How To Master The FASFA Like A Pro
College planning is exciting until students and parents look at the cost of tuition. The rising cost of higher education challenges most families, even those with a financial plan. How to master financial aid forms like a pro.
College costs continue to rise. According to The Princeton Review, 58-percent of parents estimate college costs to be over $100,000. That’s why it’s important to start your financial plan early in your child’s life.
Many parents start saving with a 529 plan. While these plans help reduce the costs of college, financial aid is necessary for many students. Qualifying for it requires organization. It’s often the biggest financial planning obstacle. Organization prevents parents and students from missing important financial aid deadlines.
The U.S. Department of Education provides more than $120 billion in grants, work-study funds, and loans each year. Every student wants a piece of the financial pie.
FASFA not only determines your federal aid, but the form is also the foundation used to determine eligibility for state and school aid, some scholarships, and private help. Everyone involved in the financial aid or tuition process wants to see the FASFA. That’s why it’s important it’s filled out accurately.
The FASFA relies heavily on your tax information but goes deeper. It asks about your income, household size, how many family members are in school, investments, and more.
If you make a mistake on the FASFA form, you may lose thousands of dollars in potential financial aid. There’s an entire industry of college planners willing to help you with the 100+ question form.
Postcards with catchy wording and happy students fill mailboxes of high school students interested in college will make you think you need an expert for help. Each one promises to help you get thousands of dollars in college scholarships and to navigate the financial aid process.
While many parents fill out the FASFA on their own, since it is free, it’s a critical form that determines how much help your student gets paying for college. Some families hire a financial aid expert so they get the most of their financial situation. Should you pay someone to fill out the FASFA like you pay someone to fill out your taxes?
Daniel Holt is the Director of Financial Aid at William Jewell College. He doesn’t recommend paying someone else to fill out your FASFA. He noted, after all, it’s a FREE form.
“The FASFA isn’t very difficult. I know it’s perceived to be that way. There are about 125 questions, and question one is your first name, and question two is your last name. You get through it pretty quick. There’s only about 15-20 of them that really matter in terms of your eligibility,” Holt said.
Holt points out that students attending elite institutions have more applications to complete and face more expenses, so sometimes they consider a college planner for reassurance. However, Holt said, he still wouldn’t recommend hiring a college planner in those circumstances.
Instead, consult with your child’s college or university or even your financial advisor. He’s an expert at managing long-term and short-term investments. Plus, your financial advisor will help you budget. You’re already paying your financial planner a fee, so why pay another one to a college planner?
How to fill out the FASFA amid divorce
If you’re going through a divorce at the time of the application, FASFA is more complicated. Still, Holt suggests an individual can navigate it on his or her own.
First, FASFA wants to know your household size. That depends on where the student lived the most during the last twelve months. With a new divorce or separation, that may be challenging to calculate.
If that answer isn’t clear, FASFA then considers which parent provides the most financial support.
“That doesn’t necessarily mean the most income or the highest income. It’s just who supported that student the most financially,” Holt said.
While your personal IRS data auto fills in the FASFA, that is not the case with a divorce situation if the tax return year used for the FASFA includes a married return. So, you manually enter the income.
“It can get a little bit messy, but the families and students just need to contact the financial aid office to go through the process a little bit,” Holt said.
Financial aid offices, like William Jewell, confirm the financial figures based on a one-parent household since there’s not tax data to back it up.
Holt suggests sitting down with the married tax return and the W-2 for the parent who is on the FASFA form. Then, you manually input the financial information.
Other income, like dividends and interest, are handled differently in a divorce situation.
“The common practice is unless you can clearly state which parent’s it was, you basically say it’s both parents. You split it by two and divide the amount in half,” Holt said.
FASFA retirement account mistakes
Holt said retirement accounts are the biggest monetary mistake his financial aid office sees on a student’s application.
“The FASFA doesn’t want to know what your retirement asset is worth,” Holt said. “They care about what you put into retirement, tax-deferred,” Holt said.
That’s the percentage you put in your retirement account each paycheck or month. For example, say you invest 5-percent of your income in retirement.
“That 5-percent is what they want to know about because at any point you can stop that and you’d have that money to pay for college, in theory. You’d have that money available to you.”
Talk with your certified financial advisor, if you have any questions about retirement planning and the FASFA.
When to apply for financial aid
The government moved up the submission date for FASFA to more closely align with college applications. Starting October 1, you can submit the FASFA for the next school year.
With the earlier October submission date, the form uses older taxes. So, for the 2018-2019 school year, the earliest application submission date is October 2017, and the FASFA uses your 2016 taxes.
Since FASFA now uses older tax data, income is not estimated. That makes your financial aid package more accurate.
States like Missouri are moving up their deadlines now that FASFA is available sooner. In Missouri, the timeline moved up from April 1 to February 1, 2018.
Holt suggests filling out FASFA as early as possible.
Find the school you’re looking at with the earliest deadline, and hit that application date.
College is more expensive than ever. That’s why it’s important to lay out a clear financial strategy when your children are young. Then, talk with a financial advisor along the road to college, making adjustments to your plan as needed.
By the time you’re done sending your kids to college, you’ll be a pro at the financial aid forms too! What lessons did you learn along the way?
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