This entry was posted on Saturday, December 1st, 2007 at 1:55 pm and is filed under College Planning For Students, Parent Guide to College Planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 1, 2007
Filling out your FAFSA
Today we’ll talk about the FAFSA form and how it is used to help determine how much your child will papy for college.
FAFSA stands for Free Application for Federal Student Aid. It is the primary means for transmitting your families financial information to colleges and universities so they can determine what kind of financial aid package. The FAFSA is due ASAP as you can get it filed, but not before January 1st, of the year your student will start his/her next year of college. (YOU heard me right, you will need to file one each year of college life).
On the FAFSA, you will report the parents and students assets and the parents and students income. The income is what is reported on the tax return for the previous year. For example, if your child is going to college for the first time in August, 2008, your FAFSA is due next month. The income figures will come from your 2007 tax return (estimates are OK), with some additional information requested to give the colleges a better insight into your actual “income cash flow” for the year of 2007.
You will also report your and the students assets on the form. The assets are valued as of the date the FAFSA is signed.
But be careful !
I’ve seen scores of FAFSA’s filled out showing all kinds of assets that are not reportable–things like IRA accounts, annuities, cash value of life ins. policies. The colleges need to get some idea of what kind of income and assets are available for education costs. IRA’s, annuities, etc. are not readily available, without some serious tax consequences, for these costs, so they are not reportable. This is by no means an exhaustive list!!
Well, you can probably see that these pieces of information can be “controlled” if you have the ability to control your income from year- to- year, or the flexibility to place your idle cash into an instrument that will not show up on the FAFSA.
There is another point to make: income or assets in the child’s name (remember that we need to show the parents as well as the student’s information) is assessed at a much higher rate than the same item in the parents name.
So, you gather all your, and your childs, financial info and fill out the form, either on-line or manually, and submit the form. If you file on-line, you will have an approximate amount for your EFC (expected family contribution) in a few seconds.
What’s this EFC?
It is the amount that the college now uses as a starting point to compute how much aid they will give you to help pay for college. The higher your income and assets, the higher the EFC and the lower your financial aid package. (At least, thats the way is usually works).
What’s a family to do when, like so many of us, they are in that “in-between” space where they have too much income to get meaningful financial aid…..but not near enough to pay the costs of college at $50,000 to $120,000 for a four year diploma?? Well, stay tuned. That’s what I’m here for.
For now, the important thing to remember is to GET THAT FAFSA FILED EARLY! (Try saying that three times real fast). The earlier you file the better your chances are for a good award package.
You will hear that nobody should pay to get their FAFSA completed, but I’ve seen plenty of incorrect forms and I’ve seen frustrated parents that just want to get the process over. People in the right position would do well to get some help and get a chance at more aid, rather than cut all their opportunities at the very start.
If you need help, contact me.
Next time we’ll talk about how to go about getting some extra financial aid once the FAFSA is filled out and filed.
December 14th, 2007 at 1:13 am
After learning about the FAFSA financial aid program and realizing just how helpful it can be for your future, you need to go for it. At least there must be a way to take you to the actual process. You do this by filling up a FAFSA (Free Application for Federal Student Aid) form that requires you to fill in all important and detailed information supposed to determine your eligibility for financial aid. Poly Muthumbi is a Web Administrator and Has Been Researching and Reporting on FAFSA FORM for Years. For More Information on FAFSA form, Visit Her Site at FAFSA FORM
March 7th, 2008 at 9:43 am
Are annunities reportable on FAFSA? How about long term 4 year C.D.? I recently came into a sizeable sum of money from insurance settlement, please give me some ideas of where to “hide it” legally of course so that my kids and I do get some forms of financial aid. I do not want to see my settlement money go into paying college expenses. It will be used as my retirement savings.
thanks
JR
March 7th, 2008 at 10:17 am
Is the value of a home business reportable on a FAFSA?