The high cost of college makes financial aid unavoidable for most students. And this means undertaking the lengthy and often complicated process of filling out the Free Application for Federal Student Aid, known as Fafsa.
The form can be confusing — so much so that each year about 25 percent of Fafsa forms are abandoned mid-process, leaving billions in federal aid unclaimed. And aside from going digital in 1997, it hasn’t changed much since it was first made available in the 1970s. The form is written in a slightly counterintuitive way, to be filled out by the student rather than a parent or guardian. And there are many moving parts.
The good news is there are some changes on the horizon. The Department of Education just announced that it would create a mobile app for the form, and there is bipartisan agreement in Congress that the process must be simplified. Last year, Fafsa was made available to be filled out earlier, and with more-accessible tax information.
But in the meantime, the form continues to confound students, especially those of limited means. Often they don’t have simple answers to questions about, say, their household income. As the founder of an online platform that helps streamline the financial aid process, I’ve become intimately familiar with Fafsa’s recurring pain points.
Here’s my guide to the basics:
Who Qualifies to Apply?
Any citizen or individual with a Social Security number. But plenty of students who are not citizens are still eligible. Refugees, permanent residents with green cards and conditional residents can apply using their alien registration numbers. DACA students should also fill out Fafsa because they can receive aid from some states and schools even if they don’t qualify for federal aid. Students should not feel trepidation about supplying the Department of Education with their identifying information — it isn’t shared with Immigration Services.
Continue reading the main storyDecided on College, Undecided on Where
Students are often baffled about the fact that Fafsa asks what schools they are applying to and that the form requires them to declare their intended major or degree. It’s early in the process, and you may not know where you’re headed in the fall or what you will study, but don’t leave those sections blank. What you write on the form won’t determine where you go or what you study, but Fafsa cannot be submitted without it. If you’re undecided on your school, just put down four colleges you’ve applied to and include at least one state school. You can change the schools after you submit.
Counting Heads
When Fafsa asks you about your household size, it’s not asking how many relatives you have. The only people you should include in your household are those you personally, as a student, financially support. This may include children, half-siblings and parents. If you are under 24 and a dependent student, the only people you should include in your household are those your parents financially support.
Who Is My Primary Parent?
For Fafsa, a legal parent is defined as a biological or legally adoptive parent. This does not include legal guardians like grandparents, aunt or uncles or older siblings, even if they claim you on their taxes. Additionally, if your parents are divorced and have close to equal custody, always indicate the parent with the least amount of income as the primary custodial parent.
More Money, More Problems
Your parents may be rolling in the dough, but if you are estranged or otherwise disconnected from them, you still qualify for aid. As long as you can prove that you aren’t receiving financial assistance from your parents and are under the age of 24, you can and should file as an independent student. It will qualify you for more money.
Down to the Last Cent
Pennies may be considered next to worthless these days, but it may seem as if you need to account for every single one when filling out Fafsa. You will be asked for your current bank balance. To answer, check your bank account the day before payday: You should indicate the dollar amount that is in your checking and savings accounts on your most strapped day of the month.
Got Assets?
Not all of what you may think of as assets are supposed to be reported on Fafsa. It is important to know which to account for because it affects how much financial aid you will receive. For example, you may think the home you live in, if your family owns it, counts as an asset on Fafsa. It doesn’t. What about the small family business you or your parents may own? Nope, doesn’t count. And the 401(k) your parents saved up for? No, still not considered an investment for Fafsa purposes. There are some assets you wouldn’t expect to count that do — like income from alimony — but by and large, only account for assets that are liquid and cash-based.
College savings plans do count as assets. If you are using a 529 college savings or Coverdell ESA plan to help pay for school, it is best to have it in your parents’ or grandparents’ name. When a student owns the 529, the plan is counted as student income and that leads to the lowest financial aid being granted.
ABCD … EFC
Declare any household income in your parents’ name. The amount your family will pay out of pocket for college will be higher if their income and assets are reported in your name. What you will be expected to pay out-of-pocket — your Expected Family Contribution (E.F.C.) — will be calculated using a complicated 36-page formula that draws from your Fafsa forms. Your E.F.C. could change depending on the number of people you indicate in your family, your length of residency in the state you live in, or any life-changing events for you or your parents, like a divorce or job loss.
Because of this multi-variable approach, you shouldn’t settle for the first financial aid package you are offered. You can — and should — appeal for more money, because there’s usually more money available and allocated specifically for families who appeal.
Why shouldn’t it go to you?
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