Answering Your Questions About The FAFSA
Now that January has arrived, it’s time for high school seniors and their parents to fill out the FAFSA, or Free Application for Federal Student Aid. The FAFSA is the form you are required to fill out if you want colleges to consider you for financial aid.
While families have their own unique circumstances, here are some of the top questions I come across this time of year and my answers which will hopefully help you along the way as well.
1. We make too much money, we probably shouldn’t bother filling out the FAFSA, right?
Wrong. Regardless of how much (or how little) you make, you should always fill out the FAFSA. Even if your EFC is very high, there are still non-need based loans like the Direct Unsubsidized Loan or Parent PLUS Loan which can help you spread out the costs. But, to qualify you must fill out a FAFSA.
2. How do parents who have joint custody and are both remarried with new spouses file the FAFSA??
When students come from divorced families, financial aid eligibility is based on the income and assets of the custodial parent. This is the parent who the student lives with for the majority of the year, even if it’s six months and one day. Even if the non-custodial parent has a considerably higher salary than the custodial parent, this parent’s income and assets are not factored into the federal financial aid eligibility calculation.
3. We’re going to have two kids in college at the same time, how will this affect our financial aid eligibility?
How many kids you have in college at the same time has a very big impact on financial aid eligibility. Consider that your EFC is divided by the number of children enrolled in college. If you have one child in college and your EFC is $40,000, then that’s what colleges would expect you to pay. If you have two kids in at the same time, the EFC will be $20,000 each. This is why it’s also important to file a FAFSA each year. Even though you may not get a lot with one child in college, if you have a second one entering a year or two later, you may end up qualifying for something.
4. We won’t have our taxes done until late March, can we just apply for financial aid then?
You can, but you shouldn’t. Financial is aid is very much a first-come, first-serve process. Additionally, some states like Connecticut have February deadlines for state grants which you don’t want to miss. If you wait until after you file your taxes, colleges won’t have as much money to give out as they would have if you had applied in January. File your FAFSA now with estimated income and then use the federal data retrieval tool after you file your taxes to update your information.
5. My daughter’s grandfather has put away money in a 529 for her which we plan on using this year. Since it’s his money and not ours, do we have to report it on the FAFSA?
Yes, you have to report any distribution from a 529. The more important factor here is that the 529 is owned by a grandparent and, therefore, may reduce your aid eligibility considerably. Where a distribution from a 529 owned by either parent is considered a parental asset, a distribution from a 529 owned by someone who is not the parent is considered student income. When calculating aid eligibility, student income and assets are assessed at a much higher level than parental assets so even though the intention is a good one, the outcome may not be helpful.
If you want some help and guidance on your college application and financial aid process, check out what other families are saying about Dobler College Consulting and then contact me today to set up an appointment for a free consultation.
Understanding Financial Aid Methodologies
So you know you will be applying for financial aid and you’re hearing something about methodologies.
Well, you’re hearing right. Methodologies is plural. There’s more than one. In fact, there are actually two methodologies for calculating financial aid: federal and institutional.
The federal methodology is used by the federal government when you submit the FAFSA (Free Application for Federal Student Aid) while the institutional methodology is used by individual colleges who require you to submit the CSS Profile, which is actually administered by the College Board.
So, what’s the difference beyond the names?
Good question.
While the FAFSA is required by all schools, only a couple hundred private schools require the CSS Profile. So, if you’re applying to the University of Connecticut, you won’t be required to fill out the CSS Profile. If you’re applying to Wesleyan University, a highly selective liberal arts college, you will be required to submit the Profile and you will then be subject to the more stringent requirements for aid eligibility.
The institutional methodology most often shows that a family needs to pay more for college than the federal methodology due to some of the following reasons:
1. If you own a business, 100% of its equity will be assessed.
2. Assets held in the names of siblings will be considered parental assets and assessed as such
3. Your home equity will be considered an asset
4. Only untaxed social security benefits for the student will be excluded. Benefits for the parent will not be excluded.
5. Pre-tax contributions to flex-plans for healthcare and dependent care are assessed as untaxed income
6. Education tax credits are assessed as untaxed income
Essentially, the federal methodology is much more forgiving than the institutional methodology. Since private colleges are dipping into their endowments to award institutional aid to their best applicants, they want to make sure this money is being used wisely (a very subjective term, here).
So, at the end of the day, take a close look at which schools you are applying to so that you know who is going to require the CSS Profile. Not all private schools will, but the more selective the school, the greater the chance that it will be required. You can find this information on the school’s financial aid website of by visiting the list of participating schools and programs on the CSS Profile webpage.
Applying For Financial Aid
If your son or daughter is going to college, then you already know that you need to apply for financial aid. What you may not know is that there are two different financial aid applications.
First, let’s talk about the application everyone needs to fill out before we talk about the application some of you will need.
The FAFSA is the Free Application for Federal Student Aid. It’s the application that is required by every college in order to consider and then award financial aid to your son or daughter. The FAFSA is free and while it will take some time to fill out, if you organize yourself ahead of time it will be much easier.
The FAFSA is a smart form which you will find very helpful. Based on the information you enter, the FAFSA customizes the questions so that you only need to answer questions that pertain to your individual situation.
While everyone needs to fill out the FAFSA, based on colleges you are applying to, some of you may also need to fill out the CSS Profile.
The Profile is only required by a couple hundred private schools in addition to some scholarship programs. Unlike the FAFSA, the Profile is not free. It will cost you $16 to register and then an additional $9 per school for each school to which you send the form.
Starting your Profile application is a two-step process. First, you must register. And you must do this in one shot. There’s no saving and going back, so get your documents and information together first, register for the Profile, and then complete the applications.
To help yourself out with the FAFSA and the CSS Profile, you will want to collect the following before you get started:
- Student’s social security number
- Student’s driver’s license number
- Statements for checking and savings accounts
- Copy of last year’s tax return and W-2’s
- Statements for any investment accounts
- Current mortgage statement (Profile only)
Both applications go live on October 1st so it’s important to start your financial aid application planning now. While the college admissions process is about to take center stage for the next couple months, it’s also time to think about the financial end of things. It can get complicated with college visits, prepping for the ACT and SAT, completing applications and looking at the financial picture.
If you want some help and guidance to make sure you’re doing it right, set up an appointment today for a free consultation.
Worried About College Costs? Look For Merit Aid
Last week I talked about several things any family can do to help themselves as they attempt to navigate the college admissions journey.
Here’s the post in case you missed it.
Since that post, I’ve heard from a few families and, inevitably, what they are most concerned with is college costs and how to pay for them. One mom in particular asked about what private scholarships to apply for and when to start looking. It was a great question, not because I think there are a ton of difference-making scholarships out there for her daughter, (or for any student, to be honest) but because it paints the picture of misinformation that parents are operating under.
You see, while you can invest time in searching for private scholarships, the likelihood that your son or daughter is actually going to win enough money to make a difference is slim. Your chances are better if you start searching for local scholarships first but, ultimately, your time would be better off spent looking for colleges where your son or daughter would qualify for merit aid.
Merit aid is the “free” money – grants, scholarships and discounts – that a college awards to an admitted student without regard to their financial need. Merit aid is often renewable money while private scholarships are typically one year awards and, the more competitive a student’s grades and test scores are, the more merit aid they can qualify for.
Knowing that private colleges, as a whole, discount about 50%, a competitive student admitted to a college that charges $40,000 for tuition and fees (room and board is extra) could expect to receive upwards of $20,000 in merit money. By competitive, I’m talking about students whose grades and test scores fall into the top 25% of who a college admits. You can rather easily find this information by looking up a school on the College Board’s Big Future website and then plugging in your grades and SAT scores under the Applying tab.
Considering that the average private scholarship is less than $3,000, don’t you think it makes more sense to look for merit money?
Me too.
Want some help navigating the college admissions journey? Give me a call now at 203.525.4096 or email me at eric@doblercollegeconsulting.com to schedule a FREE consultation to discuss your college counseling needs.