From the Financial Hotline


By: Financial Hotline
Fall 2022 (Vol. 40, No. 3)

Q: What are the income limits to apply for Student Financial Aid?

A: There are no income limits to apply for the FAFSA. The FAFSA uses several factors to calculate your expected family contribution (EFC) so even students who think they or their parents make too much should still apply. Students could qualify for maximum financial aid if you or your parents make less than $27,000. A student can make up to $7,040 before it affects their FAFSA. Go to studentaid.gov to apply.

Q: What options do I have if I don’t qualify for need-based aid?

A: Look for opportunities within your field of study. Some employers offer tuition reimbursement for employees or their children. Whether you’re working full-time or have a parent with this benefit at work, it could be a helpful way to contribute to college costs. Some companies have stricter requirements, like only paying for programs that are related to that person’s job. But if you’re an adult going back to school, this is a great option for free money.

Check out private scholarships. Many colleges and universities use endowment money to offer merit-based scholarships to entice students to attend. Research scholarship programs at your accepted schools to see if you’re eligible to apply based on your academic or extracurricular achievements. Even when you receive federal financial aid, private scholarships can help cover your expected family contribution. Talk to your high school guidance counselor to get advice on identifying eligible opportunities. Some private companies and organizations offer scholarships based on multiple different factors such as being a single mother, being left-handed, living in a specific neighborhood or being from a specific ethnic background.

You may also consider federal and private student loans. They each offer different options but utilizing both could help with college affordability. If you are still in high school, consider taking Advanced Placement (AP) classes to reduce the length of time you spend in college (and the cost). Most high schools offer several different classes, such as English, U.S. History, Calculus, or Psychology. The coursework is rigorous, but scoring well on the national exam could earn you college credits. Check with the college or university you plan to attend to find out what AP courses they accept and what exam score you’ll need to earn. You could potentially shave off a semester of your degree program (and the cost!)

Attending community college for the first two years is another way to lower college costs regardless of your financial aid package. The average cost for one year at community college was just $3,900 in 2020-21, according to the National Center for Education Statistics. After two years, you can transfer from community college to a university. Some state colleges and community colleges even offer a transfer track.

Q: My son just got his first job and is looking at saving for retirement. Is there a percentage rule of thumb of how much to put away?

A: A general answer is to save 10% of every dollar you earn. But the exact amount of your retirement savings will differ depends on not only how much you invest and how you invest it but also what you expect your life to be once you retire. In general, you should expect to get at least 4% return on your investments. Translated, that means if you have $400,000 at retirement, that should pay you $16,000 per year in income. If your retirement nest egg is $1,000,000 that should give you $40,000 in income each year.

Q: What is the easiest and most reliable way to get out of debt?

A: First, commit to stop borrowing for any reason. Next If you have multiple accounts and can’t pay them off each month, just ‘snowball’ your payments. By paying off smaller debts first, you’ll see results quickly and be inspired to continue. Here’s how it works:

  1. Make a list of all your debts ranking them from smallest to largest.

  2. Pay the minimum balance on each account.

  3. Direct any leftover funds towards paying as much as you can each month to the smallest bill until it’s paid in full.

  4. Once that debt is cleared, move to the next smallest balance and repeat.