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Your FAFSA Answers...How Much Will It Cost You?
The FAFSA (Free Application for Federal Student Aid) form is your first step in finding out what college will really cost you, how much college loan debt you will bear and if consolidation of each college loan will help or hurt.
The answers you supply will:- determine if you qualify for a Pell grant
- allow you to be considered for college grants and scholarships (Check out state college loans and grants).
- automatically fill out free grant applications in some states
- decide how much federal aid (loans, work-study programs) you qualify for
(Headlines below allow you to access more information about any topic)
...and other basic questions answered.
...has been redesigned for greater security in dealing with your personal information. It has also been made more user friendly with new help features and the ability to skip over questions that do not apply to you.
...is your first step in this process, but one you will need throughout your college years (and after). Both student and parent should apply for one.
...you need to consider is not just the federal one which is the same for all students, but your state deadline- which can occur very soon after the new form is available. Do not miss out on state grant aid or college financial aid. Both of these are assigned early (as well as federal Perkins student loans- considered the best college loans for students). Check your deadlines every year because they change.
is the quickest and easiest way to complete this form. The online application minimizes mistakes because if contradictory information is entered or if an entry is skipped, you will not be able to advance to the next question until corrections are made. Using the online form allows you to receive your SAR (student aid report) more quickly.
...should be downloaded whether or not you use it as your submission. Anytime you complete an online form, you should make a duplicate hard copy for reference. Storing previous years' FAFSAs (and student aid reports) can also be useful for comparing differing levels of financial aid.
is now out. Changes have been made to this form which will make it easier to finish and submit. (And this will definitely increase the number of students who receive aid.) The instructions are clearer, questions have been combined and simplified and the notices for help (both online and phone) are much easier to locate on every page.
How Much Aid?
Your application results in a number...your EFC (Expected Family Contribution). It is this number that will decide your eligibility for federal, state and college aid. No matter how high this number looks to you, DO NOT GIVE UP HOPE...because even though federal aid is based on it,- each school makes its own decision about what to award students
- schools know EFC numbers are artificially high because of federal needs guidelines and they take this into account
- you can make corrections if any of your information is wrong
- your EFC number is not written in stone- It will change every year as your circumstances change and as Congress makes changes to the EFC formula (It can even be adjusted during the year by a financial aid administrator if there is a documented loss of income.)
...you have an opportunity to plan ahead for the next year. Renewal is not automatic. You will manually file every year and your numbers will change. Maybe your income will go up (or down). Perhaps a sibling will be going to college. You might be living in an area that qualifies for federal disaster relief, or whatever- things change. And if you filed to late to qualify for some state aid this year, you will know enough to do it earlier next year.
Planning Ahead
If you have time before filing to adjust your finances, bear in mind that you should not- allow the student to have assets: There should be no assets in the student's name- all savings plans, investments, accounts, etc. should be under the parent's name(s). Why? Because student contributions are weighed much higher than parents' contributions.
- have a lot of cash on hand: Money in savings and checking accounts (parents included) will mean that the student is going to qualify for less aid. If you have money, use it to pay off debts which will not be taken into account when your EFC is calculated.
- accept money from grandparents for college: Ask them to wait until the student graduates, otherwise it will count as part of the expected family contribution.
- withdraw retirement funds: During the base year for your application, do not withdraw money from any type of retirement fund, because this type of investment is not included as an asset.
- take out a home equity loan for paying college expenses: I won't say that it is never right to use your home for this purpose, (because in some situations it is) but use a home equity line of credit instead. That way, any unused money won't show up as an asset the following year.
These are the basic mistakes to avoid. Doing what you can to avoid them is a legitimate strategy. Some other strategies are not as legitimate and can get you investigated and penalized. Financial aid administrators are trained to spot inconsistencies and they can recommend investigation by federal, state or local authorities. A popular (illegal) strategy a few years ago was having a parent enroll in a college at the same time as their child, but then letting their registration lapse after the financial aid application was processed. This type of fraud will always be caught.
If you pay a consultant for advice (and each year parents pay thousands of dollars) make sure it is for: - legitimate strategies to manage income for maximum financial aid (FAFSA deferred compensation is what is most asked about)
- ways to target the schools which best meet your needs, both financially and academically
and not just for filling out a form which is free to submit. If you are interested in this type of planning, you can get the same level of professional help (without the huge fees) on the internet. Some top consultants have realized that they can do better by lowering their fees and widening their client base this way. This is one such company [COMPENSATED AFFILIATE LINK]: FAFSA help It is not a book that you buy or download (with its information out-of-date by the time its written) but a membership site that is interactive, has great support and is continually updated. A couple of more advantages: -You never have to give your financial information to anyone (except to pay for registering). -You never have to pay for anything except for the initial membership fee ($99.95- that's for your entire FAFSA year).
Do the actual FAFSA yourself. You are responsible for the information in it and there is free help available for filling out the form.
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