January 1st was a very important date. Not only did it signal a new year, but it was the date the 2015-16 FAFSA was released. What is the FAFSA? It is the Free Application for Federal Student Aid. It is an annual form produced by the United States Department of Education used to determine a family's Expected Family Contribution (EFC) for college.
How Does It Work?
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.
How Does a Family Complete the FAFSA?
The form can be accessed online beginning January 1st of each year and is submitted electronically. A family can opt to print a copy and send it via mail, but this will delay the process 2-4 weeks. The earlier the FAFSA is submitted, the quicker the information is 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.
What Information is Required?
To complete the FAFSA, families will use their completed 2014 IRS Form 1040 for both 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 request information regarding 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 entering data on the FAFSA. It is imperative to return when taxes are complete to adjust and provide accurate figures. The quicker taxes are filed, the sooner an actual EFC will be calculated. The student will then be closer to the front of the line to receive maximum financial aid award from each college. Make sure not to rush when you are Entering in data. 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. This may not be possible if you have a senior in high school. But if you have a junior or younger, make sure to read this crucial information! Student earnings are weighted more heavily than parental assets (nearly 20 cents to the dollar). Why is this? The logic is that a student has saved money for college. Though this 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 remember, 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.