Stage 3: One Year Before College

• Don't sell any appreciated investments. Instead, borrow against your countable assets, such as savings accounts, stocks, bonds, and real estate, and use the borrowed money to continue paying debts.
• Submit the Free Application for Federal Student Aid (FAFSA) before January 1. You can get a copy of the form from the high school guidance office. Aid is a first-come, first-served business, and the FAFSA form will be the basis for most of your aid. Fill it out and mail it as soon as possible after January 1. The form will ask for your after-tax income, but don't worry if your taxes aren't done in time to provide exact income amounts. Just give your best estimate and get the application in the mail right away.
• Be sure to meet each school's deadlines and filing requirements. You may have to fill out other forms in addition to the FAFSA for each school your child is interested in, so check the application materials at each school for more details. The sooner you file the more financial aid you're likely to receive.
• Have your child apply for a Stafford loan first. If you still need funds, apply for a PLUS loan for the balance. PLUS loans, which are limited to the cost of college minus other financial aid, are a loan given to parents. The interest rate is usually lower than that of other personal loans; by law it cannot exceed 9%. However, you will be required to start paying it back within 60 days after the final loan disbursement. For more information, check this excellent Web site: www.finaid.org.

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