College Loans - Tips for FAFSA (Fidelity)

5 tips for tackling FAFSA
BY Mark McLaughlin,
Fidelity Interactive Content Services — 02/08/11

Virtually anyone who wants college aid must fill out a form known as FAFSA. Here’s the lowdown on the 136-question document.
Now that your high school senior has put the finishing touches on her college admissions essays, it’s your turn to grapple with an application deadline.

Welcome to the world of FAFSA.

The federal government’s Free Application for Federal Student Aid, also known as FAFSA, is a prerequisite for undergrads to qualify for a host of federal aid programs, from grants to student loans. While individual colleges set their own deadlines for filing FAFSA, the first major due date is approaching: Feb. 15, for students applying to schools in Connecticut.


“We encourage everyone to apply through FAFSA,” says Tom Graf, executive director of the Massachusetts Education Financing Authority, a nonprofit state agency that focuses on college financing for families.

In recent years the sluggish economy and stubbornly high unemployment have sent the number of FAFSA applications soaring. For the first four weeks of this year, applications were up 40% from the same period last year, according to the federal Department of Education, which administers the FAFSA program.

A lot is at stake. For the 2009-2010 school year, the average undergrad received about $11,460 in loans and grants from federal, state and private sources, according to DOE. And while the FAFSA includes 136 questions on everything from student and family finances to your child’s academic background and planned course of study, veterans of the process say with a little preparation, it’s manageable.

Filing FAFSA “may seem daunting but it is pretty straightforward,’’ says Carol Meerschaert, a Fairfield, N.J., mother of two college graduates and a high school senior headed to college in the fall. Still, “This isn’t a late night, too-tired-to-think undertaking,” she says.

To make the process more efficient, and less painful, here are five things you should know when completing FAFSA with your college-bound child.

1. File even if you don’t expect aid
Beyond federal financial aid, the FAFSA also is used by many states, colleges and universities for their own assistance programs. Some colleges require it for students on athletic scholarships.

The perception that no aid will be available is perhaps the biggest reason families skip the FAFSA. A 2006 study by the American Council on Education found that 1.5 million college students who could have qualified for Pell grants in 2003-2004 failed to apply. More recently, former Secretary of Education Margaret Spellings said some 8 million students eligible for aid don’t even send in an application.

“Why turn any money away? Why leave any money on the table?” says Mary Fallon, a spokeswoman for Student Financial Aid Services Inc., a private firm that advises families on maximizing financial aid and runs the website www.fafsa.com. (It’s not affiliated with the federal Education Department).

Returning students should remember to refile FAFSA each year they’re enrolled in college. In addition to completing FAFSA, students applying to private colleges should also fill out the College Board’s CSS Financial Aid Profile to qualify for non-federal financial aid.

2. Don’t wait to file your taxes first
Many state and individual college deadlines fall before the federal tax deadline. Kentucky, Illinois, Oregon, South Carolina and Tennessee have started awarding aid, and most aid packages will be finalized before this year’s April 18 tax filing deadline, according to Mark Kantrowitz, an expert on college financial aid.

The FAFSA worksheet available at www.fafsa.ed.gov contains a summary of filing deadlines by state.

You can complete FAFSA using estimated tax information. Just choose the “Will File” option on the application form, and then estimate your income. You must remember to make any necessary adjustments once your taxes are complete; there is no penalty for doing so.

“Don’t wait until the last few days to file your forms,” says certified college planning specialist Manuel Fabriquer of CollegePlanning ABC. If you do, you’ll most probably run into technical difficulties because so many people will be filing then.

Filing the FAFSA
Applicants can file the form online or download a paper version at
www.fafsa.ed.gov, the website run by the Federal Student Aid office of the
Department of Education. Filing electronically is recommended because it’s
faster and you can correct errors. The site has tips to help
you file. Here are some to get you started:
Get a PIN: Apply for a Department of Education personal
identification number right away atwww.pin.ed.gov as they can take up
to five business days to process. Both parent and student need a
PIN, which allows you to sign FAFSA electronically and make
corrections.
Organize your paperwork: The FAFSA on the Web
worksheet highlights the main financial information you’ll need to include
on the application.
Predict potential aid:
The FAFSA4caster provides an estimate of your federal
financial aid eligibility. Studies have shown knowing your
potential award ahead of time increases the chance
you’ll apply.
Get help: The Federal Student Aid office can
answer questions online or over the phone. Contact
information is available on the website.
Save time: Returning college students can
choose to fill out a Renewal FAFSA that
pre-fills most of the information from the
previous year.
3. Highlight unusual circumstances
The FAFSA for the 2011-2012 school year is based on financial information from 2010 but it’s important to explain major changes, if any, in your family’s financial situation.

If you’ve suffered a job loss, answer yes to the Disclocated Worker question on the form. The question doesn’t allow for an explanation so follow up with a more detailed letter to the financial aid offices at your child’s target schools.

You should also explain other financial hardships such as reduced income, major medical bills and anything else that dramatically affects your income.

If you want to appeal an aid decision, remember that at most schools no appeals will be heard until the school has received a completed FAFSA — another reason to complete the application as soon as possible.

4. Your FAFSA could be flagged
After your FAFSA has been processed, you’ll receive a Student Aid Report that includes an Expected Family Contribution, expressed in dollars. The EFC is used by schools to help calculate how much federal aid your child may receive.

Don’t panic if your report includes an asterisk next to the EFC. This means the DOE is requiring documentation of your financial information. Its automated processing system selects up to 30% of each college’s applications for verification. This is not a formal audit but is required by the DOE.

Kantrowitz recommends parents submit the documents requested by the college as soon as possible because federal rules prevent the distribution of aid until verification is complete.

Your child’s Student Aid Report will not include an EFC if your application is incomplete, but it should explain what needs to be addressed. A common mistake is using dashes or leaving responses blank instead of entering zeros when asked for dollar amounts, explains Barbara Cooke, a college counselor in Kansas City, Mo.

5. FAFSA has its quirks
Federal financial aid calculations do not always follow the same guidelines as the tax code. This has led to confusion for students of divorced parents as well as those seeking to claim independence. Some things that often trip up parents:

For divorced parents, financial aid is based on the income of the parent the child lived with the most over the preceding 12 months. If that custodial parent has remarried, the income of the stepparent also figures into the EFC. The income of the noncustodial parent does not count.
Just because a student is living away from home and financially supporting herself, that does not mean she is considered independent, according to FAFSA. There are exceptions, if a student is married or a parent, for example, but few applicants will be successful filing independently of their parents, financial aid experts say.
The DOE’s Federal Student Aid office and state financial aid groups offer free assistance with FAFSA, or you can hire a private counselor to help. To sift through the wide variety of private counseling services available, use the search by state function on the National Institute of Certified College Planners website (http://www.niccp.com/search.asp).

“[FAFSA] is really a beginning to find out your ability to pay,’’ says MEFA’s Graf. “It’s the gateway to many of the financial aid options that are available.”