The cost of higher education has doubled in the 21st century. According to the Education Data Initiative, an average year of college — including books, supplies, meals, and daily expenses — now costs $35,331 per student.
If you’re like most people, there can be no college without financial aid.
It all starts with the Free Application for Federal Student Aid (FAFSA). The information you offer when filling out the FAFSA will determine your eligibility for federal aid, such as Pell grants, loans, work-study and aid awarded by individual colleges and universities. Every school in the country must use the FAFSA when awarding federal student aid.
Colleges award financial aid based on a wide range of factors that they use to determine need. You should learn as much as you can about the processes and procedures for the schools you’re considering, but the FAFSA process doesn’t change no matter where you apply.
Follow these seven steps to get the most money possible.
1. Understand the Process
The FAFSA does not calculate the amount of financial aid you will receive. The information you provide will determine your estimated family contribution (EFC). The EFC is the amount that the Department of Education (DOE) determines your family will be able to contribute toward the student’s education. EFCs are based on taxed and untaxed income, assets and benefits like Social Security.
The next step is to determine your “demonstrated need,” which you get by subtracting your EFC from the cost of attending the school of your choice. Some schools will meet 100% of a student’s demonstrated need. Others will meet less. Consider private loans only after you’ve exhausted all available federal loans, scholarships and grants.
When you complete the FAFSA, you must declare your assets and those of your parents. Your family’s assets, or lack thereof, play a big role in determining how much aid you’re eligible to receive.
For example, if a student has a savings account, the FAFSA will assume that 20% of the account’s balance will be used to pay for college each year. On the other hand, aid officers assume only 5.6% of the funds in a parent’s savings account will be available for college expenses.
The FAFSA does not consider retirement accounts to be countable assets or assume that money in a 401k or IRA will be used to pay for college.
3. Don’t Assume Your Earn Too Much To Apply
There is a common misconception that financial aid is not available to high-earning households — don’t believe it. There are no FAFSA income limits and any eligible student can apply. While some types of federal aid are need-based, other types — like unsubsidized federal loans — are not. You’ll use FAFSA to apply for all of them no matter how much money you make.
Capital gains on your investments are also treated as income. If possible, avoid selling any investments that will generate capital gains after the student’s sophomore year of high school. Once the FAFSA has been filed for the student’s senior year, you can take gains again.
4. Complete the FAFSA and File Your Applications as Soon as Possible
Getting your application in early might help you get more aid. Colleges have a limted amount of aid to award, and if you miss the deadline, you might miss out. Some institutions use a first-come, first-served model for providing aid, so filling out your application early can only help.
The federal filing deadline is June 30, but some states might have a different deadline. Colleges might even require the forms earlier, so make sure you adhere to all deadlines that apply to you.
5. Fill Out the FAFSA Correctly
Just as filing late can move you to back of the line at award time, so can making errors on the form or omitting information. The online version of the form should prompt you in the case of blank fields, but if you fill out a paper application, make sure you check and double-check your information.
The Federal Student Aid division of the Department of Education strongly recommends creating an FSA ID before you begin filling out the FAFSA. Logging on with an FSA ID automatically loads important personal information to the FAFSA, preventing a variety of common errors that can cause delays or false rejections.
6. Appeal the Award
Most colleges allow applicants to appeal financial awards under special circumstances, particularly if your family experienced a qualifying life event the same year you fill out the FAFSA, which wouldn’t be included in that application cycle. If you received less than you think you need or that you think you deserve, ask your school about the appeals process, which usually involves writing a letter and providing documentation to back up your case.
Common reasons for successful appeal include:
Beware of asking a college to match another college’s financial aid offer in an attempt to get into your preferred school. Some colleges refuse to do this, considering it a form of negotiation, which they reject. Instead, reiterate the student’s interest in the school and clarify any circumstances that might impact the decision.
7. Inform the College if Your Circumstances Change
Sometimes unexpected life changes happen — and many schools consider them once they’re made aware of the situation. For example, if you or your parent loses a job or needs to take a pay cut, inform the college. They might adjust the award, even in subsequent years. The worst thing that can happen is denial, and if you don’t ask, you can be sure you won’t get a better award.
According to FinAid, extraordinary circumstances that might sway a school to adjust your award include the death of a parent or parental divorce, job loss, dependency override, loss of child support or the catastrophic loss of a home or business in an event like a natural disaster.
Higher education can seem prohibitively expensive, but it’s a worthwhile investment. With careful planning and the implementation of these FAFSA strategies, you can increase your chances of getting money for college that you need to satisfy your expenses.
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Andrew Lisa contributed to the reporting for this article.