Few families are able to go it alone when it comes time to pay for a college education. The college financial aid system is designed to help relieve this burden with its scholarships, grants, student loans, and tax incentives.

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Aid Myth: I'll hide money in a trust

Parents and grandparents often set up education trusts for children under the mistaken assumption that the colleges will not be able to include these trust funds when determining need. Financial aid applications require you to disclose trusts. It is assumed that the entire amount in a trust is available to be used even if the trust has been set up so that the principal can not be touched. Because a trust is considered the student's asset, the entire current value of the trust is assessed at a 20% rate even though the student can not access the trust. This occurs every year you apply for aid.

In most cases, putting money in trust will result in a family paying more for an education than if they had been allowed to spend this money directly on tuition thereby being eligible for more aid.