The Free Application for Federal Student Aid, or FAFSA, is the form students need to fill out to get any financial aid from the federal government to help pay for higher education. Each year, over 13 million students who file the FAFSA get more than $120 billion in grants, work-study, and low-interest loans from the U.S. Department of Education. Many states and colleges also use the FAFSA to determine which students get financial aid—and how much they’ll get. The FAFSA asks for information about you and your family’s finances, including tax returns, so students often need their parents help to complete it.
Countless numbers of students and parents are not completing the form accurately. These students will miss out on significant amounts of dollars in grants and federal funds simply because they are not aware of how to properly fill out a FASFA application and, in some cases, not filling out the application at all. The FAFSA should be completed whether the student decides to attend an elite school or local community college. Although a popular misconception, the student’s age and lower income compared to the parent’s higher annual salaries are not beneficial at all. It is not always the case that the parent’s income reduces the amount of grant or loan money the student may potentially receive. Also often missed, many families are not aware that the federal work-study program is a federal student aid program, and that filling out the FAFSA application is the only way to qualify. Federal aid also includes Pell grants and federal student loans. Student loans are subsidized and unsubsidized. A subsidized loan occurs when the U.S. Department of Education pays the loan interest after the recipient is enrolled as at least a half-time student. An unsubsidized loan’s interest begins to accrue when it is received, even though the student is enrolled in school.
Almost all students should consider filing the FAFSA even if they believe their parents make too much money to qualify for any awarded money. Families should know that not all financial aid is based on need. It is possible to qualify for a merit scholarship and it also requires a completed FAFSA to be filed. The FAFSA is free to file and there is a checklist to determine what documents are needed to complete the application. While it takes applicants less than an hour to complete the FAFSA, it could take much longer to locate important documents.
Know that you can use “prior-prior year” tax information to complete the FAFSA instead of the prior year’s tax information. For example, using 2020 tax information is sufficient to complete the 2022 and 2023 forms. This allows you to file the FAFSA before having to file the 2021 tax return.
In situations of divorce, the FAFSA should be filled out by the parent who gave the most financial support to the student in the last 12 months.
For a parent who pays child support, the amount of child support can be deducted from their income to reduce the total income, so that the student has a chance to receive more federal aid.
Oct. 1 is the first day to fill out the FAFSA for the new year. There is approximately $240 billion of federal aid every year. So, if you are heading to college, make sure you complete the FAFSA on time. Avoid companies that charge a fee to help you fill out the form. Many are scams. The complication sometimes comes when gathering your information, which you would have to do anyway, and not with completing the form itself.
Kevin Theissen is the owner and principal of HWC Financial in Ludlow.