Tuesday, December 15, 2009

Financial Aid Forms - What You Should Be Doing Now

It is mid-December and high school seniors are busy putting the final touches on college applications and essays. However, it may not yet be time to kick back and wait. Another deadline is lurking just around the corner and that is the due date for the submission of financial aid forms. The FAFSA, or Free Application for Federal Student Aid, which is the financial aid form used by all institutions to determine eligibility for federal funds, will become available online January 1 for the 2010-2011 academic year (go to http://www.fafsa.gov/ ). Many colleges have set financial aid deadlines in February and March, and a few are even earlier! So planning ahead is important in order to get your forms filed in time.

Even if you believe you will not qualify for financial aid, it is a good idea to fill out the FAFSA. Any student hoping to borrow under the unsubsidized Stafford student loan program is required to submit the FAFSA. For these federally guaranteed loans interest accrues while the student is in school and financial need is not a factor for eligiblity.

So what should you be doing now, prior to actually filling out the financial aid form? Here are a few tips to help you get organized to make the filing process as simple as possible.
1) While people gripe about the burden of completing the FAFSA, gathering the necessary documents may in fact be the most tedious part of the process. Required documents include the student’s driver’s license (if any) and social security number, his or her 2009 W-2 forms and other records of money earned, the student’s 2009 federal tax return, the parents’ 2009 federal tax return (for dependent students), any untaxed income records (this includes child support), and current bank statements as well as investment and business or farm records.
2) Keep copies of these documents together with your completed financial aid forms; should your application be selected for verification (schools are required to verify, at a minimum, 1 in 3 financial aid applications), you will be asked to submit these to the college.
3) Obtain a FAFSA pin number by going to http://www.pin.ed.gov/. The student and one parent will each need to establish a pin number which is both your electronic signature and the number you will need to access your online FAFSA form.
4) Check the financial aid section of each college’s website to find out the forms required and the deadlines for submission. Keep in mind that the earlier you submit, the sooner you get into the financial aid queue.
5) You may find yourself working to meet early financial aid deadlines before you are able to file your 2009 federal tax returns. In this case you will have to estimate your adjusted gross income, federal taxes and non-taxable income in order to get your financial aid forms submitted in time. Many people estimate these numbers based on the prior year tax return, and then update the form with more accurate information once the return is filed. If you are certain that you will not qualify for financial aid, but are completing the FAFSA so that your child is eligible for Stafford student loans, you may hold off submitting it until after you have actually filed your 2009 tax return.

Completing the FAFSA is really not as painful a process as some would have you believe. Not only has the 2010-2011 form been simplified, with as many as 1/3rd fewer questions, but the directions are generally clear and simple. Families are directed to the relevant lines on their tax returns for many of the required answers, taking away much of the guesswork. Remember that need-based financial aid is awarded annually. This means that all necessary financial aid forms must be completed each year that the student is in school.

Stay tuned for upcoming information on the CSS/Profile, the financial aid form that many private colleges use for allocation of their institutional funds.

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