The start date for submitting the Free Application for Federal Student Aid (FAFSA) form is coming up faster than ever this year. For the 2017-2018 school year, students (or more likely, their parents) may complete and submit the FAFSA form online as early as October 1.
This means no more waiting until you get your tax information up-to-date and your tax return completed to apply for financial aid. It also means you better have your plan to pay for college figured out three months earlier than you did in the past.
In case it’s not obvious, if you are a high school senior or the parent of one, I am talking about you.
Below are 5 action items students and parents of high school seniors need to take before completing the FAFSA.
1. Get your Federal Student Aid ID. Also known as your FSA ID, you must have this number before you can complete the FAFSA form online. It’s not hard to get. You can get yours from the Federal Student Aid website. Technically, your student should complete this step since FSA ID serves as their online signature. Make sure they get this done now, if they haven’t already.
2. Narrow down your list of schools. The summer between the junior and senior years of high school is over. By now you should have a fairly narrow list of schools you are considering. The FAFSA allows you to list up to 10 schools on the FAFSA form. You don’t have to be in love with all these schools, but you should be able to winnow down your choices to ten or fewer schools that meet your academic and financial needs and that your student is willing to attend.
If your list is fewer than 10 schools – even better.
If you haven’t started your list, click here. The MN Office of Higher Education offers an excellent search tool to help you start or narrow your search. If you are looking outside of the state of Minnesota or if you have specific search criteria, download the DIY College Search Spreadsheet on Michelle Kretzschmar’s website DIYcollegerankings.com. For the price of a college application you can download her searchable spreadsheet that includes information from every 4-year institution with at least 500 full-time undergraduate students.
3. Inventory your assets and know how they will affect financial aid. This one is a little tougher. To keep it simple, remember that assets you own in your name are assessed at a rate of 5.6% and assets owned by your student are assessed at a rate of 20% for purposes of determining financial aid.
For example, $10,000 in your name will increase your Expected Family Contribution or EFC (that’s the number that the FAFSA thinks you can afford to pay for college) by $560 (5.6% of $10,000). If your student has assets worth $10,000 your EFC will jump to $2,000 (20% of $10,000).
However not all assets are used in the FAFSA calculation. The equity in your home, your retirement accounts, and any assets owned by your small business (no more than 100 employees) are all exempt from the FAFSA math.
Knowing what assets you have and how they affect the FAFSA is a major key to unlocking financial aid. To calculate an estimate of your EFC before you submit the FAFSA form, check out the EFC Calculator at the College Board’s website. Here you can enter your financial information prior to submitting the FAFSA form and get an idea of how your assets may affect your prospects for financial aid.
4. Use the IRS data retrieval tool. The FAFSA form will use your 2015 tax information to calculate your Expected Family Contribution (EFC) for the 2017-2018 school year. You can prefill your FAFSA with this information using the IRS Data Retrieval tool. The data retrieval tool simplifies the process of filling out the FAFSA form by transferring information directly from your Federal tax return.
To be eligible to use the data retrieval tool parents must have a valid social security number, and a Federal Student Aid ID.
5. Answer three critical questions. Too often parents send their kids off to college with no idea of how much they will need to spend over the next four years (or more). They’ve never had a meaningful conversation with their kids about how much they will chip in or what they expect their student to pay or borrow. And where’s all this money going to come from anyway?
Before you send your student off to college these questions must be answered: How much will college really cost on a net basis? Who will pay for what? (You weren’t planning on paying for everything were you?) And where’s all the money going to come from?
Get smart about paying for college. While there has never been a more challenging time for parents to send their kids to college, it’s also true that there have never been more resources available to help parents pay less for college than there are today. But you have to be proactive and get smart about paying for college.
Start by making yourself a well-informed, smart consumer of a college education. Read blogs like The College Solution, DIY College Rankings, JeannieBurlowski.com and others to learn about how to pay for college. Spend time on the websites of the schools your student is considering. Attend financial aid and college planning workshops at your local high school.
If you want to save time or need help getting started, download My Favorite FREE College Planning Resources. You’ll find it in the upper right hand corner of this website.