Don’t Just Sit There! How to Get Ready For the FAFSA

If you are interested in enrolling in an American college or university for the next Fall semester and require financial assistance, you will need to complete the Free Application for Federal Student Aid (FAFSA) sometime in the first six months of the new year. Timing is everything. Although you cannot apply any sooner than January 1st, that doesn’t mean there aren’t things you can be doing right now to be better positioned than less organized applicants. This means you can file a clean application earlier than others, improving your position in the money line. Here are some suggestions to make this happen.

BOOKMARKS:

537104_41065708You need to find the right websites and bookmark them in your Favorites folder in your browser so that when you are ready to research and apply you will have all of the sites you need at your fingertips. Some suggested sites to bookmark include:

  • http://www.fafsa.ed.gov/
    - this is where you will make your FAFSA application online
    - not to be confused with fafsa.com which is a fee based site that will actually charge you to submit a free application
  • http://www.irs.gov/
    - for reviewing upcoming tax return requirements which make a difference in your FAFSA filing (can you file 1040EZ? what is your AGI?)
    - to download tax filing booklets to aid in estimations prior to filing
    - or have your tax preparer’s site/contact info. handy
  • Your Federal Tax E-File Program (if you file your tax returns electronically)
    - to review prior returns for estimating current figures
    - to input figures from current tax forms as they arrive to expedite your tax filing
    - otherwise, have your tax preparer’s site/contact info. handy
  • Your Bank
    - to obtain prior year interest figures
    - to view balance as of FAFSA filing date
    - to view any tax documents prior to receiving hard copies
  • Your Lender(s)
    - to obtain prior year interest figures
    - to view loan balance
    - to view any tax documents prior to receiving hard copies
  • Your Investments
    - to verify prior year dividends & capital gains
    - to determine any tax free interest qualifiers
    - to confirm any prior year self-employed retirement contributions
    - to view margin/loan balances
    - to confirm any un-taxed IRA distribution amounts
    - to view balances as of FAFSA filing date (for non-retirement assets only)
    - to view any tax documents prior to receiving hard copies
  • http://www.mycollegecalendar.org/
    - to create your own free calendar tracking system throughout the aid and application process
    - to find helpful links directly to the FAFSA pages referenced
    - to get clear step by step insight into the aid, admissions and scholarships process
  • http://www.educationgrant.com/
    - to educate yourself about the aid, grant, scholarship and loan process, with topical blog posts
  • http://www.nasfaa.org/redesign/parentsstudents.html (the companion to the FAFSA site)
    - to give overviews of the aid components and process
    - to review regulatory updates
    - to find tax benefit information
    - to read watch dog notices
  • PASSWORDS:

    For many of the sites you have bookmarked, you will need to set up User ID’s and PIN’s in order to access your personal information and applications. Of special importance is applying in advance for a PIN to use on the FAFSA application. This is obtained online at http://www.pin.ed.gov/. Both the student and parents (if claiming the student as a dependent) will need their own separate PIN’s. To receive the FAFSA PIN each party will need their Social Security number and date of birth. These are also common requirements for PIN’s on investment, lender and bank sites – along with your account numbers.

  • FAFSA = Free Application For Federal Student Aid
  • EFC = Expected Family Contribution
  • SAR = Student Aid Report
  • CSS/PROFILE = College Board’s Financial Aid Application
  • SEE YOUR ACCOUNTANT:

    Schedule an appointment with your tax preparer before year-end. Your accountant can guide you in making decisions on manipulating your income and assets prior to the end of the year. How can you best reduce your income for the year from an aid perspective? Is there a bonus, raise or additional income source such as alimony that you can delay until after 12/31? This will keep your income level lower for the upcoming school year’s aid calculations. However, it may also increase next year’s income figures, making your aid figures less attractive for you in the following school year. Are there capital gains that can be offset through sales of assets with losses? This can help your taxable income and also reduce your asset base for aid factor purposes. Same goes for charitable contributions. Tax and aid laws are complicated. Work with your accountant to make the waters less muddled.

    Your accountant can also assist in estimating your year-end income figures and resulting tax calculations that will be required on the FAFSA application. Working off of the prior year’s returns and using pay stubs and account history details from your bookmarked websites will help provide the details needed. You can file your FAFSA before filing your federal returns using quality estimated figures. Upon your actual tax filing, which should be done in early February once all tax forms have been received, if your formal figures do not match your estimated figures, you will need to update your FAFSA. This can trigger requests for document copies and hold up your resulting Student Aid Report (SAR) however, so estimate with pristine care and calculations. Your accountant can be an excellent resource for providing estimated tax return figures in advance of filing.

    SPEND:

    653306_89024628
    In calculating your Expected Family Contribution (EFC) the government uses all of the financial information reported on the FAFSA. What your definition of an EFC is versus the government’s is generally vastly different. The government wants the student and their parents (if claiming the student as a dependent) to spend down their non-retirement assets almost entirely towards education. They don’t allocate as much for a reserve toward everyday living expenses, taxes and insurance payments as you might imagine. So when you receive your SAR you may be disappointed with the EFC results. Since they are expecting the student to use all of their hard earned dollars towards education, why not go ahead and beat them to the punch? Every student needs a computer or laptop. Perhaps some storage organizers for the dorm room. Use assets solely in the student’s name to purchase these items before year-end. This will reduce their assets, using them for school related expenses that would be spent anyway in the upcoming year. And it can lower the EFC, increasing the aid potential.

    TALK TO THE SCHOOLS:

    Many applicants use their high school’s Guidance Counselor to research financial aid information. However, most colleges and universities provide departments available as a resource for the financial aid process. More unique are schools such as Farleigh Dickinson University who offer workshops and one-on-one assistance with an aid counselor to prospective applicants. Check with the schools you have applied to and find out if they have a program or department available to assist with application questions, resources or guidance with the FAFSA and other aid options.

    Look up their college codes on the FAFSA website or obtain from the school directly and list the earliest deadlines first on your FAFSA so they receive your SAR in time.

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    In order to receive an aid package from your school you may need to complete a CSS/PROFILE application in addition to the FAFSA which has an entirely different set of financial questions excluding less than the government does. Each school sets their own deadlines for CSS and FAFSA aid filings and you need to know what they are. Call them and get that date firm on your calendar. Many are around February 15th since it can take over a month for SAR’s to be generated. PROFILE’s can be filed prior to year-end and the exercise can get you prepared for the FAFSA process.

    Look beyond overall tuition, room & board pricing. You want to know about any flexibility across their various plans. What are the Meal programs or requirements for on campus students? Do different Housing locations or sizes carry different costs? How can you be considered for one over the other? Are there free or discounted transportation options for on or off campus students? Are rentals available for electronic needs? Is the school’s health insurance cost less than what you currently have? Whatever you can do to reduce your complete college cost will reduce the amount of your government assigned EFC that you need to spend. Knowing the true figures and available cheaper options when calculating your budget will leave you better prepared when seeking supplemental aid.

    DON’T GET LAZY:

    Money you are given as opposed to loaned is the best kind. Use your time wisely now and while waiting for the government by seeking out and applying for scholarships. These pools of money are limited too, and the sooner you can find the ones that you genuinely qualify for, the better your chances are of being a lucky recipient. Employers, communities, intended career organizations, academics, athletics, military, arts, music, specialty competitions and other avenues are all worth looking into. Just beware of scams and unrealistic opportunities.

    Implement these tips and you will be better positioned when the filing window opens for the FAFSA, and for knowing what your overall aid package needs to provide. Do you have any other resources, tips or tricks for maneuvering the college aid maze?

    This is the first in a series of posts about the college financial aid process. Subscribe to our feed so you won’t miss future tips on scholarships, loans and other aid related issues.

    ALL IMAGES COURTESY OF SXC.HU

    Related Posts:

    1. What You Need To Know About College Grants
    2. Keys To Finding And Getting College Scholarships

    Comments

    1. Thank you so much for including us in your roundup! You’ve offered your readers some great tips, and I can’t stress enough your last point – apply early and often for scholarships. It doesn’t matter what amount, as every little bit helps.

      In fact, many of the smaller scholarships are overlooked by students who assume that $500 isn’t worth the effort. In doing that, they make the award less competitive, so your odds are better for these small scholarships as well!

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