Earning a college education is one of the best investments in your future. Today, college students and their families face a “perfect storm” – college tuition is climbing, the economy is weakening, and credit is tightening. Figuring out how to pay for a college education is more challenging than ever before. But one thing hasn’t changed, filling out the government’s aid form is still complicated and time consuming.
What Is a FAFSA?
All college students are expected to contribute towards their education costs. How much you and your family will be expected to contribute depends on your financial situation — and is what’s called your Expected Family Contribution (EFC).
The Free Application for Federal Student Aid (FAFSA) is the form the U.S. Department of Education (ED) requires to determine your Expected Family Contribution (EFC). The government conducts a “need analysis” based on financial information, such as income, assets, and other family information, which you and your student will be asked to provide.
The FAFSA application is often said to be the gateway paperwork to both federal and institutional aid, as it is the application most colleges use to determine eligibility for federal, state, and college-sponsored financial aid, including grants, educational loans, and work-study programs.
The first step in the financial aid process is to complete and submit the FAFSA starting January 1st your student’s senior year. Federal aid is limited and much of it is offered on a first-come, first-served basis, so the earlier you file the better your chances of accessing the most financial aid possible.
Many states, colleges, and universities have filing deadlines as early as the first weeks in January. Pay close attention to how colleges word their deadline instructions. Some refer to the date by which your FAFSA must be submitted – the Transaction Receipt Date – while others refer to the date your completed aid application must be sent by the federal processor to a college’s financial aid office.
Missing deadlines can ruin your opportunity for financial aid. You should check with your colleges’ financial aid administrators to learn each college’s exact FAFSA deadline. Filing as close to January 1 as possible is highly recommended.
Should You Complete the FAFSA?
Many families assume they make too much money to qualify for financial aid, but there are many factors that determine eligibility (especially private colleges). Every family should complete the (minimally) FAFSA form in January of the student's high school senior year. Regardless of family income and assets, there are federal and state entitlement programs for every student, the most common being the Stafford loan.
Additionally, many colleges require the FAFSA form in order for the student to qualify for merit awards and scholarships. These can be offered as a result of academic, athletic, artistic or even leadership excellence.
Along with the FAFSA form, some colleges require the CSS/PROFILE form, and most schools require their own aid forms.
By finding out EARLY what the colleges and universities will likely require you to pay for the education, it will give you more time to plan on how you will get the money to pay your fair share and will help the student in selecting a college or university that is affordable based on what the family can spend.
Also keep in mind, the Federal Methodology Formula that is used to calculate the family’s EFC changes every year. Therefore, if you do not qualify for aid in one year, does not mean you will not qualify the next.
What if we haven't filed our taxes yet? Should we still complete a FAFSA?
Yes. You can estimate your income (using pay stubs, W-2s, 1099s, bank statements, etc. whenever possible), and then make any necessary adjustments later, once you receive your Student Aid Report (SAR). There is no penalty for estimating your income on your FAFSA—although you will need to make any adjustments once your taxes are completed. Better to estimate and file on time, so you'll receive consideration for the maximum amount of aid available, than to file late and miss out on part or all of the aid for which you might have otherwise been eligible.
In upcoming articles, we will discuss the CSS/Profile form, as well as, provide certain tips and tricks leading to successful completion of these forms.
© 2011 Cherie D. Putman, CPA
