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Answers to Introductory Questions about Financial Aid for College

Mark Kantrowitz

November 22, 2010

There are also a handful of financial aid programs that are available to you when you file a federal income tax return. These include the Hope Scholarship Tax Credit, the Lifetime Learning Tax Credit and the Tuition and Fees Deduction. You should file a federal income tax return to obtain these education tax benefits even if you are not required to file a return. The Hope Scholarship, for example, is partially refundable, so you can benefit even if you have no tax liability.

After you get your financial aid package, review the requirements for keeping each source of funding. In most cases you will have to get good grades or you might lose the money. Some scholarships are renewable and may require a renewal application, academic transcripts or other requirements for you to keep the scholarship in subsequent years.

Finally, beware of scholarship scams and other financial aid scams. If you have to pay money to get money, it’s probably a scam. Never invest more than a postage stamp to get information about scholarships or to apply for a scholarship.

Can I start applying for financial aid when I am a 10th grader in high school? — Cierra B.

You will have to wait until January 1 of your senior year in high school to submit the Free Application for Federal Student Aid (FAFSA). However, you can and should start searching for scholarships immediately, as there are many scholarships available to students in grades 9, 10 and 11, not just grade 12. These scholarships can be found in the Fastweb scholarships database.

If you are under age 13, you won’t be able to search the online scholarship databases because of the Children’s Online Privacy Protection Act (COPPA). However, a list of scholarships for children under age 13 can be found on FinAid at

You should also save as much as you can for your college education, because every dollar you save is a dollar less you will need to borrow. Encourage your parents to save for your college education in a section 529 college savings plan. These are tax-advantaged ways of saving for college, similar in concept to a Roth IRA and other retirement plans. Every state offers one, and you can save in any state’s 529 plan. More than 30 states offer a state income tax deduction for contributions to the state’s 529 plan. It is best to use the direct-sold version of the state’s 529 plan, as the fees are lower than in an advisor-sold plan. Choose the age-based asset allocation within the state plan to minimize the risk of stock market losses. This shifts the funds to a more conservative mix of investments as college approaches, reducing the risk of loss to principal.

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