Friday, January 2, 2015

The Details are in the FAFSA

The start of 2015 brings with it two things: Resolutions and tax season. We'll leave the resolutions part to others for now, but one of the components of tax season for those in college is the completion of the Free Application for Federal Student Aid (FAFSA) for the next school year. Completion of the FAFSA is the process by which students apply for financial aid from the Federal government and the universities they plan to attend. There's a great deal out there on this process (start here: so what I think might be helpful is to discuss some topics I did not understand when I started the FAFSA process all those years ago. 

College costs a ton of money. We hear reports on the soaring costs of college but it never clicked with me just how serious to take this process until years after I graduated college and the student loan payments prevented me from doing things a lot of my friends were doing. You need to know the Cost of Attendence of all the schools you are applying to. Each school you list on the FAFSA should tell you this number. If they don't, ask. Your education may cost as much as a house. Are you doing the same level of work researching this process as you would buying a home?

You need to know how much you are expected to pay out of pocket. I didn't realize that the government calculates an Epected Family Contribution that students and parents should have saved and ready to pay for college. That's actual cash that you're already expected to have. The aid package that's offered doesn't cover these costs. Worse yet, this contribution amount can change based on the taxable income of students and/or parents annually. The good news is that there's a worksheet available to help you calculate the contribution ( 

You don't need to accept every line item in the financial aid package offered by your school. Your aid package may include money for room and board or living expenses or books. If you don't need that money, simply tell the financial aid office at that school to remove it from your plan. I've seen too many students take out additional money (all loans mind you) after their fees have been paid for and blow it on things only a 19 year old with an "extra" $1,000 will buy. On a typical repayment plan it could take 6-12 months to cover that mistake

Lastly, financial aid in the form of scholarships and grants may need to be renewed. These types of aid are particularly sensitive because this is the free money everyone is trying to get their hands on. Just because they showed up on your plan this year doesn't mean your school will automatically offer them again as a returning student without a separate application process. If you miss the application process the free money you got this years could turn into a loan next year. 

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