Last September, President Obama announced his plan for earlier college financial aid. This means that families can now begin the FAFSA on October 1st. What is the FAFSA? It is the Free Application for Federal Student Aid. It is a government form that determines a family's Expected Family Contribution (EFC) and is used by colleges as a gateway to financial aid.
HOW DOES IT WORK?
Beginning this year, families will be entering 'Prior-Prior Year,' or PPY, tax information. This means if you will be attending college in the Fall of 2017, you will enter the tax information from two years previous, or 2015. This will eliminate the need to estimate your income and re-enter the information when your taxes are complete.
Families will first need to create a FSA ID to access accounts such as the FAFSA and Federal student loans. This site will also serve as a student and parent's online signature (each have to create one).
Once this is complete, on October 1, families can begin using the IRS Data Retrieval Tool (DRT) to upload tax information to complete a significant portion of the form. Additional information required include: balance of cash (savings/checking account), trust funds, 529 accounts, stocks, bonds, certificate of deposits, and other forms of 'liquid' cash, along with the number of children that will be attending college concurrently.
WHAT DOES THIS MEAN?
• Financial aid award letters should be sent out earlier. Student's should to learn of their acceptance and financial aid award information at the same time, allowing families to make better financial decisions for college
• With the use of prior-prior year tax information, the need to ask for a financial review to financial aid office should rise. This should not be taken as a negative. Circumstances will change over a year's time, allowing families to easily document changes in their financial situation to college.
• You can submit your FAFSA as your student applies to college. Most schools will accept the FAFSA as early as the first filing date, but most colleges have their financial deadline being the same time the student applies to the school.
TIPS WHEN COMPLETING
Make sure not to rush
• Since 2013 when the DRT was created, the average time to complete this form is 20 minutes, but slow down. On average there are an estimated 10 errors per form, which can cost you money.
You Can Submit the FAFSA to College You Have an interest in attending, by have not yet applied
• You can submit up to 10 colleges to have the FAFSA sent too.
File as early as possible
• Applying to a college by the priority deadline helps colleges develop a financial picture, thus allowing them to allocate the approximate amount of money necessary to secure a class
• Funds are set aside for late applying students, but filing early is always better.
'You' on the FAFSA refers to the student
• Since the student is gaining the aid, the form is assuming they are completing the form.
No matter the amount of money a family earns, complete the FAFSA
• There is no income ceiling to prevent a family from qualifying for federal student aid.
• Several factors that go into the financial aid report besides income.
• Not all financial aid is need based (grants), it can be merit aid. (Link to other blog)
If you have any questions on competing the FAFSA, financial aid or anything college, Contact Us.