What You Need to Know
The FAFSA (Free Application for Federal Student Aid) is one of the most commonly misunderstood forms involved in the college financing process, but one of the most important ones to address in a timely manner. During October, with many high school seniors still in the process of making college visits and narrowing down the schools they may want to attend, it can be easy to lose track of time, feeling like there are still many months ahead before decisions must be made. That’s not necessarily the case when it comes to the FAFSA. Additionally, students who are already enrolled in college must remember that unlike the college application, the FAFSA must be completed every year to continue to be considered for financial aid.
Many people hear mention of this application and either fear it, put it off for later in the process or dismiss it entirely. According to a report by the Bill and Melinda Gates Foundation, “Better for Students: Simplifying the Federal Financial Aid Process” as many as 2 million students a year who are probably eligible for aid do not apply. Considering the high cost of a college education, it’s prudent for students of all income levels to explore every option available to offset expenses that can add up quickly. It’s not necessary for high school seniors to have selected the colleges to which they will apply in order to complete the FAFSA. At the time of application, you must list at least one college you’d like to receive information regarding your financial needs. However, you can submit the form beginning on October 1st and add more colleges to it at a later date as you narrow down your choices.
- When: The online application opens on October 1st of the year prior to entering college. (This date used to be January 1st but was moved to October 1st.) Several states determine aid on a first-come, first-served basis, so parents should put a note on their calendars for early October to tackle this task. Also, deadlines vary by school, with some grant applications due in January, the calendar should be carefully monitored to ensure important dates aren’t missed.
- How Long to Complete: The application is about 100 questions and should take about 30-45 minutes if you have all your information pre-gathered and at your fingertips. You will need a copy of the prior year’s tax return, current investment and bank statements and 529 statements. Your tax return data can either be linked with the IRS and the FAFSA application or you can re-enter certain data.
- Which Data is Reported: The 2020-2021 FAFSA Application opens on October 1, 2019 and will be used for those planning to attend college from July 1, 2020 – June 30, 2021. The tax information is the 2018 income tax return. Investment and bank balances are the current balances when you file the FAFSA form.
- Frequency: The FAFSA is completed every year before the student attends college (and potentially graduate school); it is not just completed once by high school seniors.
- Not Just for Need-Based Aid: The FAFSA is used to calculate a student’s need for financial aid and is also used by many schools to determine eligibility for certain scholarships and work study. Additionally, the FAFSA is used to determine eligibility for the federal Pell Grant and Stafford Loan programs.
- FAFSA Factors: The FAFSA calculation takes into consideration the age of the parents, the number of dependents in the family, earnings of both the parents and the student, non-retirement savings of both the parents and the student and the student’s 529 College Savings Plan balance among other factors.
- EFC (Expected Family Contribution): Approximately 3 weeks after submitting the FAFSA, you will receive a Student Aid Report (SAR). This report provides information about the student’s eligibility for federal aid and the Expected Family Contribution (EFC). The EFC is the amount that FAFSA determines the family is expected to pay, per year, for college, assuming a school meets 100% of demonstrated financial need.
- Student’s Full Demonstrated Financial Need: Many colleges and universities try to meet their student’s full demonstrated financial need. They do this through grants, work-study, scholarships and in some cases, federal student loans. Even with this financial support, the student and family may be expected to pay the EFC (Expected Family Contribution) or more. To pay this cost, students and families may still find the need to finance some or all of their reduced cost to attend school.
- CSS Profile: Many private schools also require the CSS Profile for financial aid. The CSS Profile asks additional questions and includes the value of retirement plans and homes when determining eligibility for aid, while the FAFSA does not include those assets in their calculation.
- Financial Aid Decisions Can Be Appealed: If there are extenuating circumstances, a family can contact the college and explain why numbers alone don’t tell the story. For example, a job loss or unexpected medical expenses could be mitigating circumstances that adjust a family’s EFC.
- Many Don’t File: As mentioned before, as many as 2 million students annually who may be eligible for aid don’t file the FAFSA form. Please note that the FAFSA is a prerequisite for the unsubsidized federal Direct Stafford and federal Parent PLUS loans.
College planning can be quite involved and there are many factors to take into consideration. You may wish to contact a college specialist as you go through this process. Please give us a call if you have any questions, as we are happy to help point you in the right direction.
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