For many students, getting accepted into college is only half the battle. Receiving that acceptance letter is a great accomplishment worth celebrating. But it won’t do you much good if you can’t pay the tuition. These tips for filling out your FAFSA application can help you maximize your chances.
Qualifying for financial aid is not the same as receiving it. Colleges have more demand for aid than they have dollars to award.
11 steps to filling out the FAFSA application
Bob Cole, president of Private College 529 Plan, has worked in the student loan industry for two decades. He shared 11 tips to help you successfully fill out the FAFSA application and pay for college. Let’s take a look.
1. Give yourself a deadline to complete and submit the FAFSA application
“Qualifying for financial aid is not the same as receiving it,” says Cole. “Colleges have more demand for aid than they have dollars to award.”
The earlier you submit the FAFSA application, the more likely you are to receive university and state grants that may run out.
2. Gather the correct parent, student, and spousal income
The first step to filling out the FAFSA is to figure out whose information you need. If your parents are married to each other, you’ll generally provide yours and their financial information. If your parents aren’t married to each other, you’d likely have to fill out the information of the person who declares you as a dependent on their tax return. Stepparents’ income counts, too.
Independent students don’t have to declare parent income. You can be declared independent for a variety of reasons—for example, if you’re an active duty military member, 23 or older as of January 2019, or married.
Independent married students also need to provide spousal income.
3. Get FAFSA IDs
Everyone whose income is required for filling out the FAFSA needs their own Federal Student Aid ID. IDs can be created on the FSA website.
4. Plan to transfer your tax information
The IRS Data Retrieval Tool allows you to transfer your tax information directly into your FAFSA application.
5. Provide additional proof of income if needed
If your income has dropped for any reason since 2017, you’ll want to contact the school’s financial aid office.
Potential reasons would include illness, divorce, job loss, or working fewer hours due to returning to college or giving birth.
You’ll provide an explanation of reduced income or changes in your economic situation on a “special circumstances” form.
By doing so, you could receive grants or scholarships that you wouldn’t have been eligible for based on FAFSA calculations.
6. Gather bank and investment account information
You’ll need to gather information for any savings, checkings, and most investment accounts you have. You can skip 401(k) accounts. Home equity is considered an asset unless it comes from a primary resident or farm property.
7. Learn how a 529 plan can impact financial aid eligibility
Colleges factor in 529 savings plans when determining a student’s financial aid eligibility. This can either help or hurt you depending on who owns the plan.
If a 529 plan is owned by a student or one of their parents, the funds are considered parental assets on the FAFSA. However, 529 plans receive preferential treatment by FAFSA. The first $20,000 fall under the asset protection allowance. After that only 5.64% of the assets count as available funds to pay for college.
Make sure you report income from the correct family members. You don’t want delays in receiving financial aid because of misinformation.
If the 529 plan is owned by anybody else, such as a grandparent, it isn’t reported as an asset on the FAFSA. Distributions from the plan are considered untaxed income to the student, though. And untaxed income can impact a student’s financial aid eligibility by as much as 50% of the distribution amount (source).
8. Gather your list of top 10 schools
Select your top 10 schools on the FAFSA application and compare the financial aid options from each. You can make changes to school choices later.
But remember, the faster the school has your financial information, the more likely they are to award you financial aid that could run out.
9. Request additional grant and scholarship information
Everyone should call financial aid offices at their top school choices to learn about additional grant and scholarship information.
Financial aid counselors may tell you about department scholarships for your major, local scholarships, and additional money you could receive based on your family’s income compared to other students.
They will also tell you about any additional forms and applications you may need to fill out, such as the CSS Profile.
529 plans receive preferential treatment by FAFSA. The first $20,000 fall under the asset protection allowance. After that only 5.64% of the assets count as available funds to pay for college.
10. Learn about federal student loan options
The federal government may offer you subsidized loans, unsubsidized loans, PLUS loans, or a combination of all three. If you don’t understand the difference, you could end up with a higher interest rate loan or fewer repayment options.
For instance, you could decide not to take out subsidized loans—where the government pays your interest while you’re in school at least part-time—because your parents want to borrow the money under their name as a parent PLUS loan.
The interest charged could be twice as much and you could lose income-driven repayment options that are only available to students.
Learn more about federal student loans.
11. Consider private lending
Private student loans can help fill any gaps left after you’ve exhausted all your financial aid options. With good credit, these loans can come with attractive interest rates, which can either be variable or fixed.
But with many lenders to choose from, there are options for all types of borrowers. Each lender offers different rates and terms depending on their eligibility requirements.
Learn more about private student loans and how they compare to federal loans.
- The faster you fill out the FAFSA application, the more likely you are to receive financial aid.
- Federal grants are awarded based on need and do not run out.
- Make sure you report income from the correct family members. You don’t want delays in receiving financial aid because of misinformation.
- Always select 10 schools on the FAFSA application. Then, you can compare awards from your top choices. You can also make changes to school choices later.
- Fill out any extra information requested. You don’t want to lose out on financial aid because of a missing document or piece of information.
- Understand your federal and private student loan options.
The only way to find your best option is to review each one available to you.
Figure out your financial aid and federal student loan eligibility. Then, see what kind of offers you can get from various private lenders as well.
It may sound like a long and tedious process. But you can save yourself the headache by comparing private student loan lenders side-by-side.