Step 1: You must know the rules that the Department of Education uses to determine "need based" aid.

Here's what this means. Congress has a formula that uses 74 different criteria from your family's situation to assess what they feel you can afford for your student each year-no matter how much that school costs.

They take into account things like your income and assets, your student's income and assets, how many in your family will be going to school that year, the age of the older parent, and on and on.

All this data is then run through a needs-analysis formula to calculate a magic number called an EFC, or Expected Family Contribution.

This amount is then subtracted from the total cost of attendance of each college, which includes room and board, tuition and fees, money for books, and even an estimated amount for personal expenses and travel back and forth to the school.

The difference, if there is one, between the two numbers is how much need a family is eligible for.

But if you will take the time to understand what the rules are, you can legally and ethically lower your out-of-pocket cost by thousands or even tens of thousands of dollars a year.

For instance, having $10,000.00 in your student's name will raise what you are expected to pay by $3,500.00 ... per year ... or $14,000.00 over four years. In other words, you can actually lose more in aid than you saved by having the money in the wrong place!

But, if you know the rules, it's usually pretty easy to move that money somewhere that it is exempt from being counted at all. And you just became eligible for a whole lot more money.

Now, once you've gotten your EFC as low as legally possible, it's time to move on to step 2.

Step 2: You must research each school that your son or daughter is interested in for its financial aid history.

You've lowered your EFC, making you eligible for as much need as possible, but that doesn't mean anything-yet.

Next, we've got to research what each school historically offers to its students. I can't say that this information is readily available, but with a little digging, you should be able to find out a rough idea of what they offer.

Here are the three things you want to know for every school you're looking at.

What percentage of your need will they meet? Obviously, you want as close to 100% as possible, we're happy with anything over 80% of need met. In other words, if you have an EFC that has been reduced to $10,000.00, and your student is looking at a school that costs $35,000.00, you have a need at that school of $25,000.00. So, what we want to determine beforehand is how much of that $25,000.00 the school will help you with.

If the school will meet 80%, then you'll be getting $20,000.00 in financial aid, so you'll have to come up with your EFC of $10,000.00 plus the $5,000.00 the school will leave you short. So, in this case, you'll pay $15,000.00 out of pocket each year for a $35,000.00 school.

Next, you need to determine what percentage of the need that they meet is "gift" aid, or free money that never has to be paid back.

Let's stick with the example above for another moment. If the school was offering you 75% gift aid, that means that $15,000.00 of your $20,000.00 of aid would be free and $5,000.00 would be a "self-help" program like work study or a low-interest loan.

This is critical to find out early because by knowing these numbers, you can determine what college will really cost you. Many times, you can have two schools that have the same cost of attendance, but one ends up being much cheaper because it meets a much higher percentage of need and gives away a lot more free money.

Step 3: Fill out all the financial aid forms accurately and on time.

Here is where most parents drop the ball.

First, many mistakenly assume that they don't qualify for any financial aid, and because the forms are a hassle (they are government forms after all), they don't even bother with them.

Huge mistake.

Always fill out whatever financial aid forms your colleges require-even if you think you make too much money.

The main form that the Department of Education uses is the FAFSA. It stands for Free Application for Federal Student Aid, and every school in the country uses it.

It's like filling out a tax return, and many of the questions are taken directly from your taxes.

However, here's something to watch for: According to the Department of Education, 92% of the FAFSAs are turned in with one or more errors on it, in many cases costing the parents a ton of financial aid. So, you want to plan ahead by knowing how to lower your EFC, but then you've got to make sure that your FAFSA is error free. The best advice I can give is to carefully read the directions and take your time with the forms.

Also, financial aid is given on a "first come-first served" basis, so you don't want to wait until the last second to turn in this and the other forms. In our office, we make sure to have all the financial aid paperwork completed for our clients no later than the end of January of the year the kid is going to school. So in other words, for the class of 2026, who will be leaving for col¬lege in the fall of 2022, we filled out the forms in January of 2022.

And because most people don't have their taxes for the pre¬vious year completed, it's perfectly acceptable to estimate your numbers. You just have to let the colleges know that's what you're doing.

In addition to the FAFSA, there is a whole host of other forms that schools require, and to get a financial aid award, you have to provide them with everything they ask for. It may seem frustrat-ing and intrusive at times, but the payoff will be worth it. So, don't delay, and get them everything they ask for.

And, be proactive about checking with each school to make sure they've received what you sent them. You'd be surprised at how many times a student's award letter is delayed because the school has misplaced your documents. This can be a real prob¬lem if they've given away most of their money in the meantime, so stay on top of them.

Step 4: Don't be afraid to negotiate with the colleges.

The reason why you want to apply to six to eight schools is because you want to make sure that your student is accepted at more than one school, so you have multiple offers on the table. Many schools will compete with other schools for students (even though they all deny the practice) or will give consideration to extenuating circumstances.

So don't be shy about politely explaining to a school that even though your child is thrilled to be accepted at their university, it will be much cheaper for them to attend another college that has offered a much better financial aid package. You'll be amazed at how often additional money will appear, just for the asking.

Also, you need to alert them to things that may not have shown up when you filled out your financial aid paperwork like a recent lost job, extensive medical bills, or things like that.

Step 5: Use tax-advantaged, low-interest ways to pay for college.

Even if you think you make too much money to get any aid, there are always ways to save thousands for college.

For instance, how you pay for your share, whether you pay as you go, take student loans, or use home equity can have a dra¬matic impact on how much college really costs. So, by paying attention to all the details of your financing, you can save a ton.

Also, most entrepreneurs qualify for things like "tax scholar¬ships," which are specific ways of paying for college on a tax-advantaged basis, that saves them thousands of dollars legally on their taxes, whether they get any financial aid or not, as well as saving tens of thousands of dollars in interest and fees that the colleges would normally charge them. I don't have the space in this chapter to go into details about how to use this tool because everyone's situation is slightly different, but the important thing is to understand that it exists.

There you have it. The five steps to really getting money for college, no matter what your situation. It might seem a bit over¬whelming at first, but by following my steps you will save your-self a mountain of cash, taxes, and interest on the college process.

No doubt, you can put that money to much better use.

Ron Caruthers is the nation's leading expert on money for college. He also assists his clients and their children with every aspect of college and career planning. For more information about Ron's services, the tax scholarship programs, and other money for college programs, visit www.collegeplanninginc.com