Applying for Financial Aid

January 1 may be the date when you switch to a new calendar, but perhaps more importantly, it is also the date when the “financial aid year” begins. This means that if you are a high school senior (or the parent of a high school senior) planning to attend college in the fall of 2009, and believe you will need help in paying your college bills, this is when you need to turn your attention to financial aid matters.

First, the Basic Facts

This entire article refers to need-based aid. This type of assistance (grants, loans, and work-study) uses a measurement of income and assets to calculate an Expected Family Contribution, or EFC. If your EFC is less than the cost of attendance at a college, you are eligible for need-based aid. If your EFC exceeds the cost of attendance, you are judged to be “no-need,” and must rely on other forms of assistance (merit aid). Merit aid, usually in the form of a scholarship, is dependent on many different type of student and parent characteristics, but does not take into account family income and assets.

Beginning on January 1, the way you ask for financial aid to help you go to any U.S. college is to complete a form called the Free Application for Federal Student Aid, commonly known as the FAFSA. Not only is this form used for federal aid (the largest sponsor of college assistance), in most cases it also determines how much you receive from your state and college aid programs.

Note: In addition to requiring the FAFSA, there are about 250 mostly private colleges that require an additional form called the PROFILE. Check the financial aid section of your college’s Web site to see if you need to complete the PROFILE. If so, go to www.collegeboard.com for information.

Before you reach the point of applying for aid, you have some work to do. If you haven’t done so already, go to the website of each of your colleges, find the section on financial aid, and write down which applications are required and the deadlines. The FAFSA is always required. In addition, some colleges ask for the PROFILE or their own application. You should also get information for your state need-aid program. State deadlines are listed on the FAFSA site.

If there are both priority and regular deadlines, plan to meet the priority one. College aid is basically a “first come, first served” business. If you miss a deadline, you may miss out on money for which you might have been eligible.

A week or so before the earliest deadline, go to www.FAFSA.ed.gov and follow the instructions for filling out and submitting the FAFSA online. (There are paper copies of the FAFSA available, but I strongly recommend filing online. Doing it online is easier, faster, and less prone to errors.) While you don’t want to be late in applying for aid, you also don’t want to be too early. You may see a few Jan 15 deadlines, but most colleges and states ask for the FAFSA in the range of Feb 1 to April 15. Since many of the questions on the FAFSA refer to line items on the tax return, if it all possible, do a draft of your 2008 1040 before you file your FAFSA. In most cases you will have the necessary documentation to do this by Jan 31.

When you get to the FAFSA site, the process will probably strike you as complex, and maybe even somewhat confusing.

Don't allow this first impression to cause you to decide not to apply or to put off this task for another day!

To make it all seem a little less overwhelming, I've shared some tips that should help you get over the common reaction of, “Oh my gosh, I’m not sure I can do this, it looks more complicated than the federal tax form.” Perhaps because of this reaction, 25% of low and middle income students who surely would qualify for aid never fill out the FAFSA. If you would like to receive need-based money for college, you must complete the FAFSA.

FAFSA on the Web Tips

For ease of explanation, I’m assuming the aid applicant is a dependent student living with one or both parents. If you believe you might be an independent student, where no parental information is required, go to Step 1 on the FAFSA site and see if you meet the test for independent status.

About a week before the earliest aid deadline:

1. Gather your list of colleges.
2. Get together all the documents you will need – student driver’s license, then, for both student and parents, Social Security numbers, W-2 forms, draft or actual 2008 income tax returns, non-taxable income for 2008, bank statements, investments, and an accounting of business and farm assets.
3. Go to www.PIN.ed.gov, and get a PIN for both student and parent. Be sure to save your PIN as the student PIN can be used for every year in college and the parent PIN for all children who apply for aid. Receiving your PIN by email is the preferred option.
4. Go to www.FAFSA.ed.gov. You will see the FAFSA process divided into 3 Steps – Before Beginning a FAFSA, Filling Out the FAFSA, and FAFSA Follow-Up.
5. Before you start, there is a step that you may want to take if you are not sure if you will qualify, or if you are a high school junior and want to look ahead at your aid prospects. In the lower left corner you will see a link to FAFSA4caster. The 4caster serves a number of different functions. It is primarily a way to make an early estimate of eligibility for need aid, but it also can help you get started with the actual FAFSA by linking you to the PIN site and allowing you to transfer 4caster data to FAFSA on the Web.
6. One way or the other, let’s assume you now have your PINs and are ready to start. Click on the #1 in the upper left, “Before Beginning a FAFSA” and go through the menu items so you understand fully what lies ahead.
7. Fill out the FAFSA Worksheet first. It contains imbedded instructions which should clarify what each question asks for.
8. Go to Step 2, “Filling Out the FAFSA.” If you are having trouble, use the “Need Help” button. If that is not enough, you can get personal help from FAFSA customer service by clicking on “Live Help.”
9. Be sure to save your work as you go along. When you are done, “sign” the FAFSA by using your PINs.
10. After all this, you will want to take advantage of the services offered in Step 3, “FAFSA Follow-Up.” This is a very useful section where you can check on the status of you FAFSA, receive a copy of your Student Aid Report that contains your EFC, make corrections, and add other colleges.

Good Luck. Believe it or not, the Department of Education has done a good job of making a complicated process somewhat simpler by breaking the task into a number of different steps with careful explanations, and, as a backup, hiring real people in customer service to help if you still have questions.