Financial Q&A: How financial-aid picture changes by waiting to go to college

Q: Based on my experience, I'm of the opinion that very few 18-year-olds are ready to take full advantage of college. As such, I've encouraged my children to do other things for a few years, including working to save some money. My son is now 22 and agrees that college at 18 wouldn't have been very productive for him. But he is now thinking about enrolling. I'm wondering how the financial-aid picture changes for a 22-year-old. How is it different from a high school senior? Is his eligibility still based on his parent's income and finances, and does it matter that he's no longer living at home? What should I be doing to prepare myself financially for sending my 18-year-old daughter when she's 21?

J.G., Candia, N.H.

A: While many parents may think that their children have finally reached adulthood and are on their own by age 21, that's not so with the federal government when it comes to higher education.

In its eyes, your children are in most cases "dependent" until the age of 24 for the purposes of financial-aid assistance, unless they're married, or have dependents for whom they provide more than 50 percent of their financial support, or attend a graduate program, says James Harris, a financial-aid expert and director with Nelnet Campus Solutions, an education planning and finance company in Lincoln, Neb.

So, even if your son has been paying his own living expenses, he'll still need your information to apply for financial aid.

What does this mean for you? Here are some tips from Mr. Harris:

•No matter what your financial circumstances are, make sure your children complete the Free Application for Federal Student Aid each and every year they're attending school. FAFSA serves as the basis for determining your children's eligibility for federal student-aid programs and, in many cases, institutional, state, and private sources of aid. FAFSA will require some of your financial information and your signature. The application is available online at the FAFSA website (fafsa.ed.gov).

•If your children work after high school before starting college, encourage them to gain skills and knowledge that can advance their academic pursuits. Help them evaluate potential schools, not only based on academic compatibility, but also based on social and financial fit.

•Help your children create budgets. Have them avoid credit cards or teach them how to use them prudently. If your children need to take out a loan for college, make sure they only borrow what they truly need and begin with federally guaranteed student loans. Those programs include Stafford loans, which are made directly to students, and PLUS loans, which are geared toward parents.

•Encourage your student to aggressively look for scholarships. There are tons of them on the Internet, says Harris, including Nelnet-owned subsidiary Petersons.com. Also, work with the college and financial-aid office to see what's available.