The Free Application for Federal Student Aid (FAFSA) is the single most important document for determining your eligibility for student loans, grants, and other forms of financial aid. The form needs to be filled out each year, and how you fill it out can make a big difference when it comes to your financial aid award. Here are three tips for completing the form that will help you get as much money for college as possible.
1. Complete the FAFSA as early as possible
Deadlines for submitting the FAFSA can vary by state and institution. Some deadlines can be as early as February or March, but most schools begin accepting the FAFSA on Jan. 1. Since most financial aid, including federal, state and institutional grants, are awarded on a first-come, first-served basis, you’re better off sitting down, filling out the form, and turning it in as close to the beginning of January as possible.
Even though the FAFSA for the fall 2012 semester uses information from you and your family’s 2011 tax returns, you shouldn’t wait until you complete your taxes to submit the FAFSA. In fact, the FAFSA process is designed to allow you to estimate your 2011 assets so that the application process doesn’t stall as families hurry to calculate this year’s taxes first. Simply fill out the FAFSA using your 2010 tax filings and then go back and update your FAFSA application later with your finalized tax information.
You can get a list of FAFSA deadlines by state at www.fafsa.ed.gov/deadlines.
2. Opt for filling out the online version of the FAFSA
Although you can get a paper copy of the FAFSA, fill it out, and mail it in, it’s probably a better idea to hop on the internet and fill out the online version instead. Opting for the online version of the FAFSA will allow you to immediately get an estimate of your expected family contribution, which is used by the federal government, state governments, and colleges and universities to determine your eligibility for federal student loans, federal and state grants, and institutional financial aid. Otherwise, you’ll have to wait two or more weeks if you fill out the paper version. And the online version makes it easier to correct or update your FAFSA later on with your finalized 2011 tax return information.
The online version of the FAFSA can be found at www.fafsa.ed.gov/options.
3. Take advantage of how the FAFSA looks at assets to maximize your financial aid
The FAFSA looks at you and your family’s assets in particular ways, such as weighting student assets more heavily that parent assets. To maximize the amount of financial aid you qualify for, it’s important to take advantage of FAFSA’s blind spots and shield as many assets as possible from the income calculators:
- Since the FAFSA counts financial gifts form relatives and friends as income — and weighs your income and assets more heavily than your parent’s — it’s in your best interests to have gifts transferred to a parent’s checking or savings account.
- Since the FAFSA doesn’t count pensions and retirement funds as income, families should think about contributing as much money to them as possible.
- Distributions from 529 college savings plans owned by your grandparents will count as student assets. To prevent this, have your grandparents transfer their 529 college savings plan to you or your parent’s name so that it counts as parent assets.