As the season turns and new school year starts, there is an additional variable in play for high school seniors and their families. The college application process has now begun in earnest. You’ve studied hard, participated in extracurricular activities, and prepared for this process for a while and now it’s time to put your plan in action. However, not only do you have to get accepted to your dream school you also have to pay for it and the first step in accomplishing this is completing the FAFSA. Here are 8 critical facts that we think everyone should know about completing the FAFSA and maximizing their financial aid:
1. You can fill out the FAFSA now: Starting this year the FAFSA became available for 2017 high school seniors as of October 1, 2016; three months earlier than the customary January 1 availability. We encourage all families to fill out their FAFSA as soon as possible so that they have an accurate picture of financial aid as they apply for colleges. However, it is still vital to ensure that the FAFSA is completed accurately!
2. You are reporting older tax information: Due to the earlier FAFSA availability your income used will be from your 2015 tax return information. Because this prior data is being used there is now an option to automatically import this data from the IRS while filling out the application, helping to streamline the application process.
3. Know your college aid deadlines and requirements: A small portion of colleges and universities have moved up their college aid application deadlines 2 to 3 months. Make sure you know these deadlines!
4. Everyone should fill out the FAFSA: The idea that higher income families should forgo the FAFSA application is a myth. The FAFSA is used to determine some non-need based scholarships and grants at certain universities. Also, it is a requirement to receive cheap federal loans, some of which are also forgivable, that all students qualify for simply by completing the FAFSA.
5. Know what forms you need to complete: While the majority of universities require just the FAFSA to receive their financial aid; there are approximately 300 private universities that require students to complete the CSS/Financial Aid profile (College Scholarship Services) in order to qualify for university financial aid. In addition to this some universities also have institutional forms that must be completed.
6. Report your assets correctly: The FAFSA requires you to report 3 types of assets: cash, checking, and savings accounts, investments, and businesses you own. The application does not require you to report the value of your primary residence, retirement accounts, and certain other excludable assets. Reporting your assets correctly is critical towards maximizing your financial aid!
7. Plan your spending wisely: The FAFSA asks you to report your assets on the day you complete the application. This provides the opportunity to spend down your assets between now and when you fill out the FAFSA. While spending money just for the sake of spending is not recommended, it may be prudent to consider completing any big expenditures (i.e. buying a new car, remodeling the house, paying down a large credit card bill) before you fill out the FAFSA.
8. Consider 529 plans: The FAFSA treats student assets much more harshly than parent’s assets in its calculations. However, all 529 accounts held by the student are asked to be reported as parent assets on the FAFSA. If you have a custodial account holding college savings it may be wise to transfer these funds when possible too custodial 529 accounts before filling out the FAFSA. Just be sure that you know 529 plan funding and distribution rules before doing this or there could be harsh tax penalties.
This is just some of the critical information that is important to know about the FAFSA, but it is far from comprehensive depending on your individual situation. If you have more questions about the FAFSA or your financial aid options you receive upon completing the FAFSA, please reach out to any of us at Fortis Capital Management and we would love to assist you. Best of luck!