A mid-winter ritual is on millions of families’ calendars this month, and it wasn't about asking a large rodent named Phil for a weather forecast.
For families with college-age children, it’s time — once more — to complete the Free Application for Federal Student Aid (FAFSA), the yearly application to calculate college students’ eligibility for financial aid.
With college costs continuing to soar and borrowing levels an ongoing concern, leveraging FAFSA to offer you or the student in your life the best chance for financial help is more important than ever.
But, when it comes to navigating the FAFSA, many might find a chat with Punxsutawney Phil easier to understand. You can’t control the weather, but you can pick up a few pointers to make the most of the FAFSA.
Worth the effort
Families with college students are all too familiar with the financials surrounding higher education. According to The College Board, the average 2014-2015 tuition increase was 3.7 percent at private colleges and 2.9 percent at public universities. Spreading those numbers out a bit further, the 10-year rate increase checks in at roughly 5 percent.
Those numbers become all the more disconcerting when compared with other statistical barometers. For one thing, college costs are rising much faster than the general inflation rate, which refers to how much it costs to buy goods and services and has grown from 1 percent to 3 percent over the past 10 years. Even more troubling, growth in personal income, which Federal Bureau of Economic Analysis says has increased 3.9 percent in the past decade, has failed to keep pace with tuition growth.
The discouraging comparisons underscore one of the first rules of FAFSA: Never assume that filing a FAFSA is a waste of time, although college is becoming more pricey and, as a result, students are fighting for every penny of financial aid.
“Many students and their parents don’t apply for FAFSA money because they assume their family earns too much to qualify. That’s a costly assumption,” said Russell Schaffer, a spokesperson for Kaplan Test Prep. “Billions of dollars — which includes everything from Pell Grants to work-study opportunities to federal Stafford Loans and more — are awarded to millions of students from all income brackets.”
Moreover, don’t assume that a FAFSA filed later in the year carries as much clout as one completed months earlier. Although it’s accurate that the FAFSA deadline is technically June 30, many schools and a number of states dole out financial aid on a first come, first-served basis. The closer you file to the beginning of the new year, the better your chances of moving to the front of the line and staying there.
“Nine states award aid on a first-come, first-served basis; three have February deadlines; and 11 have March deadlines,” said Mark Kantrowitz, author of “Filing the FAFSA”. “Students who file the FAFSA in January, February and March receive more than twice as much grant funding, on average, as students who file the FAFSA later.”
Another calendar-based bit of advice: Although you can file a FAFSA using estimated tax information from the prior year, it's better to have your taxes completed. Final numbers of the FAFSA means a more accurate estimate of how much a family can afford to contribute to paying for school and, in turn, a faster financial aid decision.
Accuracy is everything
While tackling the FAFSA as early as possible in the year can increase a student’s chances of landing valuable financial help, even an early FAFSA can misfire if the application isn’t accurate or complete.
Start by getting organized: Compile all necessary paperwork and financial documentation, including income records, yearly bank statements, 1099s and any other financial records that may impact aid eligibility.
Make the most of the technology the FAFSA system provides. For instance, when going to the FAFSA website, notice a feature known as the IRS data retrieval tool that appears while completing the form. The system, which becomes active in February, allows for direct, electronic transfer of IRS tax information into the FAFSA.
“This saves time, ensures accuracy and will reduce the amount of paperwork that may be needed to turn in to the school if the file is selected for verification,” said Theodis Wright, director of financial aid and scholarships at Dillard University in New Orleans.
Check and recheck the numbers entered into the FAFSA. Even seemingly innocent missteps can cause delays and possible lost financial aid. Case in point: According to the National Association of Student Financial Aid Administrators, some 300,000 FAFSA applications were reprocessed last year because the forms were filled out using dollars and cents. The problem is the decimal points don’t register during initial processing, making the applicants look like well-heeled millionaires. Play it safe and round any numbers to the nearest dollar.
Once you’ve completed and filed the FAFSA, it’s a smart play to check in with the schools receiving to ensure they’ve actually received the application. Occasionally, schools will require additional documentation to determine a student’s financial situation. The sooner you know everything they might need and get it to them, the quicker they can make a decision about financial aid and other funding sources.
Lastly, be sure to contact any school receiving your FAFSA to let them know about any corrections or updates. “Not doing so can cause issues with both your filing and award,” said Wright.
If you’ve completed the FAFSA and you or your student just received a dump truck full of financial aid, be sure to congratulate yourself. But not for too long.
Bear in mind that FAFSA is an annual process, and families need to resubmit applications every year. The good news is, encore applications need not be as challenging or painful as the first go round. The Department of Education offers a renewal FAFSA to minimize both necessary time and effort with subsequent applications.
No matter how your circumstances may change — perhaps an increase in income, perhaps another child graduating from college or just beginning — make sure to take the time to file every FAFSA you’re entitled to.
As Kaplan's Schaffer put it: “Submitting a FAFSA doesn’t guarantee you’ll get financial aid, but not submitting one guarantees you won’t.”