Before You File Your FAFSA
It’s January, and the FAFSA is looming over your head. Every financial aid officer and guidance counselor has advised that you file your FAFSA, but you’re dreading it. Looking through all those confusing forms? No, thanks. You’d like to put it off as long as possible. But the reality is, the sooner you file your FAFSA the better. Many colleges have a pool of grant and scholarship money, and once it’s gone, it’s gone. You’re better off filing your FAFSA as soon as you can so you can get your hands on some of that “free” money.
But before you sit down and get started, make sure you have everything you need. Here are some of the documents you will want to have on hand:
Student’s Social Security card and driver’s license
You will need to use these for identification, and they must be entered correctly.
A parent and student PIN number (if dependent student)
Go to http://www.pin.ed.gov/ two or three days before you plan to sit down and file the FAFSA. Follow the instructions to request a PIN. For dependent students, both the student and a parent must apply for a PIN. You will use the PIN to digitally sign the document after you have completed it. Do not give your PIN to anyone.
The student’s and parent’s IRS 1040 forms (if dependent student)
Dependent students (under 24, still living at home, unmarried, etc.) will need to have information from their and their parents’ 2010 tax forms. If you have not completed tax forms for 2010 yet and your financial situation has not changed drastically since 2009, enter the data from your 2009 tax forms. When you have completed your 2010 tax forms, go back to the FAFSA website and revise your submission with the new data.
Current value on any investments
You will need to provide the sum of any of the following investments: Real estate that is for investment purposes (does not include the primary residence), trust funds, custodial accounts (UGMA and UTMA), 529 savings plans, money market funds, mutual funds, stocks, bonds, commodities, and CDs. You will also need to provide business assets (if you own a company with more than 100 employees) or farm assets (if you own an investment farm that the family does not live on).
Current bank statements
You will need to provide the current value of your cash, checking, and savings accounts. This should be the value on the day that you submit the FAFSA. If you go back and revise later, you should also revise this field.
Remember that you should always be honest while filling out your FAFSA. Falsifying information is a federal crime and could result in a significant fine. Also remember that many FAFSA forms contain mistakes, some of which can be costly. Ask your financial advisor or CAPlus representative to review your form before you submit.
About Bethany Warsaw
Bethany Warsaw has degrees in English and writing and is experienced in graphic design. She and her husband have two daughters, and she does freelance graphic design in her spare time.
11 TOP TIPS FOR GETTING THE MOST STUDENT AID POSSIBLE in 2011:
1. Don’t delay. If you file your income taxes around the April 15th deadline, don’t wait until your taxes are completed to file your FAFSA or you will miss most of the state and college student aid deadlines. Most programs award aid on a first-come, first-serve basis. Providing accurate estimates on the FAFSA as early as January 1, 2011 holds your place in the virtual aid line.
2. Be careful when calculating or estimating your adjusted gross income. Answering this question incorrectly won’t cause your FAFSA to be rejected by the Dept of ED, but a wrong answer could lower your aid award. Remember, your taxable income is not your adjusted gross income.
3. Don’t include untaxed Social Security as income. Reporting it will inflate your expected family contribution and lower the amount of aid for which you are eligible.
4. Children of divorced parents typically believe that the parent they live with is their legal guardian and that they are in a legal guardianship. This is not true in all cases. Whichever parent the student lived with the most in the previous 12 months is the legal guardian for FAFSA purposes. If neither (or lived with both parents equally), then whichever parent supported the child most financially in the previous 12 months. A wrong answer will incorrectly change the student’s dependency status to “independent” and impact the aid calculation.
5. More families are withdrawing funds from retirement accounts early – sometimes it’s taxed and sometimes it’s not. Counting these funds in both adjusted gross income and untaxed income will inflate your expected family contribution and decrease aid.
6. If you or a family member has had their job eliminated, you may be eligible to answer “yes” to the “dislocated worker” question. You need to meet one of four criteria on the day that you submit your FAFSA. Being a “dislocated worker” affects how your assets are treated and could even reduce your expected family contribution to zero.
7. Consider getting student aid advice and FAFSA preparation help from paid professionals. Federal law allows paid professional FAFSA preparation, much like tax advisors help families prepare their taxes accurately and correctly to maximize their tax refunds. Choose a professional FAFSA preparer who has a good Better Business Bureau rating, uses people to review each answer to ensure accuracy, tells you about your do-it-yourself option with the Dept of Education, receives high ratings from past clients, and has the goal of making you eligible for the most aid possible. With the average student aid award of $10,000 at stake, help from a professional FAFSA preparer can relieve some of the stress of finding money for college.
8. Don’t include your primary residence, car, boat, or furniture as assets or you will be inflating your expected family contribution and lowering your potential for aid.
9. Not all businesses are treated the same when calculating assets. Different rules apply to family-owned businesses employing fewer than 100 people. Getting this wrong won’t reject your FAFSA, but it could lower the amount of aid for which you are eligible.
10. List your last name exactly as it appears on your Social Security card or your FAFSA will be rejected.
11. Double-check all numbers and sign. That sounds simple, but transposing numbers and not signing the form are two common mistakes that will lose you your virtual place in the aid line.
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