This will probably be the most boring article ever. So why should you read it? Well, if you are a student, just hand it to your parents. If you are a parent, the FAFSA going to affect you financially. It takes time and effort to complete. The following article is what you need to get started.
What is the FAFSA?
FAFSA stands for Free Application for Federal Student Aid. This is an incredibly important, yet daunting piece of the financial aid puzzle. Colleges require you to fill this out if you are seeking any kind of financial aid. By the time you are done, you may feel like you have given everything but your blood as a sample.
The FAFSA is the required application for federal and state financial aid including: Pell Grants, Perkins & Stafford Loans, and Work Study. In addition, it is used by most colleges to determine eligibility for their own need-based financial aid programs including scholarships and loans.
When Should You Fill Out the FAFSA?
Anytime after October 1 of your child’s senior year, and every subsequent year you must fill out the FAFSA. The FAFSA is based on your income taxes from the previous year. For example, if they are entering college in the fall of 2017 then your FAFSA will be based on your income taxes in 2015.
Colleges vary on how they award some types of aid, sometimes on a first-come first-served basis, so the sooner you can get your finalized FAFSA complete and submitted to your school the better. You should try to have your application complete by the middle of February at the latest. You cannot submit a FAFSA until October 1st. The FAFSA is based on your income tax return. Fill it out in October! The longer you wait, the more chance there is you will miss out on institutional aid.
Steps to Filling Out the FAFSA
So how do you go about filling out the FAFSA? Take it one step at a time and you will be fine. I sometimes like to think in these terms when I face a challenge, “there are a lot of people more stupid than I, who have gotten through it.”
The online FAFSA application can be found at www.fafsa.ed.gov. Paper forms are also available by calling 1-800-4-FED-AID.
You will need a PIN to digitally sign your online FAFSA application. You can get your PIN at www.pin.ed.gov. You will need a PIN for the student and also the parent.
Financial Aid is based on your Expected Family Contribution (EFC) which is determined by your FAFSA application. EFC is a measure of your family’s financial strength. It is based on your taxed and untaxed income, assets and benefits. It also considers your family size and who will be in college.
Once complete, you will receive a Student Aid Report (SAR) which will tell you your EFC. Colleges will use this to determine your financial aid. You will be able to specify which colleges to send your SAR report to during the application process. You will need the college’s Title IV Institution Code which you can get from the school or by following this link: http://ifap.ed.gov/ifap/fedSchoolCodeList.jsp
If your taxes are complete and you use the online FAFSA application, you will be able to use the IRS Data Retrieval Tool (DRT) to automatically fill out much of your FAFSA. The DRT allows you to link your FAFSA and your tax return electronically. It’s part of the online FAFSA application.
You can fill out a provisional FAFSA by entering your information manually, but it must be confirmed via the IRS Data Retrieval Tool before it will be finalized. This means you must have your taxes completed before you will be considered to have a completed FAFSA.
Your FAFSA will be checked for potential errors and subject to verification which is a process where your college will request additional information from you which might include dependency status, government assistance received, household member verification, residency status, proof of income, tax information, etc. Using unmodified data from the IRS Data Retrieval Tool will reduce verification requests.
You can estimate your EFC and SAR by using an online estimator. (e.g. http://www.finaid.org/calculators/finaidestimate.phtml). This is a good tool to use before the end of the tax year and can be used to determine your eligibility. This is not a necessary step, but it could be valuable for you to do so that you have time to make necessary changes. It is important that you do this in time to make changes regarding income, savings, etc. that may help maximize your financial aid award.
To complete the FAFSA you will need student and parent tax information, information regarding investments, assets, other financial assistance received (e.g. SSI), business taxes, drivers licenses, etc.
Follow the instructions included with the FAFSA as you fill it out. Once you have completed your FAFSA and submitted it, it will take 2-3 weeks to receive your SAR. Make sure you save a copy of your application and all documents your application was based on.
What Happens After You Complete the FAFSA?
After completing the application process for a school and sending them your FAFSA they will put together a financial package. The SAR will tell you your EFC. The college will subtract the EFC from their estimate of the cost of attendance at their institution. The resulting amount is your financial need. The college will offer you a package of financial aid equal to this amount. It may include assistance from federal, state and private grants, scholarships and loans.
Schools will send you an award letter. In bullet point format and in bold letters you will see all that you are receiving. Athletic scholarships, academic scholarships, institutional aid, federal grants, federal loans and work Study will be on your award letter. The college typically includes their cost of attendance room and board, tuition, books and student fees. They may also include travel and other incidental expenses.
Early Planning Can Make a Difference
You do have some control over your final EFC if you do some prior planning. You need to consult an accountant for your own situation as every situation is different. I am in no way an expert and am not handing out any financial advice. If you are interested in looking into ways to affect your final EFC, go to www.finaid.org.
Many states have their own college scholarships. Rules vary, but most are for residents of the state if they choose an institution within the state. The FAFSA must be completed for these to be awarded. Scholarships are not the only portion of the aid package, upon completion of the FAFSA you will also find out what federal loans you are eligible to receive.
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