Even if you think you may not be qualified for federal financial aid because your family has good income, you should still fill out the Free Application for Federal Student Aid (FAFSA). First, it’s free to apply and second, many states, colleges and scholarship organizations often award merit-based aid from the FAFSA form. The best time to fill out the FAFSA is early in January of the year you’ll be heading off to college. Many colleges and states hand out financial aid on a first come first serve basis, so the earlier your FAFSA is done, the more you might receive in federal grants, student loans and work-study. The FAFSA is an important tool for all college bound students, so prepare to fill in the form as soon as possible with all the information it requires. Here are some tips to help you perform this essential task.
Online or Print Application
You can fill out and send the FAFSA online or you can get a paper copy to complete. To get the paper copy, call 1-800-4-FED-AID. Filing the FAFSA online is better as it gets processed much faster, at half the time as the printed form. Get started in December by gathering all the documents you’ll need to fill out the FAFSA and applying for a PIN number. You can apply for the PIN here. To complete the FAFSA online, head to the FAFSA Web page. Be forewarned that there are online sites with similar names that will charge you a fee to fill out the FAFSA, so be sure you have the actual federal FAFSA site at www.fafsa.ed.gov.
Gather Documents Beforehand
Here are the documents and records you’ll need to accurately complete the FAFSA:
- Parents’ and student’s taxable income, including wages, capital gains, pensions, dividends, interest, annuities, alimony received, unemployment benefits, collected rents and income from businesses.
- Non-taxable income for students and parents. Non-taxable refers to welfare benefits (excluding food stamps), workman’s compensation, child support received, housing and food allowances, untaxed Social Security money, tax-exempt interest, deductible payments to a retirement fund, earned income credit and veterans’ non-education benefits.
- Expenses such as child support and U.S. income tax paid.
- Student driver’s license, Social Security card, income tax returns, W-2 forms and any record of money you’ve earned in the past year (for 2013, you’ll need your 2012 income tax return).
- Bank statements
- Records of stocks, mutual funds, bonds and any other investments
- Information on CDs, money market funds, trust funds, college savings plans, real estate holdings, and education IRAs
- Current mortgage data
- Business records
- Farm records
It’s important to avoid making mistakes as much as possible. Use the most up to date information in filling out the online FAFSA. Refer to the 1040 federal tax return, not the W-2 form for reporting income and taxes. Use your full legal name, not your nickname. Most important, don’t leave any field blank. If a question doesn’t apply to you, write in not applicable or N/A. Be sure to sign and date the form, and if you file as a dependent student, have your parents sign and date it as well.
Financial aid deadlines are strict, so pay close attention and mark the dates on your college application calendar. States, schools and private scholarships usually have earlier deadlines than federal financial aid. Many colleges have financial aid deadlines early in February, which is why you should get the FAFSA done as early in January as possible. Many students lose out on financial aid because they miss the deadlines, so don’t be one of them. Take deadlines seriously and you stand to obtain access to potential thousands of dollars towards your college education.
Expected Family Contribution
The reason you complete the FAFSA form is to determine the amount your family is expected to put towards your college education. This number is called the EFC for expected family contribution to your college education. The amount is based on your family’s income and assets, and the EFC determines how much in grants, loans and work-study you will receive. You can figure out your family’s EFC ahead of the FAFSA by filling out the FAFSA4Caster tool at www.fafsa.ed.gov. Whether there is financial need or not, all dependent students who qualify can borrow up to $27,000 in federal unsubsidized Stafford loans over the four years of their college. These loans should be avoided as much as possible, however. Google student loan debt and read the horror stories of students who borrowed far beyond their ability to repay.
Making the Most in Financial Aid
When the federal government figures out the EFC for each family, it looks at certain assets and assesses them. Assets in a student’s name are assessed at 20 percent, while parental assets are assessed at 5.6 percent. For every dollar in a student’s account, the government removes 20 cents from the final aid package to the student. The parent’s assets are assessed at a lesser rate of 5.6 percent. Some assets are not taken into consideration in finding a family’s EFC, for example the family’s home, retirement accounts, annuities and life insurance policies. During the student’s senior year in high school, savvy parents can re-allocate assessable monies into non-assessable accounts, say moving money from CDs or money market accounts to max out the retirement IRA or pay down the mortgage. Don’t game the system, but shifting money from one category to another isn’t a problem.
Keep in Touch with the College’s Financial Aid Office
If your circumstances change, alert your college’s financial aid officer. Your family could experience unexpected medical expenses, a lost job, divorce or a death in the family. If you can provide documentation, you can let the college know of your changed circumstances and financial situation. The college will take this into account in their financial aid award to you. It pays to keep in touch the financial aid office of each college to which you’re considering applying.
Early Bird Gets the Worm
When it comes to financial aid, the earlier you get in the FAFSA form, the more funds you may receive. At least seven states are now awarding financial aid on a first come first served basis, handing out all the available aid to the early birds. When the aid is gone, it’s gone. Students applying too late will lose out. Don’t let this be you.