Fast-Track the FAFSApersonal finances | May 23, 2016 | By Bob Williams
If your youngster is planning on heading off to college this fall, there’s one phrase you should already be very familiar with: Financial Aid. If your budding collegian qualifies, Pell Grants can reduce your financial footprint on their road to graduation.
We say you should already be familiar, because many high schools start the financial aid application process while the students are in their senior year. The main building block of any financial aid offering is an application called the FAFSA, which stands for Free Application for Federal Student Aid. The FAFSA can be filled out on paper and mailed in to the U.S. Department of Education, or completed online, which is light-years faster and safer.
We’ll take you through some of the high spots – as well as alert you to some of the pitfalls – so you can get your fresh-faced freshman to class on time and on budget.
Get Your Name in the Hat
Your student won’t get financial aid if they don’t complete a FAFSA; we can’t put it any plainer than that. And you should never wait until the deadline to do it. If possible, it pays to do the application process in the spring, before the student graduates high school. (The parent’s tax return is required for the FAFSA, but if you haven't yet filed, you can estimate and send the tax return later, once it’s filed.) But there’s still time during the summer to get it done.
The reason for extra time will become very clear shortly.
The application itself is fairly easy online. Go to www.fafsa.ed.gov, the U.S. Department of Education’s FAFSA website. Here you can make your application free of charge. (Note that there are some companies that will allow you to complete a FAFSA online, but they will charge you to submit them. The federal site will always carry a .gov web address.)
And here’s your first pitfall to avoid: The federal FAFSA application is written as if the student is filling it out. So, when the FAFSA asks for your name and Social Security Number, it’s asking for the STUDENT’S information, not the parent’s. Read all the questions carefully. Any form submitted with mistakes will cause delays while things are fixed.
You’ll have to come up with a PIN (Personal Identification Number) that will identify your application. This can be different from the PIN you may have entered when you e-filed your tax return, but you will need to write it down. You’ll very likely need it later – especially if you save the online form to complete later.
The next thing you’ll need to know is that the FAFSA uses your previous year’s income tax return to determine if your income is within federal limits for financial aid. So if you’re filling out a FAFSA this summer to start school in the fall, you’ll need the 2015 income tax return.
Before you start digging through all your paperwork just yet, check out the federal FAFSA website. You can get that income tax return electronically through the federal site, using their IRS Data Retrieval Tool. There are a few limitations, however.
You cannot use the Retrieval Tool if you filed your tax return as Married Filing Separately or as Head of Household, if you filed an amended tax return, or if you filed a Puerto Rican or foreign tax return. Those conditions mean you’ll have to submit a written copy and fill out the application manually. If you don’t have a copy of your return, your college may require a tax return transcript.
Some Finer Points
Financial aid directors tell us there are some things that deserve a little special attention. First, make sure your child’s FAFSA carries the exact same home address as your income tax return. And by exact, we mean exact. If your return says your address is 101 Apple Street, don’t submit a FAFSA that carries an address of 101 Apple St. As nitpicky as that sounds, it’s enough to get your application bounced – and delayed.
Also, understand that it’s not a good idea to try to retrieve your income tax return right after you’ve filed it with the IRS. Generally, the tool won’t work if you e-filed your return less than three weeks previous. If you mailed in your return to the IRS, if it was within the last eight weeks, you’ll probably have to mail in a return or transcript for the FAFSA.
If your application for student aid is successful, your student should get a notification – generally by email – in three to four business days. You should print out that confirmation page and keep it in a safe place. Remember to sign out of the web site when you are through.
Your student’s college of choice will follow with a letter or email outlining their award. That letter will spell out the estimated Pell Grant that the student may qualify for, the estimated college loans the student may qualify for, and the Expected Family Contributions (EFC). The EFC is how much you, the parent (or your student) will have to come up with to meet the costs of college.
Think of it as a co-pay like your health insurance: they pay their part, and the EFC is your part.
We hope we’ve given you a little help in getting that anticipatory academic ready for college, at least where your wallet is concerned. The key lessons of the FAFSA are very much like the lessons we’ve been preaching about income taxes: be prepared, be thorough - and be early.