College is a very exciting time for students and parents, but it also comes with some very real financial stress. Luckily, there are lots of financial aid opportunities to help ease the strain. The best place to start the hunt for financial aid is filling out a Free Application for Federal Student Aid (FAFSA®). Regardless of your family’s income or your child’s academic record, every college-bound student should submit a FAFSA. For certain kinds of aid, there is no income cutoff to qualify, and many factors are taken into account to determine each unique package. We’ve put together these five tips to help you understand the process and make the most of your application.
1. Complete the FAFSA quickly
Federal grant money is distributed on a first-come, first-served basis. Many schools also base their financial aid awards on data from the FAFSA, and they too have limited funds to distribute. Additionally, individual states have varying deadlines to apply for state aid programs. So, to ensure that your child is awarded the best possible financial aid package, file the FAFSA as early as possible. The Department of Education recently started making the form available in October, rather than January, for the upcoming school year. The FAFSA also now asks for tax information from the previous year instead of the current year, so not having taxes filed yet will no longer be a concern. If your income has changed significantly since the prior year, get in touch with school financial aid offices and they can assess on a case-by-case basis.
2. Watch out for simple errors
Small errors in filling out the FAFSA can equate to significant losses of aid dollars. Pay close attention to all directions on the application, make sure that you’re differentiating between questions asking for parent versus student information, understand definitions of the terms the FAFSA uses, and double-check your data entry on basic information like names, social security numbers, and tax figures. Also, before starting the application, be sure to register for an FSA ID, which may take up to three days to process before it can be used to sign a completed FAFSA form. Without this signature, the form won’t be processed.
3. Save smartly
As all parents are aware, college is a big investment. The best tip for saving for your child’s college education is to start early, maximizing the amount of time you have to build up savings accounts and reducing your overall need for financial aid. However, once you start saving, there are some best practices to follow in order to maximize your eligibility for financial aid. FAFSA formulas assume that students can spend 20% of their assets on college costs. The rate for parents is much lower, at just 5.64% of assets. So, make sure that college savings accounts are either in your name or in your child’s name in a dedicated 529 college savings plan, which are assessed at the 5.64% rate.
4. Know what NOT to mention
Some types of assets are not required to be declared on the FAFSA, and therefore, leaving them off of your application can improve your child’s chances of being awarded need-based aid. If you are a homeowner, your primary home does not need to be declared (secondary homes or real-estate investments, however, are assessed), and you also are not required to include vehicles, boats, or household possessions like furniture. Finally, the FAFSA does not ask about insurance or retirement accounts like 401(k) or IRA plans.
5. Look for outside funding
The FAFSA is far from the only source of funding for college costs. Be sure to explore other avenues through which your child can receive aid. Many community groups, local institutions, nonprofits, and corporations offer independent scholarship or grant programs based on financial need or academic merit. Best of all? These kinds of aid don’t need to be repaid! Check out College Scholarships.org or Fastweb to start your search.
Looking for additional info and tools to help navigate the college search and financial aid processes? The U.S. Department of Education’s office of Federal Student Aid has a great library of resources. And, be sure to check out this blog post for 10 budgeting tips to help parents plan ahead for college costs!