Updated 12/21/11: Statistics and information have been updated to reflect the current year.
If one of your New Year's resolutions is to find more money for college, here are six steps you can take to reduce the financial pain of higher education:
1. File your FAFSA: The Free Application for Federal Student Aid (FAFSA) application for 2012-2013 will become available January 1. It's a necessary first step in securing money for college from government programs, and financial aid officers usually urge students and parents to fill out the form as early as possible.
[Find out how to avoid FAFSA errors.]
2. Contact your financial aid office: If you think the information on your FAFSA form does not accurately reflect your current economic status, don't be afraid to alert your school's financial aid officers about extenuating circumstances, says Justin Draeger, president of the National Association of Student Financial Aid Administrators. The 2012-2013 FAFSA determines your need for aid based on your financial situation in 2011. But if a parent lost his or her job recently and saw a dramatic decrease in income, or if a family member had big medical expenses (which aren't reported on the FAFSA), among other situations, schools are permitted to adjust your eligibility for financial aid.
Reach out to your school's financial aid office early with a letter or E-mail that specifically outlines and documents your unusual expenses or drop in income, recommends Ann Playe, a consultant at College Karma.. Students and parents can also appeal to the financial aid office after receiving their aid package.
[Get the best financial aid package.]
3. Collect a "tax scholarship": Students and families can get several kinds of tax breaks for their educational expenses. Low- and middle-income families can collect American Opportunity tax credits (AOTC) of up to $2,500 per tax year, for example. The AOTC was recently extended through Dec. 31, 2012, and can be claimed for educational expenses, including tuition and textbooks, through the first four years of college. Even families who don't owe a cent in taxes are still eligible for the tax credit
Another tax deduction option is the lifetime learning credit, which grants up to $2,000 per tax year. It's an either-or situation for families, though; the lifetime learning credit and the AOTC cannot both be applied for by the same student in the same year.
4. Get a late-deadline scholarship: Though the due dates for many hefty merit-based scholarships have passed, use the web to find scholarships and scout around your community for any remaining opportunities. Sites such as Fastweb.com match a student's profile against a database of scholarships and only consider applications that are still available. It's not too late for the high school senior just beginning to think about scholarships, but "they shouldn't just sit on their hands now," Playe from College Karma says. "They should get online and see what's out there."
[Find more scholarships you might qualify for.]
5. Be realistic: "Parents have to be much more conservative in terms of what they're telling their kids they can finance for college," says Zac Bissonnette, author of Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching Off My Parents. Have a conversation about financial savings as early as your high schooler's freshman year, he says, so everyone is on board with what your family can afford—instead of selecting a school first and then figuring out how to finance the education. "That doesn't work," Bisonnette says. "People need to integrate the financing stuff into the college choice stuff more."
For the first time, every college and university now has a net price calculator that aims to show prospective students and parents how much the first year of college might cost them, depending on their unique financial situation. If you know how to use a net price calculator correctly, you'll get a ballpark estimation of the total cost of college at a particular school.
6. Start saving—now: Even for parents of teenagers, it's not too late to start squirrelling away some future funds. "They should save for college even this late in the game," says Mark Kantrowitz, the publisher of Fastweb.com and FinAid.org. "Every dollar they save is a dollar less they have to borrow." One comparatively quick and painless way to kick-start college savings: take advantage of credit card and marketing offers of free bonuses deposited into 529 college savings accounts.
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