Millions of parents and students are angst-ridden over paying for college.
Americans have racked up some $1.5 trillion in student loan debt. I know more than a few families who are terrified of this decades-long burden.
Is there a way to obtain a debt-free degree? Yes, but you’ll need to do some homework and fill out the FAFSA form.
The FAFSA is the key to financial aid. It tells college and the government if you’re qualified. You can’t even start the financial aid process with colleges without it.
Yet many families don’t file the FAFSA. They don’t think they will qualify. A common excuse I hear is that “we make too much money.”
After covering this subject for years, a lot of financial aid granting is counter-intuitive. Colleges with big price tags often are the most generous. And state schools the least. There are thousands of grants available, but they won’t come your way unless you apply for them. The FAFSA opens up the door.
What do you need to know? Here’s some expert guidance from PayforEd.com:
“Completing the FAFSA is an important step in the college funding process, and we believe that every student should complete the FAFSA for a variety of reasons.”
“The FAFSA submission generates your Expected Family Contribution or EFC. This is an important number in the financial aid process and packaging. The colleges determine your financial need by subtracting the Cost of Attendance (COA) by your EFC.”
Basically, colleges want to know how much your family can reasonably contribute to college expenses. They don’t expect you to raid your retirement funds or home equity. They are looking at ways you can pay for college without impoverishing you.
Here are the steps you need to follow when completing the FAFSA:
1). The first step in completing the FAFSA is creating the FSA ID. This User ID and password is used to sign various federal documents and gives you access to some of the federal loan systems. For most students, both the student and one of the parents will need to create their own FSA ID. It is linked to the social security system and will need to be validated before you can use it to sign your FAFSA. It usually takes a few days before it is formally approved depending on the time of the year.
2) Get all of your financial information together. “Getting all of this organized now will make the FAFSA completion process much easier when it is time to complete the form. You will need the following information:”
- Name, address, and date of birth (DOB is often misreported, check input)
- Social security number for both Student and Parent(s) if filing as a dependent student
- Federal tax information or tax returns including IRS W-2 information for the student (and spouse if you are married) and for parents if you are a dependent student. Forms needed: IRS, 1040
- Foreign tax return and/or Tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federated States of Micronesia, or Palau
- Records of untaxed income, such as child support received, interest income
- Length of current state residence
- College list with city and state (especially true for college with multiple campuses)
- Parents current marital status
- Student’s high school name and completion date
- Student’s current academic position
- The education level of the parents
- Cash, savings and checking accounts balances, investments for both student and parent
- Real estate value (not the primary residence) and business and farm assets for the student and parents if she/he is a dependent student. (Family owned business and farms do not need to be included in the asset number)
- Student’s Driver’s License number
- Number of other siblings in college
- FSA IDs for student and one parent
3) Choose your colleges. “The FAFSA allows you to input ten colleges at a time. If you have more than ten colleges, you will need to go back and enter the remaining colleges. You will need to wait until the initial FAFSA submission has processed. FAFSA Processing will generally take 1 – 3 days depending on the time of year. Once the original FAFSA is processed, then the student can enter the remaining colleges.”
I know this sounds like a lot of work. I was intimidated by the process at first and there were several glitches, which the government has worked out. You can download your tax return directly from the IRS, for example.
But after having gone through this drill several times, it’s easier than filing taxes. You just have to update it every year your child is in college. It’s more than worth it. It’s the difference between obtaining generous aid – and going into debt.
For the original article click here: https://www.forbes.com/sites/johnwasik/2019/10/18/why-the-fafsa-is-the-key-to-college-financial-aid/#324c19f763e5