What you need to know about FAFSA

By diamondcpas Personal Finance Comments Off on What you need to know about FAFSA

If you, or someone you know, are headed to college, be sure to familiarize yourself with FAFSA – Free Application for Student Aid. Regardless of your family’s income, everyone should complete the form, and the sooner, the better, according to financial advisors and college admission officials.

The application became available Oct. 1 for the 2021-2022 academic year.  It’s always wise to file your application as early as you can, as some financial aid is provided to those whose qualifying applications arrive first.

While the detailed forms can seem a bit overwhelming at first, there are several tips that can make it easier and help you navigate the process without too much frustration. An application should only take about one hour to complete.  Be sure you have your parents’ or guardians’ tax information available, as well as yours, advisors suggest, to make things move more quickly.

Each person on the application will be given an FSA ID. Keep track of that identification, as you’ll need it multiple times throughout the application. Also, the ID will serve as your electronic signature.

As the cost of higher education continues to skyrocket, it’s important to remember that every student should file a FAFSA. The government takes into account income, the number of people in the household and the cost of living. Financial aid can include everything from scholarships and grants to low-interest loans.

A FAFSA has to be filed each year that you want to attend school, although after the first year, some of the information will be auto-filled, making the process easier. Experts recommend using prior-prior year tax information to fill out the application, instead of the prior year’s tax information.  Keep in mind, you can import tax records into your FAFSA by using the IRS data retrieval tool. You’ll see “Link to IRS” to make the connection.

Don’t just fill in your favorite school, add other universities and colleges in which you have an interest. Since you can include up to 10 schools to receive your FAFSA information, it doesn’t hurt to add them. Each school will let you know what, if any, financial aid you might qualify for from them.

Be sure you report everything asked for accurately and completely. A failure to do so can make you ineligible for future aid and, possibly, legal consequences. And last, but not least, if you receive financial aid, you must accept it in order to actually receive the money.

After you file your FAFSA form, the colleges you’ve chosen to receive your information will determine your eligibility for financial aid. They do this by subtracting your Expected Family Contribution (EFC) from the cost of attending the school.  If a family has more than one student in higher education at a time, the student’s EFC will be lower, making her eligible for a higher level of assistance.

If you have questions or concerns about the FAFSA application or the information needed, please contact one of our tax advisors. We are happy to help!

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