When it comes to applying for financial aid for college, no single document is more important to fill out than the Free Application for Federal Student Aid, or FAFSA. It’s the best way you can ensure you have a shot at obtaining financial aid.
The FAFSA gathers information about income, assets and family demographics to calculate a family’s expected contribution to college expenses and determine their eligibility for federal student aid.
It’s the starting point for applying to almost all student financial assistance programs. And many schools use it as part of their applications for nonfederal aid.
“Aid is rewarded from three different sources: the federal government, from states, and from colleges and universities themselves,” said Martha Holler, senior vice president at Sallie Mae, a financial services company specializing in education. “You want to see how much you’re eligible for so that you maximize how much money you’re getting from other sources vs. how much you’re contributing from your own pocketbook.”
Pay attention to filing deadlines. For federal student aid, the deadline is June 30, 2016, for the 2015-16 academic year.
It’s very important that you not delay filing the FAFSA because some of the student aid is awarded on a first-come, first-served basis. If you don’t fill out the FAFSA, you’re potentially leaving money on the table.
“Students who file the FAFSA in January, February or March receive more than twice as much grant funding, on average, as students who file the FAFSA later,” said Mark Kantrowitz, publisher of Edvisors Network, Inc., which publishes college financial aid information.
“Every student should complete the FAFSA each year, even if he or she did not get any aid last year,” Kantrowitz said. “The financial formulas are complicated enough that it is difficult to predict whether a student will qualify for financial aid without applying. Even small changes may have a big impact on the amount and types of financial aid the student will receive.”
Examples include changes in income, student assets, the number of children enrolled in college at the same time and financial aid formulas.
“Families tend to underestimate eligibility for need-based aid and overestimate eligibility for merit-based aid,” Kantrowitz said.
The new year just started, so most families haven’t filed their 2014 income tax return. You can still submit your FAFSA now using estimated tax information, but then you must correct that information after you file your return.
The easiest way to complete or correct your FAFSA with accurate tax information is by using the IRS Data Retrieval Tool through www.fafsa.gov.
The tool allows students and parents to view and transfer their most recent tax return information directly into the online version of the FAFSA.
One of the most challenging parts about the FAFSA is how it defines a parent.
“Who is considered a parent on the FAFSA is a source of confusion for many students with nontraditional family situations ever since last year’s FAFSA changed the definition,” Kantrowitz said. “The U.S. Department of Education is adding some help text to clarify. But there is still a lot of potential for confusion.”
For federal student aid purposes, a student’s parents aren’t limited to just biological parents.
“An adoptive parent is treated in the same manner as a biological parent on the FAFSA,” Kantrowitz said. “For example, if the student’s grandparent legally adopts the student, the grandparent will be required to complete the FAFSA. But, if the grandparent is a legal guardian for the student and has not adopted the student, the grandparent cannot substitute for the parents on the FAFSA, even if the student is living with the grandparent.”
Also, a same-sex marriage counts as married on the FAFSA.
“Biological/adoptive parents includes both parents listed on the student’s birth certificate, even if they are same-sex,” Kantrowitz said.
It’s important for all parents to report the number of children in a family attending college, because that works to your advantage.
“The number in college has a big impact on eligibility for need-based aid, because the parent contribution portion of the expected family contribution is divided by the number in college,” Kantrowitz said.
So the more children you have in college, the better it is for you. It almost always ends in more aid, Kantrowitz said.
Pamela Yip is a personal finance columnist for the Dallas Morning News.