How to Save Money and Time Completing the FAFSA
(ARA) – Financing a college education is becoming increasingly difficult for many Americans, making competition for grants, loans, work-study, scholarships and institutional financial aid more intense than ever. Incorporating a little strategy and planning can increase your family’s chances of receiving federal student aid and create more time for finding other ways to save money for college.
Any student requesting federal financial aid is required to complete the Free Application for Federal Student Aid (FAFSA) each year. FAFSA information is used by Federal Student Aid to calculate the expected family contribution, which is subtracted from the cost of attendance at the school(s) a student plans to attend. That amount determines a family’s eligibility for federal aid.FAFSAs for the 2008-2009 academic year are being accepted between January 1 and midnight Central Standard Time, June 30, 2009. However, don’t wait until the last minute because federal aid is awarded on a first-come, first-served basis. In addition, most states and schools use FAFSA information to award their financial aid. Note that schools and states often have their own forms and deadlines.
Following a few simple pre-planning steps will help you complete the FAFSA more easily and faster, ensure your information is accurate and complete, and ideally save you thousands of dollars.
First, read and complete the FAFSA questions in advance at www.fafsa.ed.gov. Federal Student Aid estimates that first-time users will need less than an hour to complete the worksheet; however, it will take less time if you come prepared with all of the necessary information.
If you haven’t already, complete your 2008 tax returns. Federal Student Aid recommends that you do your taxes before completing the FAFSA because you must report your income earned in the previous year. You can save time by using certain tax preparation software programs that allow you to automatically transfer your tax data into an online FAFSA worksheet. “The College Student Financial Aid Worksheet in TaxACT Deluxe eliminates time and effort involved with completing a FAFSA worksheet,” explains Leigh Aragon, spokeswomen for 2nd Story Software, Inc., makers of TaxACT. ”Other features also help identify tax credits, deductions and strategies that can reduce a family’s income.” The higher a family’s cash assets and adjusted gross income, the less government assistance a family will receive. So, in addition to consulting your personal attorney or accountant, Aragon also suggests taking the following measures throughout the year in order to maximize your 2009 tax deductions.
* Contribute as much as you can to your retirement savings account.
* Prepay state taxes before the end of the year.
* Contribute to a flexible benefits plan.
* Make energy efficient improvements to your house.
* Pay down or pay off loans and bills.
* Sell bad investments by December 31.
Third, gather your tax returns, Social Security Number, driver’s license, bank statements and investment records. You’ll want these documents for reference only; you do not need to mail them to Federal Student Aid.
If you intend to complete the online FAFSA worksheet, apply for a PIN. A PIN will give you free access to your information on the www.fasfa.ed.gov Web site and allow you to electronically sign your FAFSA. Since your worksheet cannot be processed until it is signed, completing the free online worksheet and signing it electronically is by far the fastest way to submit.
Following these easy steps will help simplify and quicken the process of filling out the FAFSA, as well as increase your odds of obtaining the most Federal financial aid for 2008-2009 and in years ahead.
To learn more about FAFSA, visit www.fafsa.ed.gov. Information about TaxACT Deluxe can be found at www.TaxACT.com.
Courtesy of ARAcontent
I want to point out that the federal deadline for the federal aid application for the 2009-2010 academic year is not in 2009 (as stated in the post). The deadline is June 30, 2010. The 18-month window allows students and families to apply for aid if their financial circumstances change or if they are entering college in the second half the year. Some college costs may be paid retroactively with this aid, which are usually federal loans.
Yes 70% of all state and college aid deadlines fall before April 15, 2009 but you do have an 18-month window if you need it.
Because the federal student aid application (FAFSA) is daunting to some U.S. law authorizes 2 options for students – either prepare it yourself and file for free on the Dept. of Education’s web site OR pay a professional FAFSA preparer to do it for you. This approach is similar to having a professional tax preparer help you with income taxes.
The government’s computer review doesn’t catch all errors and these errors could reduce your aid award, and other errors can cause rejection which means there could be less money available by the time your error is corrected and your application accepted. So be very careful if you don’t use a professional FAFSA preparer.
If you choose a professional FAFSA preparer make sure the company has an A+ Better Business Bureau rating, uses people to review each answer to ensure accuracy, receives high ratings from past clients, and has the goal of making you eligible for the most aid possible.
With the average student aid award of $9,500 at stake (2007), help from a professional FAFSA preparer can relieve some of the stress of finding money for college.
Let me add to the tips about preparing your FAFSA:
Don’t include untaxed Social Security as income. The law changed this year. Reporting it will inflate your expected family contribution and lower the amount of aid for which you are eligible.
Children of divorced parents typically believe that the parent they live with is their legal guardian and that they are in a legal guardianship. This is not true in all cases. A wrong answer will incorrectly change the student’s dependency status to “independent” and impact the aid calculation.
More families are withdrawing funds from retirement accounts early – sometimes it’s taxed and sometimes it’s not. Counting these funds in both adjusted gross income and untaxed income will inflate your expected family contribution and decrease aid.
If you or a family member has had their job eliminated, you may be eligible to answer “yes” to the “dislocated worker” question. You need to meet one of four criteria on the day that you submit your FAFSA. Student Financial Aid Services is seeing that one in every 10 families has a member whose job has been eliminated. Being a “dislocated worker” affects how your assets are treated and could even reduce your expected family contribution to zero.
Don’t include your primary residence or family-owned business (less than 100 employees) as an asset, or you will be inflating your expected family contribution and lowering your potential for aid.
Not all businesses are treated the same when calculating assets. Different rules apply to family-owned businesses employing fewer than 100 people. Getting this wrong won’t reject your FAFSA, but it could lower the amount of aid for which you are eligible.
List your last name exactly as it appears on your Social Security card or your FAFSA will be rejected.
Double-check all numbers. That sounds simple, but transposing numbers is one of the most common mistakes and will affect your aid award.
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