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Resource Center


Navigating the Free Application for Federal Student Aid Process (FAFSA)


The heavy burden of student loan debt that so many people in our country face is always in the news, so new students and their parents know exactly how important it is to minimize their costs. Obtaining financial aid is dependent upon filling out the Free Application for Federal Student Aid, which means there is a lot of pressure surrounding the task of filling it out correctly.

The first thing you should know is that the form is very important, and you should fill it out no matter what. This may seem obvious, since it is required for anyone who hopes to receive federal loans or grants or who may be admitted to a work-study program, but a surprising number of students do not submit the application at all.

“Unfortunately, the standard FAFSA has over 100 questions asking for everything from your net worth to your parents’ assets, causing many overwhelmed students to never complete it,” says Alexandra Rice for U.S. News & World Report.

The length of the application isn’t the only reason students might forgo submitting it. One of the most common reasons is that students think their parents’ income level is too high to qualify for financial aid.

“This is a costly misconception,” states Rice. “It’s important to be aware that many colleges offer merit-based aid that doesn’t even consider financial need; it’s based on achievements such as grades, SAT scores or athletics. In other words, the amount of money your parents make doesn’t matter for this type of aid, but you can’t get it if you don’t fill out the form.”

So when it comes time to fill out your FAFSA application, you should be aware of some of the most important questions and answer them carefully to help ensure you get the most aid that you are entitled to.

Kim Clark from Time Inc.’s points to questions 24 and 25, which deal with the education level of your parents.

“Don’t brag!” cautions Clark. “If either parent attended but did not graduate from college, then just click on high school. There are some extra scholarship programs for people whose parents never finished college.”

Question 31, dealing with work study, is another one to watch out for. You should answer yes regardless of whether or not you currently think you want to work while attending school. You aren’t obligated to take a work-study position even if you answer yes, and it keeps you in the running so your options are open when the time is closer and you can assess how you feel.

Not only do work-study jobs help you earn some money to put toward your tuition, but the income doesn’t impact your financial aid eligibility in future years. On the other hand, if you don’t try to gain a work-study position and later decide you need to work and take an off-campus job, those earnings could impact that future eligibility.

“Also, research shows that students who spend 10 to 15 hours a week on work-study jobs do better in college than those who don’t work,” states Rice.

Questions 41 and 42 deal with the student’s savings and investments, which have a big impact on how much aid you receive. It is important to pay extra attention to these questions in order to accurately calculate the exact sum of investments and savings that belong specifically to the student.

“Every dollar of savings in the student’s name reduces need-based aid by about 20 cents, while money in parents’ accounts — even if it’s designated for the student — reduces need-based aid by a maximum of 5.64 percent,” states Rice.

If you take the money that the student has saved up for college and contribute it to a 529 college savings account, you can make a big difference in how much need-based aid you are eligible for. This may seem strange, since that money is intended for the student to use during school, but 529 accounts are technically parental assets, which you will disclose in question 91.

“Notice that the question asks how much the student’s savings and investments are worth ‘as of today,’” states Rice. “That means you have until the day you fill out your FAFSA to move the student’s money into a 529.”

This brings us to question 91, which is where one of the most common and expensive mistakes can happen. That error is mistakenly reporting parental assets as too high by double reporting certain assets as being owned by both the parents and the child. If the student’s parents are divorced or if they meet other separation criteria, the student needs to include only the assets of the parent they live with most of the time.

Another important thing to keep in mind with this question is that retirement savings and the net value of your home are exempt according to FAFSA’s fine print. This means that while you do need to include the value of 529 savings accounts and other taxable investment accounts, you do not need to include pensions, 401(k)s, IRAs or the value of life insurance plans.

Even though college hasn’t started, this is one questionnaire that it truly pays to take seriously, so keep these tips in mind when it comes time to fill out your FAFSA application.