High school students and their parents alike can get sweaty palms realizing college expenses are right around the corner. One of the biggest concerns around starting college is how to apply for financial aid.
The office of Federal Student Aid (FSA), which administers the Free Application for Federal Student Aid (FAFSA), is the largest provider of student financial aid in the United States. Each year, it issues more than $150 billion in federal grants, loans, and work-study funds to millions of students.
Here are answers to some of the most common questions when it comes to the FAFSA.
What Information and Documentation Will I Need to Apply for Student Financial Aid?
The FAFSA comprises seven sections of questions and requests for information regarding the student, his or her parents, and the colleges that should receive the student’s FAFSA information. Everything from general demographic and contact information (for example, marital status, mailing address, and Social Security numbers) to specifics regarding the student’s and parents’ assets (such as gross household income and 529 account balances) is requested.
Before filling out the FAFSA, gather key documents, including federal income tax return(s) for the parents and/or the student (as appropriate) and other tax and financial information and documentation. Starting with the 2017-2018 FAFSA, you’ll be required to report income information from an earlier tax year — you will report 2015 income information on a 2017-2018 form, for example. Find a complete list of the necessary documents and information at the U.S. Department of Education’s Federal Student Aid website.
When Should I Apply for Student Financial Aid?
For federal student aid, you can start filing a 2017-2018 FAFSA as early as Oct. 1, 2016 (three months earlier than previous years’ forms). The deadlines for state or college aid vary by program and by state, so it’s important to familiarize yourself with the various aid programs and their respective deadlines. The FSA’s website provides deadline information for some programs.
There are a few federal student aid programs that have limited funds, and many schools award aid on a first-come, first-served basis, so it may be beneficial to apply as early as possible — even if current taxes for the student and/or his or her parents have not been filed. If this route is chosen, and estimated tax information is provided on the FAFSA, it must be corrected after the appropriate return(s) is filed. In addition, because financial situations can change from year to year, a new FAFSA must be completed for every school year in order for the student to stay eligible for student aid.
Fortunately, filling out an application is free, the FSA provides several resources, and the process can take less than an hour.
How Is the Amount of Student Aid Determined?
Most students are eligible for some form of financial aid. States’ and schools’ financial aid programs use the information provided on the FAFSA to determine financial need. They usually apply a mathematical formula that takes into account the cost of attendance at the school or schools listed (up to 10 may be included on the FAFSA), minus the expected family contribution. The size of a family and the parents’ income, among other factors, are typically considered when determining financial need and aid award amounts.
How Do Federal Student Loans Compare to Private Student Loans?
Federal student loans often have fixed interest rates while private loans can have variable interest rates. Also, the terms of a federal student loan may not require repayment until after a student graduates and may allow for monthly payments based on income.
Given all of the upsides, if you’re starting college — or your son or daughter is — it’s worth applying for student aid.
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