The month of January is when millions of families disclose their important financial information to the Department of Education through the Free Application for Federal Student Aid (FAFSA). Filling out financial aid forms can be challenging to say the least. However, don’t rush through the process – any mistakes can cause significant delays in the process or, worse, disqualify you all together.
Hengehold Capital Management offers these helpful tips to make the process of applying for financial aid as smooth as can be:
Fill Out The Form!
Many families mistakenly think they won't qualify and miss out on receiving financial aid by failing to apply for it. You can’t find out for sure if you don’t fill out the form. You should always submit your FAFSA, regardless of your family’s income. By not completing the FAFSA, you are potentially wasting an opportunity to qualify for what could be thousands of dollars to help pay for college.
The Earlier The Better
To maximize your potential aid, submit the FAFSA as early as possible in January. Do not wait until your taxes are complete. It is okay to use estimates of your income, so long as they aren't far off from the actual values. Many university and state grants are awarded on a first-come, first-serve basis. This is one task you do not want to put off for a rainy day.
Don’t Sell Yourself Short (Or Long)
New rules will be in place for the 2016-17 school year intended to make it easier for families to submit accurate tax information. However, even with those new rules, make certain that all income is reported on the FAFSA. Contributions to a 401(k) or any other pre-tax retirement account often get ignored as reported income and can show, in effect, a higher FAFSA income than what might be shown on your tax return. Likewise, many parents include retirement assets or real estate equity as part of their investments or net worth, when in fact retirement assets should not be included here. Income from rental property or vacation homes, however, should be included.
Know Who “You” Are
FAFSA is written from a student perspective, as if they are the one completing it. When the FAFSA refers to “you” and “yours,” it is in fact referring to the student.
Online filing provides built-in edits to help prevent errors, is more time-efficient, includes an online help feature, and offers a much simpler renewal process. Most of us don’t even remember how to fill out a paper form anymore. Make it easier….do it online.
Choose Order Wisely
It is possible to miss out on certain state aid, particularly grants, if you do not list state schools first in your list of schools to receive your financial information. The order does not matter at all to the schools who receive the information. Similarly, if you change your mind and consider schools that are different from those you originally list, be sure to log back in and add those schools.
Save Early, Save Often
Be sure to save your file as you go. No one wants to put in all of the work required to fill out the FAFSA only to have a power outage or computer failure set you back. Also, it is imperative to thoroughly read the confirmation page before closing out, as this page contains vital information about the schools you have listed and may even link to other forms that might be required by your state.
Even the Wealthy Should Apply for College Aid
In a recent article published by The Wall Street Journal, they suggest that filing the FAFSA “‘can be used as a positioning tool’ or can lead to benefits like merit aid.” The article discusses a few reasons why it is a good idea for wealthy families to complete the FAFSA form.
- In order to be considered for merit aid, some schools require the FAFSA form to be filed.
- If you want your kids to bear some of the burden of paying for college, one avenue is to take out a low-interest federal student loan. A FAFSA form is necessary to obtain these types of loans.
- If you have multiple children attending higher-cost colleges, you just may qualify.
- Your situation may change. You could lose your job or have other financial hardships that affect your ability to pay for college. Having a FAFSA on file can be the first step to qualifying for federal aid.
At HCM, we help families through major life transitions such as sending their children to college. For many, it will be the most expensive time of their lives and, if not handled properly, could cost them their retirement. If you or someone you know needs help with college planning, please have them contact an Greg Middendorf, a Certified College Planning Specialist - [email protected] or call 877-598-5120.
Content in this article is not intended to be financial advice. Instead, we think of it as educational, and financial education is important to us. Retirement and financial planning services at the Cincinnati firm Hengehold Capital Management.