An easy guide to the FAFSA
If there’s a piece of advice I give parents over and over again, it’s this: whatever your income, complete the FAFSA.
Many parents believe the FAFSA (Free Application for Federal Student Aid) should only be submitted by students with high financial need. Nothing could be further from the truth. Colleges use the FAFSA data to determine all types of financial aid, not just need-based. If your student doesn’t complete the FAFSA, he may not qualify for any aid from the college or the government, including student and parent loans.
Now that we’ve gotten that out of the way, don’t fear the FAFSA! It requires a bit of time and attention to detail, but it’s not complicated if you read the instructions and follow them step-by-step.
The FAFSA primarily collects financial information. When filing, be ready to answer questions about your current financial situation. The FAFSA form is submitted just one time each school year, even if your student is applying to more than one school. And, yes, if you have more than one student going to college and applying for financial aid, you must submit a separate FAFSA for each.
Though your student may not have been accepted to a college or university yet, it’s important to file the FAFSA as early as possible. For the 2016-2017 academic year, the form is available on October 1st, and you can file the FAFSA online at http://www.fafsa.gov.
Ultimately, the time and information that go into the form will be reduced to three little letters: EFC, which stands for Expected Family Contribution. You provide your financial information on the FAFSA, submit the form online, and the information from the form goes into the aid calculations. The output from these calculations is your student’s EFC — what he is expected to contribute towards the cost of college.
The calculations — focused primarily on the assets and income of parent(s) and student, family size, and the number of dependent children enrolled in college in a given year — are intended to assess a family’s ability to pay for college. This data is then shared by the FAFSA with the Financial Aid Offices of the colleges your student selects when completing the FAFSA.
Gather documents before starting
Filing the FAFSA is easier if you have documents on hand when starting. Both parents and students will need a FSA ID; register on the FAFSA website.
Here are the documents you will need:
- Social security numbers
- Driver’s license
- Student’s W-2s and tax returns (for year prior to year applying)
- Parent’s W-2s and tax returns (if student is dependent)
- Bank statements
- Business financial statements
- Citizenship records (if your student is not a U.S. Citizen)
Although a finished tax return makes filing the form easier, it’s not required for FAFSA completion. Families can complete the FAFSA with estimated tax information and then make corrections once the tax return is filed. Meeting state and institutional deadlines is more important than completing the FAFSA with final tax information and families should complete the FAFSA with estimated information if necessary by the applicable deadline. (Note: states and colleges all have different deadlines!)
Later, after your tax return is filed, you should login to your online FAFSA and use the IRS Data Retrieval Tool to download and auto-populate the information reported on your tax return. If you filed your return electronically, the Data Retrieval Tool should be accessible if it’s been more than three weeks since you submitted your return. If you filed a paper return, you won’t be able to access the information until about three months after you have mailed it. You can, however, go into the FAFSA and manually update with the correct tax information once your return is filed.
Work as a team
The FAFSA contains both student information sections and parent information sections. Your student should complete his part and you should complete your part. It may be best to work as a team and complete the FAFSA together. Both of you will be responsible for signing the return if your student is a dependent.
The form is broken down into these sections:
- Student demographics and schools — Students provide basic information at the beginning of the form and at the end list the colleges that should receive the FAFSA data.
- Student financial information, dependency determination and parent financial information — This is the “meat” of the FAFSA and will require the parents’ and student’s tax returns and other financial information.
- Submission — Confirm all information (check and double-check!) before electronically signing and submitting the form.
A change for 2016-2017, with more to come
The FAFSA recently changed how students and parents authenticate their identity. The four-digit PIN was replaced by a new FSA ID consisting of a username and password. Both students and parents need to create a FSA ID; find out more here. If you have an older student or are completing a renewal FAFSA, you can enter your PIN while registering for the FSA ID to connect to your existing account.
A really big change will take place later in 2016 for the 2017-2018 academic year. Beginning this October 1st, the FAFSA will be available in the fall, and will collect “prior prior” tax information. That means families no longer have to apply for financial aid using estimated data.
Don’t delay — complete today!
My last word: complete the FAFSA as soon as it becomes available. When my daughter was applying to college, we waited until our federal income tax return was completed. That decision meant she was not the first in line for aid when colleges began distributing it and this lessened her aid awards. The early bird gets the worm (or in this case, a bigger piece of the financial aid pie)!
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