Monday, February 4, 2013

Free Application for Federal Student Aid (FAFSA)

January 1st was a very important date. Not only did it signal a new year, but it was the date the 2013-14 FAFSA was released. What is the FAFSA? It is the Free Application for Federal Student Aid. It is a form produced by the United States Department of Education that determines a family's Expected Family Contribution (EFC).

The FAFSA is a 103 question form used to determine a family's EFC for college. Financial information is imputed into a formula developed by the United States Department of Education to determine the EFC. The EFC is then forwarded to up to ten designated colleges to individually determine a student's financial aid package.

The form can be accessed online ( starting January 1st of each year and is submitted electronically. A family can opt to print a copy and send it via the mail, but this will delay the process by 2-4 weeks. The sooner the FAFSA is filled out, the quicker the information can be received by each college. The longer a family waits to submit their FAFSA can lead to a college having less financial resources to award to a family. 

To fill out the FAFSA, families will use their previous year's IRS Form 1040, Form 1040A or Form 1040EZ  (whichever Federal Income Tax Return Form that was used) both for the parent(s) and the student. Many of the questions ask about specific 'lines' on the tax form, such as adjusted gross income and balance of cash (savings and checking account). Other questions ask about a family's net worth (trust funds, stocks, bonds, certificate of deposits, etc...) and the number of children that will be attending college concurrently.

Complete whichever IRS Form 1040 as soon as possible. A parent can estimate their earnings when filling out the FAFSA, but they will need to later adjust and provide accurate figures. The sooner taxes are filed, the quicker an actual EFC will be calculated. The student will then be closer to the front of the line to receive each college's maximum financial aid award. Make sure not to rush when you are filling out the form. There are an average of 10 errors estimated per form. Remember, the form is free. One should not pay to access a FAFSA website.

In addition, keep as many assets out of the student's name as possible. Student earnings are weighted more heavily than parental money (nearly 20 cents to the dollar). Why is this? The logic is that a student has earned money and has saved over the years for college. Though that might not be the case, make sure to legally change the location of your high school student's assets by their 2nd semester of junior year or 1st semester of senior year (the FAFSA uses the previous year's tax returns, not the year they begin attending college). A FAFSA must be submitted each year a student is looking for financial aid; from the first year in college, until the last year of their doctoral program.

Next Monday, In and Around the Quad will debunk common FAFSA myths.

No comments:

Post a Comment