Understanding the FAFSA

by Mark Kantrowitz, Publisher of FinAid.org and Fastweb.com
Understanding the FAFSA

There is an abundance of state aid available to students attending private and public schools. But most schools still require completion of the Free Application for Federal Student Aid (FAFSA) to help them determine how much aid is needed and how that aid should be packaged.

How does it work? The FAFSA is used to calculate the Expected Family Contribution (EFC), which is a measure of your ability to pay. The EFC is subtracted from the college's cost of attendance to determine your financial need. (The cost of attendance includes tuition, fees, an allowance for room and board, books and supplies, transportation and other costs associated with enrollment in college.) The financial aid package you get from your school is based on your financial need.

When to Submit a FAFSA

The FAFSA should be submitted as soon as possible after January 1. Don't wait until you have filed your federal income tax return or been admitted to college.

It's okay to estimate your income based on your W-2 and 1099 statements and the last pay stub of the year. You'll have an opportunity to correct any errors later. While you can qualify for federal student aid as late as June 30 of the following year or the last day of classes (whichever comes first), it's better to get the form in earlier. Some states and colleges have much earlier deadlines for their own aid funds, some as early as February or March.

How to Submit a FAFSA

The FAFSA can be submitted online at www.fafsa.ed.gov. The online form has built-in edit checks to catch errors and intelligent skip logic to avoid asking you irrelevant questions. It typically takes about an hour to complete the form, although it can sometimes take longer the first time you complete it, especially if you haven't gathered the documents you'll need.

You will need a PIN to sign the form electronically. You can obtain a PIN at www.pin.ed.gov.

If you need help completing the form, there are several sources of free help. The US Department of Education sponsors a toll-free hotline to answer questions about the FAFSA and federal student aid, 1-800-4-FED-AID (1-800-433-3243). Several dozen states sponsor College Goal Sunday programs, where college financial aid administrators volunteer to provide free in-person help completing the form. You can also ask the financial aid administrator at a local college for help.

The most common mistakes on the FAFSA include:

  • Errors involving the Social Security Number or name. Digit transpositions are common. Also, your name on the FAFSA must match your legal name as it appears on your Social Security Card, even if you use a different name now.
  • Errors involving total income tax or adjusted gross income. Some applicants report the adjusted gross income, the amount withheld or the taxes due in the answer to the question about tax liability. The FAFSA refers to specific lines on your federal income tax return. Use those figures instead of trying to use a shortcut.
  • Answer the question about type of income tax return carefully. If you were eligible to file an IRS Form 1040A or 1040EZ instead of IRS Form 1040, specify this on the FAFSA. This can make a big difference in the amount of financial aid you get.
  • If you are separated but not divorced, you should answer "Yes" to the question "As of today, are you married?"

If you watch out for those errors, have your documents in order, and access the help line from the U.S. Department of Education when necessary, completing the FAFSA can be relatively painless process.

Mark Kantrowitz is an expert on paying for college. He is publisher of FinAid.org and Fastweb.com, the leading free web sites for information about student financial aid, student loans and scholarships.

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