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The FAFSA: What it is and Why You Need to Know

FAFSA stands for Free Application for Federal Student Aid. If you have an athlete who will be going to college, you’re going to fill out the FAFSA. So sooner or later, you need to know this information. In this article, you’ll learn when, how, and why to fill out the FAFSA.

What is the FAFSA?

As you might guess when you see the word “federal,” the FAFSA is a form you submit to the federal government. Once you have provided your tax returns and bank account balances, the government determines how much financial aid your teen is eligible to receive. In addition to the federal government, states and individual universities also rely on the information from the FAFSA.

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.

Almost every college in the country requires prospective students to fill out the FAFSA. But the good news is that you only have to fill it out once and can then send your results to as many colleges as you choose to.

When should you fill out the FAFSA?

Anytime after October 1 of your teen’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 2022 then your FAFSA will be based on your income taxes filed in 2021.

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 cannot submit the FAFSA before October 1. Fill it out in October! The longer you wait, the more chance there is you will miss out on institutional aid. You definitely want to have it filled out by February if at all possible.

And remember, your teen doesn’t have to decide which college they’re attending by the time you fill out the FAFSA. Fill it out, get the results, and when you see the financial aid packages you’ll have a better idea of which schools you can afford.

Here’s how you fill out the FAFSA

So how do you go about filling out the FAFSA? Take it one step at a time and you’ll be fine.

The online FAFSA application can be found at Federal Student Aid. Simply follow the instructions.

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, driver’s licenses, etc.

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: School Code Lists. It’s easiest to call your admissions counselor and ask for the school code.

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 completed the FAFSA.

What happens after you submit the form

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 (Student Aid Report). Make sure you save a copy of your application and all documents your application was based on.

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.

How do colleges use your results?

After completing the application process for a school and sending them your FAFSA they will put together a financial package. Each college subtracts the EFC from 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. For example, let’s say your EFC is $2000. You’ll need to find $2000 cash. The cost of the college your son is considering is $26,000. So your financial “need” is $24,000.

Schools will send you an award letter. In bullet-point format and in bold letters you will see the aid your family is receiving. Athletic scholarships, academic scholarships, institutional aid, federal grants, federal loans, and work-study will be on your award letter.

Early planning can make a difference

You can estimate your EFC and SAR by using an online estimator. This is a good tool to use before the end of the tax year and can be used to determine your eligibility.

This isn’t a necessary step, but it could be valuable. It gives you time to make necessary changes to your income, savings, etc. that may help maximize your financial aid award.

You do have some control over your final EFC if you do some prior planning. I can’t give you financial advice. Consult your accountant or read the Guide for College Financial Aid.

 

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