What is the maximum income to qualify for financial aid?
Many students and parents ask the question “What is the maximum income that I can have to still qualify for financial aid?”
This is an important question because many families think that their income is too high to qualify for financial aid. In fact, according to a 2018 research study, among students who did not file the FAFSA to apply for need-based financial aid, 32% thought that they would not qualify for any financial aid so they simply didn’t fill out the FAFSA.
Filling out the FAFSA? Check out our Ultimate Guide to the FAFSA for step-by-step advice!
For students applying to college, this is a bad idea because there is no magical cutoff to qualify for financial aid. In fact, you can fill out the FAFSA with any income! Keep on reading to learn more about:
- How financial aid is calculated
- Net Price Calculator
- Major types of financial aid
- Why you should apply for financial aid (even if you won’t qualify)
- When it makes sense to not apply for financial aid
How financial aid is calculated
The major reason that there is no income limit to apply for financial aid is because financial aid is very complex. Every college will calculate financial aid according to their own unique formula. That means that you can expect to receive a different financial aid package at every college you are accepted to. Some colleges may even ask students to complete an additional financial aid form like the CSS Profile.
Also, financial aid formulas include many other datapoint in addition to income. Family size, the number of people in college, assets, student income, and student assets are some of the things that are factored in. This means that simply looking at income will not tell the full story.
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Net Price Calculator
If you are a student who is wondering about how much financial aid you can expect from a particular college, you are in luck. The Net Price Calculator (NPC) is a tool that estimates a potential financial aid package that is based on your family’s financial situation. This will allow you to easily compare the cost of a variety of colleges and universities.
There are two limitations to the Net Price Calculator that we should mention:
- The Net Price Calculator only provides an estimate of financial aid. Students will need to wait until they are accepted to receive their official financial aid award letter.
- The NPC only includes need-based financial aid and does not include merit scholarships.
Major types of financial aid
There are three major types of financial aid that students may qualify for:
- Need-based grants that are based on demonstrated financial need.
- Student loans that can be provided by the federal government or private financial firms that do need to be repaid.
- Merit scholarships that are based off of talents and academic achviement.
Of the three major types of financial aid, only need-based grants and certain student loans will be impacted by financial need. Merit scholarships will be awarded regardless of your family’s financial circumstances.
Why you should apply for financial aid (even if you won’t qualify)
When in doubt, you should always apply for financial aid. The worst case scenario is that you simply don’t qualify for financial aid. Here are a few reasons why you should apply for financial aid:
- Some colleges have a policy that prevents students from applying for financial aid if they do not apply as a first year freshman. This means that you can be in a difficult situation if your family situation changes (one of your parents loses their job, a sibling enters college, or there is a big change in your family’s financial situation).
- You may miss out on certain federal student loans that have more favorable interest rates and repayment terms.
The bottom line with this is that you can’t predict the future. Your financial situation can change and may even change over the course of your senior year in high school. Applying for financial aid adds an additional layer of security to your college financial planning.
When it makes sense to not apply for financial aid
If you have made it this far, you know that we are big proponents of applying for financial aid. For almost all students, applying for financial aid is the right move.
However, in cases where a family is able to comfortably pay for the full cost of attendance without any concerns, you may not have to apply for financial aid. So, if your family is donating a building or making a major donation to the school, you probably don’t have to worry about financial aid. For everyone else, apply!