ColdWeatherA friend and client emailed me asking for guidance on the FAFSA because the financial aid night at the local high school was cancelled last night due to the extreme cold weather. So with her prompting I’m writing this very concise guide to financial aid that won’t answer all your questions, but will help you with the basics and point you in the right direction…at least until your laptop thaws out.

What forms do I have to fill out?

Both the student and parent(s) will need to complete one FAFSA – the Free Application for Federal Student Aid. It’s the first step in the process and even if you think you made too much money last year, fill it out anyway or your student may lose out on opportunities for institutional aid simply because s/he didn’t file a FAFSA. (I did, and it’s not a pretty story.)

Is it hard to fill out? How much time does it take?

It’s about like filing your taxes, but easier since there are fewer documents to pull together. If you have everything at your side, you can your student can knock it out in an hour. But both parent(s) and student need a PIN to use as an electronic signature, so do that today.

What kinds of questions does it ask?

The FAFSA wants to know four key things: student income and assets; and parental income and assets. Much of the income data will be pulled directly from your taxes. And with regard to assets, most retirement funds will NOT be included, EX: 401K, Roth, IRA. Assets refers more to cash on hand (savings and checking accounts), and any stocks and bonds that aren’t included in a retirement plan.

What if I haven’t filed my taxes yet?

I recommend you use 2013 taxes to file the FAFSA now, and update the information once you do file your 2014 taxes. This is perfectly legal and acceptable.  This method works best if your 2014 return will look a lot like 2013. If you’ve experienced major changes in your financial situation, you may wish to wait — but don’t wait too long. Colleges need time to process your financial aid package and you absolutely need that in hand before the National Decision Day of May 1st.

What happens when I submit the FAFSA?

The Federal Student Aid office puts all your numbers into a giant hopper and spits out what they believe you should pay for college in the 2015-16 academic year. That’s called your Expected Family Contribution or EFC, and it’s the most important part of the Student Aid Report you’ll receive within about a week of filing. One of the questions you’ll be asked is how many members of your family will be in college next year. If this is your first child, then probably just one; but if you have more than one in college, you’ll “share” that EFC among students and even between colleges.

What do I do with my EFC?

You’ll list the colleges to which your son or daughter has been accepted, or possibly will be accepted to, when you fill out the FAFSA. Those schools receive your SAR and will use the EFC to calculate financial aid which uses a simple formula:

Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Need

Your need is not necessary the same as what you’ll receive in aid; in fact, it’s probably not the same because most colleges don’t meet 100% of demonstrated need. But it tells the college, “Hey, these guys need some help because our COA is $30k and their EFC is $20k, so we’d better come up with a package of loans, grants and work-study to show them that we’re an affordable option”.

How soon will I know what we’ll get in aid from each college?

Maybe not as soon as you’d like. Many students who applied and were accepted already received an estimate of merit aid (a.k.a. scholarship) in their acceptance letter. Merit aid has nothing to do with need — it’s a reward for good grades, standardized test scores, and all the other cool things your kid did in high school. The award letter with all the details on merit aid and need-based aid will likely arrive in April. This is why my mantra to families is “Delay the decision”, i.e. you need to have all the information from every college before you can really compare costs – and then use that as one part of your final decision.

Doesn’t sound too bad. So what’s the catch?

There’s no catch but you do need to do your due diligence with each and every college under consideration. Go to their financial aid page or look for a link for accepted students, and follow the directions very closely. Colleges are not in the business of making things simple (that’s a dig, I admit it), so read, re-read, ask your spouse or child to read it, and then write down everything or dump it into a spreadsheet. (Spreadsheets are life.)
There is another financial aid form used by approximately 300 colleges called the CSS PROFILE but not everyone needs to file it. Be warned that while there is considerable overlap between the FAFSA and the CSS PROFILE, there are major differences, most notably the inclusion of retirement funds on the PROFILE.

Where can we find more info?

I’ve given you a very quick overview, but when you really start to dig into this you may find these resources helpful:

So what if…

…we have a senior who is having trouble applying to colleges, or deciding if college is the right path…or we have students who aren’t seniors but we want to learn more about the whole college planning process including how to get higher scores on the ACT?
Gee, I’m glad you asked because I’d love to help you with any and all college questions. Call, email or go ahead and schedule your  free one-hour strategy session to get your questions answered and point you in the right direction.