FAFSA - 5 Tips for Maximizing Your Federal Student Financial Aid Eligibility
If you want money for college, the key to unlocking the largest source of financial aid available to you is the Free Application for Federal Student Aid (FAFSA) form.
Colleges and universities around the country use it to determine the financial aid packages they award to students.
In 2017 you can submit the online FAFSA form as early as October 1 for fall admissions the following year. Most schools have an April 1 deadline for filing the FAFSA but some as early as mid-February.
And since most schools award financial aid packages on a first-come, first serve basis, the sooner you submit it, the better your chances are for receiving more money.
It takes careful planning and organization of all the required documents and information to complete the application properly--it’s not something you’re going to rush through.
And for families with younger children, learning about the FAFSA and the numerous financial aid formulas can really pay off down the line, as there are some steps you can take well in advance of your child’s enrollment to dramatically improve the financial aid package you are likely to receive.
5 Major Tips to Maximize Your Student Financial Aid
Tip 1: File Early and Don't Make Mistakes
Most schools award financial aid on a first-come, first serve basis until all the school’s funds are depleted.
Applying as early as you can helps you get first dibs on the funds from programs that tend to be depleted the quickest:
- The William D. Ford Federal Direct Loan (Direct Loan) Program
- Federal Perkins Loan (Perkins Loan) Program
- Teacher Education Assistance for College and Higher Education (TEACH) Grant
- Federal Work-Study (FWS) Program
- Federal Pell Grant
Funds for each of these programs are school-specific, and students who submit a complete and accurate FAFSA have the best chance of receiving them.
Your first opportunity to file for financial aid is now October 1 of the year prior to fall admissions.
Be sure to fill out the FAFSA form carefully and correctly-- an inaccurate form will have to be corrected and will result in your application being pushed back in the queue.
You’re going to need the following documents:
You will need the following information when filling out the FAFSA:
- Driver’s License
- Social Security number
- Federal Income Tax Return
- Your parents' federal income tax return (if you're a dependent)
- Records of your untaxed income from the previous year
- Bank Statements
- Business and mortgage information
- Investment Records
Tip 2: Strategically Move and Utilize Student Assets
The FAFSA uses a sliding scale based on geographic location and family size to determine a student’s eligibility for financial aid.
The basic formula assumes that students and their families should be able to spend approximately 20 percent of the family’s assets to pay for college.
That number is called the Expected Family Contribution, or EFC score. It’s broken down like this:
- 20% of the student’s assets
- 50% of the student’s income after allowances
- 2.6—5.6% of the parent’s assets based on a sliding income scale
- 22—47% of the parent’s income, again based on a sliding income scale
A good strategy to lower your EFC and have a better chance to receive more financial aid is to minimize the student’s assets, which are factored in at a higher rate.
You can do that by moving some of the student’s money over to a parent owned 529 account because a 529 controlled by a parent will be evaluated at the lower 2.6--5.6% rate.
Another way to reduce a student’s assets is to pay for freshman year tuition using the student’s checking or savings account.
That way the money in the accounts won’t continue to limit and reduce financial aid awards in subsequent years.
Families with younger children can avoid higher rates by consistently saving for college under parent’s accounts instead of setting up child-owned college savings accounts which will reduce the student’s overall financial need.
Tip 3: Explore and Apply For As Many Financial Aid Packages As You Can
While many colleges claim to meet 100 percent of their students’ financial needs, there’s a big difference between “needs” and “costs.”
All financial aid is awarded on a “need” basis and the amount awarded varies greatly. That need is based on the student’s EFC score
Another thing to be aware of is that while many students tend to rely on Grants, fewer and fewer schools today offer "free" financial aid in the form of grants (meaning that the money has to be paid back). Financial aid packages that are offered today include a combination of grants, low-interest loans and work-study opportunities. Be thorough and make sure you know EXACTLY how much you’re receiving as "FREE" aid and how much you’re "BORROWING" when comparing financial aid offers.
Tip 4: Be thorough and ACCURATE on Your FAFSA Application
Under-reporting your income or leaving out assets on the FAFSA form is considered fraud.
At a minimum, you may forfeit all financial aid awards, but you could also be subject to fines or even worse.
Never before in our history has there been more electronic collaboration between individual colleges, the Department of Education, the IRS and the banking system.
Schools can now easily spot a fraudulent claim using sophisticated technology and algorithms.
Report your income and assets carefully and honestly, and if you have even the slightest question about anything concerning your finances, be sure and ask a qualified tax professional.
Tip 5: Update Your FAFSA Annually
Minimize your available assets every year as you pay for your student’s educational costs and expenses.
That way you won’t miss out on any opportunities to qualify for better aid packages as they enter their junior and senior years.
Make no mistake—college is one of the largest money-making businesses there is today. A college education is already costly, and gets more expensive every year.
You’re going to need all the financial aid you can get, and the sooner you submit a FAFSA application, the better your chances are of getting your share.