A Beginner’s Guide to the FAFSA
The best things in life are free. But you still have to pay for college. Fortunately, the Free Application for Federal Student Aid (widely known as the FAFSA) can qualify you for loans, grants, and scholarships that drastically reduce your family’s out-of-pocket costs. Here are eight things you need to know right now about completing the application for federal student aid.
1). Have Your Deadlines Down
Beginning October 1, the FAFSA for the 2020-21 award year becomes available both online and in print. It’s highly recommended that you complete the FAFSA electronically to avoid processing delays. Contact the financial aid offices at the colleges you’re applying to and ask them about their priority deadlines. The sooner you file, the better.
2). Determine Your Dependency Status
You can hold down a job, pay your own bills, and still be dependent on your parents. The FAFSA classifies applicants as either “dependent” or “independent” based on how they respond to a series of questions. Filers are independent if they’re married, a parent, an active-duty service member, or will be twenty-four years old in the year they file. Children under legal guardianship, emancipated minors, and wards of the court can also claim independence.
3). Create a Federal Student Aid ID
No application is complete without the proper signatures. A Federal Student Aid (FSA) ID allows you to sign not only your FAFSA but also your entrance counseling and promissory notes for any federal student loans you might borrow. One parent must also register a unique FSA ID to sign off on their dependent child’s FAFSA.
4). Gather All the Documents
Have your affairs in order. The FAFSA runs on prior-prior year information. That means tax returns, W-2 statements, and any records of untaxed income going back two years should be available beforehand. But the net worth of your checking, savings, and other assets should be reported as of the day you file.
5). Have a Housing Plan
It’s all about location, location, location. The FAFSA asks you to select a housing plan for every school listed. Filers indicate they’re either living on campus, with parent(s), or off campus but apart from their parent(s). How that question gets answered directly affects each school’s cost of attendance. On-campus residents have more space in their financial aid budgets because room and board are included.
6). Deploy the IRS Data Retrieval Tool
Don’t play guessing games. Let the application do the job for you. If you, or your parents, filed a federal tax return, that information can be transcribed onto your FAFSA electronically at the push of a button. Be sure to use the same address as the one on your tax return.
7). Cover Your Assets
Only report qualified assets and their values as of the day you file the FAFSA. Investments can be real estate (but not your primary residence), rental property, stocks, bonds, trust funds, and other commodities. Parents should also list education savings accounts they opened for their child. Do not include the value of life insurance and retirement plans.
8). Wait for Your Student Aid Report
It takes approximately two weeks from the date you hit send to the date your Student Aid Report hits your mailbox. Schools determine financial aid eligibility based on your application’s listed Expected Family Contribution (EFC). They subtract the EFC from the cost of attendance to reveal how much aid you qualify for. Only families with EFCs above a school’s cost of attendance qualify for loans.