Fumble no more when figuring out FAFSA
Sending a child off to college is daunting to begin with, and thinking about the process of applying for financial aid is one more major to-do to add to parents’ considerable list. Yet, filling out the famously formidable — and frustrating — FAFSA (Free Application for Federal Student Aid) doesn’t have to feel hopelessly complicated.
Yes, there are two FAFSAs this year, and parents need a considerable amount of paperwork to get the process going, but we’re here to calm your nerves with answers to some frequently asked questions about the process.
Financial aid has been on the minds of those seeking higher education since 1953, when John Monro of Harvard University created the first financial aid need analysis formula. From there, a bevy of other forms and landmark events came to fruition, leading up to the creation of FAFSA in 1992; it would become available online in 1997.
FAFSA was developed by the U.S. Department of Education to ensure all eligible individuals can benefit from federally funded financial assistance for education beyond high school.
Every student seeking higher education should fill it out
It’s generally recommended that every student fill out the form. Nearly everyone who applies will be offered aid of some sort. Aid is generally offered regardless of credit history or if you feel your family’s yearly income is too high to require assistance. Also, federal loans are easier to deal with after graduation than private loans.
Why are there two FAFSA forms this year?
Unlike earlier years, in which families filed a FAFSA form outlining their prior year’s income and tax data, this year there the two: the 2016-2017 FAFSA, with a start date of Jan. 1, 2016, and the 2017-2018 FAFSA, with a start date of Oct. 1, 2016. Though it may seem to make things more complicated for parents, it’s actually a benefit to students and their families. The two forms align financial aid applications with the start of the college admission season, so students will be able to apply for financial aid before or at the same time as they apply for admission, allowing cost considerations to help when choosing where to enroll.
“Starting with the 2017-2018 award year, the FAFSA requires families to switch from providing prior-year to prior-prior-year income and tax data,” said David Levy, editor at Edvisors (edvisors.com) and a leading expert in the industry. “The use of older income and tax data will allow students to file the FAFSA three months earlier, starting on October 1, instead of January 1. For example, instead of filing the 2017-2018 FAFSA on or after Jan. 1, 2017, using income and tax data from 2016 federal income tax returns, families will be able to file the form on or after Oct.1, 2016, using income and tax data from 2015 federal income tax returns.”
Bottom line: The early filing will give families an earlier, more accurate picture of potential financial aid for the next school year.
When should we apply, and how do we know what year is covered by each application?
The application season for the 2016-2017 FAFSA opened on Jan. 1 of this year, while the FAFSA for the 2017-2018 academic year will be available beginning Oct. 1. For students filing the first form, the base year runs from January 1 of the junior year in high school (spring term) to December 31 of the senior year in high school (fall term). For those filing the latter form, the base year runs from January 1 of the sophomore year in high school (spring term) to December 31 of the junior year in high school (fall term).
How long does this whole process take?
Between gathering necessary documents and filling out the form, the answer is: “a while.”
“Although the U.S. Department of Education says that it takes less than half an hour to complete FAFSA on the Web, an hour is a more realistic estimate, assuming that the family has already assembled all the information needed to complete the form,” Levy said.
After the FAFSA is completed, it can take several months for a college’s financial aid office to determine a student’s financial aid eligibility, and after presenting that to the student, the family has a few weeks to make a final decision.
“College financial aid offices typically start working on the financial aid packages for admitted students in January and February,” Levy said. “Financial aid award letters are then issued in late March and early April. Most students will have until the May 1, National Candidates Reply Date, to decide whether to accept the college’s offer of admissions and financial aid. Students who apply under early admissions programs, such as early action and early decision, may receive financial aid award letters in December.”
What do we need for preparation beforehand to make this process easier?
A lot of documents, but going through the process of gathering those will only benefit the student in the end. Not every family will have all documents listed below, but gathering as much information as possible is a great start.
To complete the FAFSA, a student needs a driver’s license (if they have one) and/or an Alien Registration Card, if the student is not a U.S. citizen but is an eligible non-citizen.
The student and parents will then need a number of documents:
• Social Security cards
• W-2 forms, 1099 forms, records of earned income and records of other taxable income such as unemployment benefits, if available
• Federal income tax returns for the prior tax year, if completed (IRS Form 1040, 1040A or 1040EZ or the equivalent foreign income tax return)
• Records of child support paid, if any
• Records of untaxed income, if any
• Records of student aid funds that were included in adjusted gross income, such as the taxable portion of scholarships and fellowships and AmeriCorps benefits
• Records of taxable earnings from Federal Work-Study or other need-based work programs
• Current bank and brokerage account statements as of the date the FAFSA is submitted
• Current records of stocks, bonds, mutual funds and other investments
All financial information must be reported for the previous tax year, which is usually the previous calendar year. For example, to file the 2016-2017 FAFSA, students will need documentation from the 2015 tax year.
It’s also good to keep a folder containing copies of these documents, as well as a copy of the completed FAFSA form and confirmation page (if done on the Web), as a college’s financial aid office may require them.
What if our 2015 federal income tax isn’t ready yet?
Taxes don’t need to be filed before applying.
“Submit the FAFSA and other aid applications by the published deadline dates, if not sooner, even if this means using estimated income and tax data,” Levy said. “If the FAFSA is based on estimated data, all inaccuracies must be corrected after the student and parent(s) have filed their 2015 federal income tax returns.”
The federal income tax return data can be updated using the IRS Data Retrieval Tool at fafsa.ed.gov.
What if my spouse/partner and I are separated/divorced?
Only one parent is responsible for completing the application, even if he or she files a joint federal income tax return. The filing parent is determined by the family and does not necessarily have to be the parent who has legal custody of the child or who claims him or her as a tax exemption.
What if my family’s financial situation has changed significantly recently?
“If the family has unusual financial circumstances, appeal for more financial aid by asking the college financial aid administrator for a professional judgment review of those circumstances,” Levy said. This may also be called a “special circumstances
“These can include changes in income or the net value of assets from last year to the current year, and anything that distinguishes the family from the typical family,” he added.
A review/appeal can be requested by either writing a letter summarizing the circumstances and providing supporting documents, or completing a form on a college’s Website. Supporting documents may include copies of a layoff notice, proof of the recent receipt of unemployment benefits, copies of medical or dental bills, and letters from doctors, clergy, social workers, child advocates, police, teachers, guidance counselors, college financial aid administrators, or anyone else who is familiar with family’s situation.
Have more questions? Check out the FAFSA helpline: 1-800-4-FED-AID (1-800-433-3243), email the U.S. Department of Education firstname.lastname@example.org, or get Edvisors’s free “Filing for FAFSA” book at edvisors.com/fafsa/book/user-info/