If you are the parent of a high school senior, it's time to turn your attention to another
set of online submissions: financial aid forms. With the cost of college
reaching new heights annually, many parents of college students today cannot
ignore the financial aid piece of the college process. In order to qualify for financial aid or even to borrow under a federal loan
program, you will have to complete at least one and perhaps two financial aid applications. The Free Application for Federal
Student Aid, more commonly known as the FAFSA, is the form that colleges require students complete in order to qualify for certain types of financial
assistance and for any federal student aid. More than 300 institutions
also require submission of the CSS/Profile form, found on the College Board website, for the allocation of
their own institutional resources.
Completing the FAFSA and;
CSS/Profile (if also required) is the only way you will know for certain
whether you qualify for need-based financial aid. College net price calculators
and other online tools may give you a ballpark figure, but there are too many variables that these simplified calculators won’t capture. While parent
income will be the most significant determinant, there are several factors in
addition to income that influence eligibility including the age of the older
parent, assets owned, number of family members living in the household and the number of
children in college. Yet the FAFSA is
not only required to calculate demonstrated need. Any student or parent who
wishes to borrow under the federal loan program, regardless of financial need,
must file a FAFSA. This even applies for parents who may choose to cover college costs with a Parent Loan for Undergraduate Students or PLUS loan.
A small handful of colleges also require that students complete the FAFSA in order
to receive merit aid awards. The single
best way to find out a college’s documentation requirements is to visit the
financial aid pages on its website where you will also find the college specific deadlines. They may be as early as February 1.
FAFSA completion is relatively
straightforward, especially for those who have already filed a tax return and meet the eligibility requirements to take
advantage of the IRS Data Retrieval Tool. This enables filers to fill in much of the
financial information on the FAFSA automatically by transferring data from the IRS. But there is a catch. This feature is not available until two
weeks after processing an electronic return and can take up to eight weeks if you file by
mail.
Furthermore, the data retrieval feature will not be active until early February, too late for colleges with February 1 financial aid deadlines. This means you may still be faced with the task of
estimating your prior year income and expenses. A word of advice if you estimate: better to under
than over-estimate earnings since this is what will be used for the initial calculation of the financial aid award. Your FAFSA must ultimately be amended with the actual tax
return numbers, so you can take advantage of the data retrieval tool at that time. If you are certain you will not
qualify for need-based aid yet will complete the FAFSA in order to borrow
either a federal student loan or PLUS loan, you are not constrained by college
financial aid deadlines so file your tax returns first to simplify the
process.
I also recommend that you
take advantage of other resources available that can guide you through the form
completion process and shed additional light on the factors that will influence
your eligibility. For a helpful guide on
filling out the FAFSA form, there are online tutorials such as the FAFSA tutorial offered by Edvisors, a college financial aid website. On the College Board website you will find the CSS/Profile and tips for completing the form as well as the list of
colleges that require it.
Keep in mind that qualifying for
financial aid is not a guarantee that you will receive a lot of free money so
go into the process with realistic expectations. Your own estimated need, your formula
determined “demonstrated need,” and the amount of assistance you might actually
receive can and will likely be three different numbers. Financial aid formulas may yield a higher
Expected Family Contribution (EFC) and lower demonstrated need than what you
believe you can afford. The formulas are not frequently updated and
consequently, underestimate today's cost of living, especially for those who
reside in more expensive regions of the country. Furthermore, most colleges won’t
fully plug the gap between the Cost of Attendance and what the formulas determine you should pay. Like many of us managing our personal finances, colleges struggle to equitably allocate a finite pool of resources. So embark on this process with tempered hope
and expectations. But don’t put it off. Familiarize yourself with financial aid
requirements and deadlines to give yourself the best chance to receive any aid for
which you may qualify.
