BEAT THE RUSH (AND THE FISCAL CLIFF): APPLY FOR FINANCIAL AID NOW

It’s early September. By now, high school seniors should have all their college applications in to their schools of interest for the 2020-2021 academic year. If you do, great. If not, what I am about to say may be less relevant but you should do it anyway: start filling out your Free Application for Federal Student Aid (FAFSA). Now. Returning student? Cool. The holidays are over and you’re not going back to school for a few days. Fill out your FAFSA. Today. Are you a dependent student? Wonderful. Tell your parents to go online and start entering all their information into the FAFSA.
FAFSA
Regardless of your status as a student, the federal government and whatever school you attend will require you (and your parents) to submit a FAFSA before they can determine how much aid you qualify for. In the world of dwindling financial aid dollars, aid is doled out on a first-come, first-served basis. Moreover, with the entire fiscal cliff fiasco unresolved — just delayed until March 1 — getting your application in and a qualification letter back in the next couple months may be a good thing.

I know it’s early in the year, and you may not have all the information you need, such as tax forms, but you can still use close estimates to get the FAFSA submitted and then amend your application once you have filed your 2019 tax returns. With decent estimates, your award level will be unaffected absent any real major changes or life events such as losing your major source of income or a divorce.

Getting an early jump can also help your school make decisions for school-based aid programs, such as foundation scholarships. Many scholarship programs have application deadlines in the spring. A school will not be able to determine eligibility for many scholarships, particularly those based on need, until a FAFSA has been submitted for the student. No FAFSA, no scholarship: it’s definitely a “you snooze, you lose situation.”

Starting the Process

If your parents (or you, if you are a parent yourself or what colleges so touchingly refer to as a “nontraditional” student) filled out FAFSAs when they went to college, they probably still have nightmares about those multipage blue and white forms that never seem to end. The bad news is that the FAFSA is no shorter today — in fact, with all the Patriot Act stuff, it may be longer than it was a decade or so ago. More positively, though, it is available online, and you can save it as you go. This means that if you need to take a break to dig up some information or stare out at a bird in a tree, you can do so without losing all your work. To begin the FAFSA, visit www.FAFSA.ed.gov and follow the link on the “Start a New Application” button.

If this is your first experience with the FAFSA, pay attention to the questions being asked and the information required. The information gathered from the FAFSA will be used to calculate the Expected Family Contribution (EFC) to your education. This figure is the foundation of what colleges use to decide how much they think you should pay out of pocket and how much aid you should be offered. The assets that are asked about on the FAFSA are given different weights in calculating the EFC. For example, checking and savings accounts or custodial accounts in the name of the student will be counted much more heavily “against” the EFC (i.e. you will be expected to pay more from such accounts) than if the same assets were held in the name of a parent or grandparent.

Tax year 2019 is in the books and there is not much you can do about your income or assets for the past year. However, you can use your experience with this year’s FAFSA as a learning opportunity. Take note of what you listed and disclosed and do some research on this and other sites (like FinAid) about how your assets and their characterization can serve to increase or decrease financial aid eligibility. Talk to your financial planner (but not necessarily anyone who charges to dole out financial aid-specific advice, as such advice is typically redundant to typical financial planning and represents an additional set of funds that won’t be used to pay for college) before you do anything to liquidate or recharacterize your assets, as sometimes the tax hit or costs involved are not worth the potential increase in aid eligibility.

Regardless of your current financial situation, if you think you will need financial aid for the 2020-2021 academic year, fill out your FAFSA now.…

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