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 research from the National Center for Education Statistics, 32% who didn’t submit the FAFSA didn’t do so because they thought that they wouldn’t qualify for any financial aid. This is a big mistake for students, because there is no magical income cutoff to qualify for financial aid!
In this post, we’ll be talking 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
Keep on reading to learn more about why you should apply for financial aid no matter what your family income is.
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.
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.
These data points will help the financial aid officers determine an Estimated Family Contribution or EFC for you, which is the amount of money that the college estimates your family can afford to pay for college.
Next, we’ll talk about the Net Price Calculator, which is a great tool for estimating financial aid.
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 a few 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.
- Some NPCs only include need-based financial aid and will not share information about college-specific scholarships. However, some colleges do ask questions about GPA and test scores to give you an idea of how much money you can expect to receive in merit scholarships.
- The NPC won’t consider any private scholarships that you might win, so you will have to factor these awards in sparately.
So while not 100% accurate, the Net Price Calculator is a great start for students and parents looking to get pretty accurate financial aid estimate. Overall, this is a great tool to assess how your family income will impact financial aid at any college or university.
Major types of financial aid
When you complete the Net Price calculator or apply for financial aid, you will be eligible for three major types of financial aid. These three types o aid include:
- Need-based grants that are based on demonstrated financial need. These need-based grants can include the Pell Grant and Federal SEOG Grant.
- Student loans that can be provided by the federal government or private financial firms that do need to be repaid. This includes Federal Direct Stafford Loans and PLUS Loans from the federal government.
- 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 and your family income. Merit scholarships will be awarded regardless of your family’s financial circumstances.
This means that even if you don’t qualify for need-based financial aid because of your family income or other factors, you will still be eligible for merit scholarships.
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:
Ensure that you can apply for financial aid in future years
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 federal student loans
You may miss out on certain federal student loans that have more favorable interest rates and repayment options.
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. And if your financial aid is not enough, there are always options!
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!
Key next steps for students
- Unless you are in an unusually safe financial position, you should absolutely complete and submit the FAFSA.
- Some colleges will require the CSS Profile as part of the financial aid process, so you will need to submit the CSS Profile to any colleges that require it.
- Don’t forget that you will need to reapply for financial aid each year that you are in school!