Tuesday, June 19, 2018
A crash course on college financial aid paperwork
Your child got into college—now, how do you pay for it?
If you’ve been diligently saving money in a 529 plan, you still might not have enough to cover all college-related expenses. Items such as food and study materials aren’t always considered eligible under 529 rules, which means you’ll be saddled with extra costs.
College financial aid could significantly offset the amount you’re responsible for, freeing up more of your own resources to cover the items not eligible for 529 funds or other financial aid.
529 College Savings Series
- Saving for College: What is a 529 Plan?
- When Should I Start Saving for College?
- Five Mistakes That Can Derail Your 529 Savings Plan
- 529 Plans: How to Plan for Merit Aid
- How Do Colleges Determine Financial Need?
- How to Help Your Child Make Mature Decisions on College and Their Career Path
This guide examines the college financial aid application process in closer detail and offers actionable tips for completing your paperwork correctly and on time.
An Overview of College Financial Aid Forms
There’s an estimated $130 billion available in federal financial aid each year, and your student may be eligible for a portion of it. In fact, nearly two-thirds of all college students receive some combination of grants and/or scholarships to help pay for college.
When you’re diligent about applying for financial aid and you’re saving money in a 529, the potential burden of student loans can be greatly diminished.
The key is understanding how you can take advantage of federal student aid by filling out the right forms at the right time.
The Free Application for Federal Student Aid (commonly known as FAFSA) is a form filled out by both parent and student to determine eligibility for federal student aid.
A new FAFSA must be filled out each year, as financial situations can vary from year to year.
The types of financial aid resulting from FAFSA are as follows:
- Pell Grants: Grants are offered in amounts up to $6,095 for 2018-19.
- Federal Work-Study Program: This program allows students to work part-time (e.g., an on-campus job) to earn up to a certain amount. In many cases, the school pays for about half of the student’s wages, and the government pays for the other half.
- Stafford Loan: This fixed interest rate loan is available for students enrolled at least part-time and is either Federal Direct subsidized or Federal Direct unsubsidized.
- Federal Perkins Loan: Similar to the Stafford loan, the Federal Perkins Loan is lent directly by schools. The fixed interest rate for this loan is set at 5 percent.
How to Fill Out the FAFSA
To begin your FAFSA, you first need to create a unique user ID and password. Go to fafsa.gov and click “Start A New FAFSA.”
When parents fill out their portion, they create a Save Key. It’s a temporary password your child uses to log in and complete their part of the application.
Tips for Filling Out the FAFSA
Unfortunately, the FAFSA isn’t a quick and easy form. Questions about your family’s finances, including investments and savings, are enough to make your eyes glaze over.
The following tips can help you get the best possible outcome from your FAFSA submission:
- Fill out the form completely. Skipping sections or failing to enter “N/A” if a question doesn’t apply to you can harm your chances of securing the aid you deserve.
- Use accurate information, not guesses. If you’re not sure what information you need to complete the form, print out a practice form before starting to fill in the real thing. Knowing what you need ahead of time can prevent frustration later. You can access a copy of the FAFSA worksheet here.
- Don’t wait until the last minute. If you’re mailing the form, you’ll need a few days to ensure that your form makes it to its destination, in addition to processing time. If you’re filling out the form online, a simple technical error or server issue can prevent you from uploading your information. If this happens, there may not be time for you to resubmit the form later.
- Review your form before you send it. It’s easy to skip something or forget about a section.
- Save a copy. If your form gets lost, you’ll have a backup.
In addition to the FAFSA, some colleges may require students to fill out a College Scholarship Service (CSS) Profile, which serves as a more detailed snapshot of a student’s financial situation and is used primarily by private colleges to determine how to distribute the school’s funds.
Unlike the FAFSA, there is a fee for filling out a CSS Profile. Expect to pay $25.00 for the first college you send the CSS Profile to, and $16.00 per subsequent college. Since you must fill out a new CSS Profile each year, you will be required to pay this fee each time.
You should only fill out a CSS Profile if your selected college requires it. To start, go to cssprofile.collegeboard.org and read through the overview section. You can also access live chat or support while filling out the application.
Financial Aid Deadlines
The FAFSA becomes available on October 1 for the following school year. However, you should check with the individual college to determine FAFSA or CSS Profile deadlines.
Keep in mind that applying for financial aid doesn’t hurt your child’s chances of being accepted into a university. Schools look at their academic record, achievements, and what each student can bring to the campus community. In fact, financial need can sometimes help a student’s ability to gain admission. Schools want a diverse group of students, and financial aid may play a role in their efforts to develop one.
The biggest favor you can do for yourself is to apply early while there still are plenty of funds to distribute. Doing so can be the difference between getting a financial boost or footing the entire bill yourself.
For further guidance in planning for college costs, talk to one of our experts today to create an action plan worthy of your child’s future.
Brett Carolan, CFP® serves as an advisor at Brighton Jones.
Read other posts in our 529 College Savings series: