If you have a college bound student in your home, odds are good that you’ve spent some time at the theme parks in Orlando. The secret to maintaining your sanity on those vacations is learning how to manage your fast-pass tickets so you can jump to the front of the line and avoid an hour plus wait in the cue. Competing for financial aid requires the same “fast-pass” mentality.
Each January, many of our clients ask me when they can file their taxes so they can complete their student aid forms for their children or grandchildren. The Free Application for Financial Student Aid form (FASFA) qualifies families for a majority of Federal and State student aid as well as most institutional college aid programs. You can file the 103 question form any time after January 1st, yet most people wait to complete the form after they’ve filed their tax returns in February or March.
Since most financial aid is offered on a first-come, first-served basis, filing the form earlier can make a big difference. According to Mark Kantrowitz of Edvisor.com, those that file prior to March 30th receive twice as much money on average than those that file later. Because many states and colleges have earlier deadlines, you may need to file earlier as well. Here in the Volunteer State, the cutoff varies based upon need and eligibility. Prior-year recipients receive award must apply by March 1st while the deadline for lottery scholarships is September 1st.
Here are some tips for completing the FAFSA effectively:
- The early bird gets the worm. The sooner you file, the more likely you receive benefits. I recommend completing the 2015-2016 FAFSA form using 2013 tax return numbers as an estimate, and updating that information when you’ve filed your 2014 tax forms.
- File the FAFSA online. The website, www.fasfa.gov streamlines the process by eliminating the questions that aren’t applicable to your specific financial situation.
- Understand what assets and income to include. The value of your retirement accounts and principal residence should not be included in your aid calculation number. This will affect eligibility for various financial aid resources.
After completing the FAFSA form, you’ll receive a Student Aid Report (SAR) that details how much you and your family are expected to contribute to the college education (also known as EFC, or expected family contribution). This amount is not necessarily how much you will pay for college, but is used by the colleges to determine the amount of aid you are eligible to receive. It is based on your household size, number of students in college, your income and your assets (not including the value of your retirement accounts or personal residence).
It’s important to file the FAFSA even if you don’t qualify for needs-based assistance because it allows you access to low-cost student loans and merit based aid. The FAFSA does provide access to all financial resources. Higher education can come at a high cost. It’s important that students and their parents research and analyze all of the available funding options as they pursue their cap and gown.