Does a Savings Account Affect University Financial Aid?
Understanding the FAFSA
When looking at ways to finance your college education, one of the first things that should come to your mind is the FAFSA. The FAFSA, or the Free Application for Federal Student Aid, is the gateway document to most sources for Federal Financial Assistance. The FAFSA uses an equation to determine how much money you and your family should expect to contribute to your education, as well as how much the federal government should be willing to cover. This number is your EFC or your "expected family contribution."
Your EFC Number
Your EFC or your expected family contribution is the number that your college of choice will be looking at to determine how much financial aid you will qualify for. Things that will be taken into consideration in calculating this number are yours and your families income (or just yours if you are no longer a dependent and over the age of 24), as well as any assets that you have, which would include any money in your savings account. The more assets and income you have, the greater your EFC number. The higher your EFC number, the less financial aid you will qualify for. This is why a savings account may negatively affect the amount of financial aid you receive from your university.
Benefits of a Savings Account
Though your savings account can affect the level of financial you may receive, it can also lighten the amount of federal loans you may have to take to pay for your education. Not all financial aid comes in the form of grants. In fact, most of it comes in the form of low interest federal loans that can be deferred while you are in school. If you plan in advance and save for your education, though you may qualify for for less financial aid, you will be making interest off of your savings instead of paying interest on a host of school loans that you would have had to take out if you relied solely on financial aid.
Tags: financial will, your education, your savings, Account Affect, Account Affect University, Affect University