You could be missing out on free money for college.
Even if you think your parents earn too much money for you to qualify for financial aid, you should still fill out the form.
By Alexandra Rice Jan. 5, 2015, at 9:00 a.m.
Taken from U.S. News & World Report Money
The average student loan debt hovers near $30,000, and graduating from college this deep in the red is a tough way to begin adult life. Filling out the Free Application for Federal Student Aid, a government form that streamlines the college financial aid process, is a must if you want to qualify for assistance and reduce your student loan burden.
Unfortunately, the standard FAFSA has over 100 questions asking for everything from your net worth to your parents’ assets, causing many overwhelmed students to never complete it.
Don’t leave money on the table. Here’s why it’s worth the effort to fill out the FAFSA.
Who Qualifies for College Aid
The FAFSA helps determine whether students are eligible for federal loans, grants or work-study programs. Many colleges also require it to be on file for their own need-based or merit-based aid packages. According to the U.S. Department of Education, over $150 billion is given to college students annually via the FAFSA. To qualify for some of that money, you must meet basic eligibility requirements, such as being a U.S. citizen (though there are exceptions) and having a high school diploma or GED.
Figuring out how much financial aid you may be eligible for is simple, says Sean Moore, founder of SMART College Funding in Boca Raton, Florida. Take the cost of your school’s attendance and subtract your expected family contribution (EFC) as determined by the FAFSA. What you’re left with is the amount you’ll need and may receive in aid. Moore says there are many free calculators, such as one by The College Board, to help you with the math.
Be aware that the EFC calculated in your FAFSA probably isn’t the exact number you will have to pay for school. Each college has its own formula for determining aid, so you may be asked to pay less. Unfortunately, you aren’t guaranteed to receive the amount you need. If you don’t receive the full amount of aid you were hoping for from the government or your school, you may need to take out a private loan or take on a part-time job to fill in the gap.
Raul Alvarez of CollegeGreenlight.com, a website that offers free resources to first-generation and underrepresented college students, says there are a few other circumstances that may indicate you’ll qualify for need-based aid. If you have a single parent who is working and has multiple children, you are likely to qualify. You’re also likely eligible for aid if you qualify for a free or reduced-price lunch.
Why You Should Fill Out the FAFSA
Experts agree one of the most common reasons students don’t fill out the FAFSA is because they believe their parents make too much money, so they won’t qualify.
This is a costly misconception. “Everyone should fill out the FAFSA, because everyone is eligible for some form of financial aid, no matter their circumstances,” says Abigail Seldin, co-founder of College Abacus, a free college cost comparison tool.
She says most financial aid in the U.S. is awarded by universities rather than the government, and you usually can’t qualify for need-based or merit-based aid without a FAFSA on file. It’s important to be aware that many colleges offer merit-based aid that doesn’t even consider financial need; it’s based on achievements such as grades, SAT scores or athletics. In other words, the amount of money your parents make doesn’t matter for this type of aid, but you can’t get it if you don’t fill out the form.
When You Should Fill Out the FAFSA
Seldin recommends you fill out the FAFSA as soon as it’s available, which is typically in early January, to increase your chances of getting money. “The sooner you submit your FAFSA, the sooner your school can receive the results of your FAFSA,” she says. “So if your school is awarding financial aid or admission on a rolling basis, you are advantaged by having your information in early, because some schools will run out of money.”
Common FAFSA Mistakes
Moore of SMART College Funding says the latest statistics show that over 80 percent of submitted FAFSAs contain at least one error. He says a common point of confusion is which assets are countable. Pay close attention, as this can make a huge difference in how much aid you receive. For example, money in a retirement account won’t count against you, but money in a checking account will. Small family businesses also aren’t a counted asset, so don’t lose out on money by incorrectly including assets that should be uncounted, he advises.
Alvarez says some students also worry they can’t submit the FAFSA if their parents haven’t filed their taxes yet. Not a problem, he explains. “If your parents don’t have their W-2s yet, they can give you an estimate of their income, and you can easily file a correction of a FAFSA online. You don’t have to get it perfect the first time; it won’t count against you,” he says.
For more FAFSA mistakes to avoid, you can watch U.S. News Education’s video with financial aid experts discussing common FAFSA errors.
Filling out the FAFSA may be a headache, but the possibility of graduating with less student debt is worth the trouble. It costs nothing to sit down with your family and complete the form once a year, and your financial future may be brighter for it.