We all want our students to get help paying for college. The FAFSA, or Free Application for Federal Student Aid should be on every parent and future college students’ radar. Get smart about your strategy for acing the FAFSA! Most U.S. colleges and universities, including state schools, use the Free Application for Federal Student Aid to calculate your “expected family contribution,” or the amount they think a family can afford to pay for tuition, room and board, books, and other college-related costs. The gap between a school’s sticker price and the expected family contribution is the amount of need-based aid a student is eligible to receive. 

This one application will determine you or your dependent students’ eligibility for Federal Pell Grants, and all direct federal student loans including subsidized and unsubsidized.  Additionally, many states determine a student/family’s eligibility for their own aid programs based on a FAFSA application (including New York State). The financial help awarded by the FAFSA might come in the form of government grants, grants supplied by the school, work-study jobs, or loans.

Families need to fill out the FAFSA for every year of study. Because it’s based on financial information that’s two years old, it pays to start strategizing while your student is still in high school. But even if you didn’t start plotting early, there are still last-minute moves you can make that will help you maximize financial aid.

If you’re a parent who went to college in the past and remember doing FAFSA applications, it’s important to note that there have been some changes to this process in the recent years. Most notably, the application timeframe has been moved up.  It used to be that you could not apply for FAFSA until January. You also could not apply until the previous years tax returns were filed, which for most people meant that you could not apply until at least February.  Now, the application window opens on October 2nd and it is best to jump on the application as soon as possible.  Federal Aid is given out in part based on first come first serve for the year, so don’t miss out on any aid you qualify for!

Sometimes families skip filling out the application because they assume they won’t qualify for aid, or they don’t finish it because they find the process confusing. You never know what you may receive, so it is worth mustering up some patience and pushing through the application. Besides being the gateway to more than $38 billion in federal grants, colleges use the FAFSA to determine state aid, institutional aid, work-study awards, federal student loans and sometimes merit scholarships. 


FAFSA Application Process

Before you can start the FAFSA application process, you must set up an account with a Federal Student Aid ID, which requires a student’s Social Security number or alien registration number. It takes one to three days to confirm your account, so start this process several days beforehand. Your FSA ID is a username and password for your account.

One parent also needs to set up a separate FSA ID if you’re a dependent student. The parent’s FSA ID is solely to sign electronically, and it requires their Social Security number, a separate email address, and a separate phone number from the student’s. The same parent FSA ID can be used for multiple kids in college. 

There’s a handful of things you will need for the application, including the social security numbers of both the student and the parents social if the student is a dependent of them, Drivers License number (if you have one), and tax information including IRS Form 1040 (plus a record of any non taxable income such as child support).  Finally, you will need to give information on financial assets that are owned by both the student and the parents whom they are dependent on, including cash in any bank accounts, investments, real estate (excluding primary residence), and business and farm assets.

Many families qualify to use what’s called the IRS Data Retrieval Tool (DRT) to populate the student and parent income sections. You’ll see a “Link to IRS” button if you’re eligible to use the tool. The DRT populates tax return information directly from the IRS.

Some recommend using the tool because it’s safe, fast and accurate; it eliminates the chance you might make a mistake when entering your financial information. But note that the FAFSA form won’t display numbers — only the phrase “Transferred from the IRS” — so you won’t be able to verify numbers against your tax return.

The application can be time consuming and tricky, so be sure to set aside a chunk of time to read and process everything that is involved. If at any point you get tripped up by the application, there is both a “FAFSA Help” page with FAQ’s, and a “contact us” tab where you can email or chat with someone to answer your questions.


Award Letter

After applying for FAFSA, you will receive an award letter in Mid April which will outline what financial aid you are eligible for.  Generally, you can work directly with your college or university’s financial aid department to accept any awards you plan to take.  It is possible depending on scholarships or other aid that you are able to borrow more than you need to cover tuition.  You should work with your financial aid advisor to make sure you don’t borrow more than what is needed.  Otherwise, you will end up owing more than you needed to borrow down the road!

What are you eligible for? There are several factors that determine eligibility for different financial aid awards. It is important to note that no matter how much aid you qualify for, it is not unlimited. If you do not jump on the application soon enough, you may not get all the aid you are eligible for if it runs out before they get to you.

For needs based awards such as grants or subsidized loans you would first need to calculate the “Expected Family Contribution” level that is determined based on the financial information given during the FAFSA process.  You then subtract that value from Cost of Attendance to determine “Financial Need”.  You cannot receive more need based aid than this amount.  It is worth noting that the family’s expected contribution level does not change when the number of students from the same family who enroll in college changes.  So, if multiple siblings are attending at the same time they will potentially be eligible for higher amounts of need based aid.

Secondly, there is a calculation for non-need based aid.  This is unrelated to the Expected Family Contribution level.  Your Eligibility for non-need aid is determined by subtracting the Financial Aid you may have already received from either federal, state or private sources from the total cost of attendance.  These types of aid include unsubsidized loans, federal plus loans as well as the Teacher Education TEACH Grant. 


Beyond FAFSA

 Your journey to financial aid and scholarships should begin with FAFSA. The government issued aid is a great way to get an idea of what you qualify for and what you may need to come up with on your own. Even if you believe that you will not qualify for any aid, there are much more flexible repayment options with federal loans than with private loans, and you will need to complete a FAFSA to receive federal loans.

However, your search should not end there. If you did not receive enough financial aid to cover your school expenses, you have several ways to fill the gap.

Your school’s financial aid office is an excellent resource to help you explore these additional options, even after completing the FAFSA. Scholarships are usually merit-based and do not have to be repaid. Many scholarships have deadlines and may require time to write essays. So get organized and regularly search and apply for scholarships. Some private financial institutions offer education loans that do not require the FAFSA form. Federal aid should come first, but  it does not always cover the cost of more expensive schools. Private loans will almost always require a cosigner and may have higher fees or interest rates depending on your credit score.

If you’ve exhausted other options and still need additional funds to help you pay for school, contact your school’s financial aid office to see if your school considers special circumstances. Sometimes a family’s finances are not accurately reflected on the FAFSA form because of changes that have occurred, such as job loss/reduction, divorce or separation, or other circumstances. You then can petition for a reevaluation of the information on your FAFSA form. This process will likely require you to submit additional documentation to your school’s financial aid office. If warranted, the financial aid office can then recalculate your eligibility, possibly resulting in a change to your financial aid offer.

Before going out on your own and making any final decisions on how to fill the gap between your aid and your expenses, meet with a representative in your financial aid office to determine what campus resources might be available. You might still have time to change some of your choices before the semester begins: Can you change the type of meal plan you chose? The type of housing? The number of classes in which you are enrolled? When approaching college funding, scholarship, work study programs, and other funding strategies should be investigated to do the most to reduce possible future student loan debt. 

For most families, the FAFSA is a straightforward process that doesn’t take too much time. Data from the U.S. Department of Education show that most applicants complete the form in less than an hour. If you want to practice before filling it out, visit studentaid.gov for a free worksheet to get you started!

Need help preparing for the upcoming semester? PowHERHouse Money Coaching and Wilcox Financial can help! Book a discovery call today.