Smart timing and cash management can mean thousands of dollars in extra financial aid.+ READ ARTICLE
Filling out the 10 eye-crossing pages of the 2016-17 Free Application for Federal Student Aid, the most important application for need-based college financial aid, may not seem like a fun adventure in Super Mario’s Mushroom Kingdom. But hidden among its 103 questions are hints that, if followed correctly, can dramatically increase your need-based aid and possibly rescue your dreams of an affordable college education.
- Don’t blow it off: The FAFSA qualifies you and your parents for lots of goodies – regardless of how wealthy your family is. Students from families earning more than $200,000 a year often qualify for need-based aid from private colleges, for example. And students from families earning more than that need to file a FAFSA to qualify for low-cost, forgivable federal student loans and aid programs that require the FAFSA but award aid without regard to family income, such as the Tennessee Promise free community college offer.
- Go online. You can print out a PDF and fill out the FAFSA on paper. But the online version uses skip logic, which makes it easier and faster. Also, for later filers, the online version will import your tax information, which speeds things up even more.
- Time it right. Fill out the 2016-17 form by early February if you live in one of the 17 states with early deadlines or “first-come, first-served” financial aid programs. Some of these states run out of money quickly, so file your FAFSA right away, even if you don’t have your 2015 tax information. You can fill out the 2016-17 form in January using estimates based on your 2014 tax forms. Then, when you do your 2015 taxes, you can go back into your FAFSA and make any updates or corrections. Everybody else has more time—but not a lot. Call your college to find out your particular deadline, but remember that those who file the FAFSA by March 30 receive, on average, twice the grant money as later filers, calculates financial aid expert Mark Kantrowitz. Don’t despair if you still haven’t filled out last year’s FAFSA. You can still qualify for federal aid for the 2015-16 academic year by filling out last year’s FAFSA, even as late as June 30 of 2016.
- Clarify your relationships. Questions 16 and 59 ask about the students’ and parents’ marital status as of the day you file the form, to see if both parents’ income should be counted as financial resources for the student. Divorced or separated parents should report only one parent’s income – the parent with whom the student spends the most time – only if the other parent does not live in the same house. In other words, if you’re in the process of getting divorced or separated anyway, one spouse should move out before you finish the FAFSA.
- Parents: Don’t brag. Some states and colleges offer extra aid to children of parents who haven’t earned college degrees. Questions 24 and 25 ask about the highest level of education your parents completed. So if one or both of your parents, attended community college, or even are just one credit away from a bachelor’s degree, make sure to fill in the dot only for “high school,” Bishop advises.
- Pay your bills first. Questions 41 and 90 ask about how much cash students and parents have in savings and checking accounts at the moment you are filling out the FAFSA. But notice that there are no questions on the FAFSA about your debts or bills. So if you’ve got a sufficient emergency cash reserve, use any extra cash to pay down credit cards, car loans, or other bills before you finish filling out the form, and report the newly lower cash amount on the FAFSA. Here’s more expert advice on how to legally manage your assets to increase your odds of aid.
- Shield your investments. Questions 42, 43, 91 and 92 ask about the student’s and the parents’ investments. But many filers don’t realize that the value of any retirement accounts, as well as the home you live in, should not be included in these boxes. So if you’ve got a lot of money in non-retirement accounts, prepay your mortgage or plow some into Roth IRAs. One big advantage of Roth IRAs: You can take out your contributions (but not any earnings) tax-free to pay college bills