Prepping to pay for college? Here's a study guide to getting the most from the FAFSA and other application forms you'll need to fill out. And don't be tardy! - by Adriane G. Berg
This isn't a mid-term exam, so last-minute cramming won't help. This is how to apply for financial aid to ensure you get the most assistance possible. Last-minute applicants need not worry. They're not likely to get anything, because the colleges will have doled out everything already.
Don't be fooled. The application may say that June 1 of the senior year is the deadline. This just means that it will be processed if received up to that date, but by then the college is likely to have expended all of its financial aid. The sooner you get your application in after Jan. 1, the better your odds for receiving assistance.
According to school counselors, one of the biggest mistakes parents and students make is to assume that they don't qualify for aid. More than 60% of the people who apply to accredited four-year colleges for financial aid receive some type of financial assistance, even if it's simply in the form of federally subsidized loans.
Our targets are the Free Application for Federal Student Aid (FAFSA) form, required by all colleges, and the Financial Aid Profile, an additional form required by many private institutions. You may have to file some ancillary forms, but they mostly want the same information.
Check the Web site of each college to determine which forms it wants and the deadlines. Remember that these dates are absolute. If you miss them, your application is set aside until timely applications are processed. You'll get money only if there's cash to spare, no matter how needy you are.
Here's a quick checklist for what you need and how to get the most out of the critical FAFSA.
Yes, the FAFSA is based largely on the information you file on your 1040 form, but the clock is ticking. You can file an amended return later if the numbers are significantly different.
Be sure that you have all the current forms required by each school you hope to attend. Check both the admissions application and the annual college-published bulletins to determine which forms are required.
If you plan to file the FAFSA electronically, check out the directions at the FAFSA Web site (see link at left). The Profile is online for the first time this year as well.
Once you have the forms, compile every document you would need to fill out a tax return. If you have a return done for the base year, be sure the numbers reconcile with the aid forms. If the return isn't done, estimate. You can revise grossly incorrect numbers even after you've sent in the application.
If you apply by mail, your application will be processed in approximately four weeks. Then, you'll receive a Student Aid Report (SAR) in the mail. The SAR will report the information from your application and how much you're expected to pay. Each school you list on the application also may receive your application information if the school participates electronically.
If you apply electronically, your application will be processed in about a week. The results will be sent to your school electronically. You'll also receive a copy of the SAR in the mail.
When you receive the SAR, you must review it carefully to make sure it's correct. If any changes are necessary, your school may submit the corrections electronically, or, if you applied by mail, you may make corrections on Part 2 of the SAR and return it to the address given at the end of the report.
If the data is correct and you don't need to make changes, you can receive financial aid on the basis of that information. If your school has not received your application information electronically, you must take your SAR to the school.
Our mission is to fill out these forms so that we emerge with the lowest legitimate Expected Family Contribution, or EFC. (This is the amount the federal government expects you or your family to contribute toward a family member's higher education.) Your financial aid administrator calculates your cost of attendance and subtracts the amount you and your family are expected to contribute toward that cost. Aid will be calculated by reducing the tuition by the EFC. It's that simple. A school that costs tens of thousands of dollars can suddenly become within reach, based on your EFC score.
To accomplish our mission, we must make the "parent's available income and assets" and the "student's available income and assets" for the "base year" as low as possible. Assets and income are defined the same for both students and parents. But the student's wealth and cash flow are counted much more heavily -- 47% of parent's income and 5.65% of their assets, compared to 50% of the student's income and 35% of their assets. Debts are not deducted from assets to arrive at availability, unless they are secured by the asset.
The base year for which all figures are reported is from Jan. 1 of the junior year to Dec. 31 of the senior year.
If your adjusted gross income (AGI) is less than $50,000, file the simplified needs form and you need not report any assets whatsoever. If your AGI is below $12,000, you have an automatic zero EFC no matter what assets you own.
Assets that are deducted or not counted to determine how much financial aid you or your child can receive include:
Just as you might do with your taxes, you also can lower your adjusted income that's considered for FAFSA purposes. When it comes to strategic income planning, it's all about Line 33 of the 1040, which is your adjusted gross income number. One caveat, however: These strategies only make sense if aid is likely or at least possible. If you get turned down, you'll have to scramble to sell your purchases or withdraw your pension dollars, almost always with a loss or penalty.
If you've received a one-time infusion of cash or other special circumstances exist that could affect your chances for aid, send an explanation to the financial aid officer of each school, not with the form. Some of the most common reasons: