How to Get Financial Aid for College When Parents Make Too Much

A common theme in higher education among higher-income families is the concept of being too poor to attend college but too rich to qualify for financial aid. This is one of the most significant and harmful myths in student aid today. 

Even if your family earns a substantial income, you are still encouraged to apply for federal aid. Many opportunities exist in the world of college funding, even if it seems as though your parents make too much money for financial aid. You may be surprised by what is available. 

In this guide, we will break down how to get financial aid for college when your parents make too much money, as well as how to pay for college costs if you don’t qualify for financial aid.

In this guide:

• How your parents’ income affects your eligibility for federal aid
• Other factors that could help or hinder your ability to obtain student aid
• Determine your EFC
• How to get financial aid without your parents’ help

How your parents’ income affects your eligibility for federal aid

As any prospective college student prepares to head off to school, one of the first steps is completing the Free Application for Federal Student Aid (FAFSA). This application gathers information about your family’s financial situation, and it dictates which types of student aid you qualify for. 

Fill out the FAFSA even if you think your parents make too much. Several factors determine your eligibility for student aid, and your parents’ income is only one of them. 

When filling out the FAFSA, you are asked to provide detailed information about your parents’ financial circumstances, including tax returns so that income can be evaluated. 

These details are used to help calculate your financial need, which determines your eligibility for certain types of state and federal financial aid. Although your family income is a significant source of insight for federal aid applications, it is not the only factor. 

What is the maximum income to qualify for financial aid?

Fortunately, thinking that your parents make too much money for financial aid is misguided.

There is no stated maximum income to qualify for financial aid. Every college student is encouraged to apply for federal aid through the FAFSA, and your parents’ income level will have no bearing on some available aid. 

Household income does, however, restrict certain financial aid types, such as Pell Grants and other need-based awards. These are structured to assist low-income students in affording the cost of college. 

Other factors that could help or hinder your ability to obtain student aid

Your ability to receive aid is based on several factors above and beyond your parents’ income, including:

• The cost of attendance at the school you choose
• Family assets
• Your personal income and financial standing
• Other significant expenses your family has, such as medical debt

School cost of attendance

First, the cost of attendance at the college or university you plan to attend plays a part in determining federal financial aid eligibility.

The higher the cost of attendance, the more financial aid you could qualify for. For example, if you select a public school in the state where you reside, the total cost of attendance will be lower than a private out-of-state school.

Family assets

On the FAFSA, you will be asked to provide information about your family’s assets, including bank accounts, investment accounts, and accounts for educational savings plans, such as the 529 savings plan.

It also asks for information about your parents’ home, but these details are limited to the purchase year, the monthly mortgage payment, and balance owed. 

Family cash assets—including bank accounts, investments, and education savings accounts—are included in calculating your eligibility for aid; home equity may or may not matter, depending on the school you plan to attend.

However, retirement accounts, cash value life insurance, and annuities do not typically count toward what your family is able to contribute toward college expenses. 

Your assets

Your income and assets are also considered in the FAFSA, but that’s where the required information ends.

Other significant expenses

A specific college may evaluate your ability to qualify for financial aid based on other factors, including other significant expenses the household incurs each month, such as significant medical debt. It may also consider whether a sibling is attending school at the same time as you. 

Determine your EFC

The details mentioned above determine the calculation of your expected family contribution, or EFC. Your EFC is a number your school uses to calculate how much aid you’re eligible for. Despite its name, this number is not the amount your family has to pay toward your education. 

Depending on your EFC and the cost to attend your school, you could be eligible for certain types of need-based aid, such as Pell Grants. 

If your household income is high, as are the assets you could use to pay for college expenses, your EFC is going to be higher as well. This means you might be limited in the aid you are eligible to receive.

If you’re curious about how this figure will look, you can see the exact formula the federal government uses to calculate your EFC. You can also speak with your school’s financial aid office to learn about other financial aid you could apply for, such as grants or scholarships.

Your school might also give you a way to appeal EFC calculations if your circumstances have changed since filing the FAFSA, such as through loss of employment, death of a parent, reduction in earnings, or medical costs.

How to get financial aid without your parents’ help

There are also ways to get financial aid without the influence of your parents’ income. Here are some tips on how to gain access to financial aid without including your parents.

Rich parents or not—fill out the FAFSA

Wondering whether you should even fill out the FAFSA if your parents are rich? The answer is a resounding yes. You might be surprised by aid you didn’t think you’d be eligible for, and some private lenders also use FAFSA information to determine your eligibility for their aid.

Look for scholarships and grants

Another solution is to apply for scholarships and grant funding. Many scholarships and grants exist for different types of students. 

Some of these awards are based on demographic details of the student, such as race, ethnicity, gender, or geography. Other scholarships and grants provide funds to those who are following a particular degree path, or those who submit essays on a specific topic.

A misconception about scholarships and grants is that these funds are only available to those who are low-income. That simply isn’t the case. Scholarships and grants are given for a variety of reasons.

For example, the Palantir Women in Technology Scholarship is open to students who identify as women who are pursuing an undergraduate degree in STEM subjects.

Use non–need-based aid

If you are concerned about how to pay for college if you don’t qualify for need-based aid, the FAFSA is your first step to collecting non–need-based aid. 

When you complete the FAFSA, you will be eligible for a loan at minimum. Non-need based aid includes the following types of federal Direct student loans:

• Direct Unsubsidized Loans: Federal loan limits are based on the year of school the student is completing and the total cost of attendance. Although payment is not due on these loans until you school, interest accrues while loan payments are deferred.
• Graduate PLUS and Parent PLUS Loans: Federal Direct PLUS loans are available to parents of undergraduate students and to graduate students. They work similarly to Direct Unsubsidized Loans in terms of deferment and interest accrual, but they may offer higher loan limits.

Federal student loans can be a viable way to cover the cost of college that cannot be managed through savings or other assets. 

Students who receive federal loans have an advantage over those who take out private loans, because federal loans come with more favorable repayment options.

Federal loan interest rates are set by federal law and are usually lower than comparable private student loans, whose rates follow the market. 

You can estimate how much non-need based aid you are eligible for online. 

Consider declaring your independence

Another option for paying for college if you do not qualify for financial aid due to your parents’ income is to declare your independence. Being an independent student typically requires one of the following to be true:

• You are over the age of 24.
• You are married.
• You have dependents other than a spouse.
• You are an orphan.
• You are a veteran or active duty member of the U.S. Armed Forces.

There are few other ways to declare yourself independent from your parents if you do not meet these eligibility guidelines. 

If you fall into one or more of these categories, you can submit the FAFSA as an independent student and leave off your parents’ income. This means you could qualify for a larger amount of student aid. 

For married students, you might be required to report your spouse’s income, which can impact how much aid you receive. 

Consider private student loans

Finally, if you do not qualify for federal financial aid because either you or your parents have high income or substantial assets, private student loans might help. 

Private student loans are available from private lenders, and they require a strong credit history or a co-signer with one. Lenders offering private student loans may provide higher total loan limits and lower interest rates than comparable federal student loans.

However, you will need to make some comparisons among lenders to ensure you are getting the best possible terms for your situation. 

Also, private student loans do not have the same protections as federal student loans. Income-driven repayment plans are not an option, nor is deferment or forbearance in most cases. But as a final option for covering the cost of college, private loans can be a beneficial tool.