What You Need to Know About FAFSA (The Free Application for Federal Student Aid form)
If you have a college bound high school senior in the house, here are some useful tips you should know about filling out the FAFSA form. The application for the 2019-2020 school year is now available as of October 1st. You can also use this estimating tool to get a sense of options without filling out the complete form.
All students, even students from affluent families, should submit an application. Though only families with income of less than $50K qualify for federal grants, there are thousands of state and private scholarships that are accessible only if you fill out the form.
You also need to fill out the form to apply for low cost and forgivable federal student loans, which are available to families with less than $250K in annual income.. Private loans cost much more.
Allow 2-4 hours to complete the form (yes, 2-4 hours.) Both student and at least one parent (typically the “head of household”) must be involved with this process, as information is required from both. In particular, the parent will link their Federal Tax Return from two years prior to speed the collection of income data. We recommend setting aside an entire Saturday or Sunday morning so that both student and parent can concentrate.
Make sure that you properly record information about parents, step-parents, legal guardians and siblings, and also properly record your own marital status (and whether you are legally emancipated from your parents.)
Young men MUST register for Selective Service, or they are ineligible for financial aid even if they filled out the FAFSA properly.
Keep an eye on deadlines (the spring through June,) but don’t submit the form so early that you don’t actually know your list colleges and universities to receive the form. Target November-December as some schools award aid on a first come-first served basis.
Finally, don’t go crazy trying to hide assets. Right off the bat, assets in retirement accounts are excluded, as is equity in the family’s primary residence. Families that have substantial assets in taxable investment accounts also typically have high incomes, which factors far more into the aid calculation. You can attempt to hide assets, but you can’t hide income as that number is derived directly from IRS records. In other words, negligible benefit.
Advisers at Heron Wealth cheerfully help our families fill out these forms over a screen share. We have the experience to explain the nuances and ready access to the family’s investment, retirement and 529 College Savings accounts to fill in the details.