrence University in Canton, NY, who made this observation about the stinginess of the nation’s mightiest universities. Here’s what he said:

“The wealthiest colleges and universities — those that can best afford the financial aid necessary to enroll a large number of low-income students — in fact enroll the smallest percentage of such students.”

Maybe some day the higher ed big boys will be shamed into doing the right thing.

Further Reading:

Watch Out for That Financial Aid Surprise

Will Saving for College Penalize My Chances for Financial Aid?