With the stratospheric costs of today's college education, it is more important than ever to apply for financial aid and to do so correctly. It could make the difference between a dream school and a far less rewarding educational experience. If price weren’t an issue, would you prefer Ivy League or Acme Welding Academy?
To help smooth this process, you will need to become proficient with FAFSA (Free Application for Student Federal Aid). This document is used as the reference for most types of financial aid – scholarships, grants, work-study programs, and federal student loans.
FAFSA assesses need by analyzing financial information you supply and deriving the amount your family should be able to devote to college costs. This number is known as the EFC (Expected Family Contribution), and is subtracted from the school's cost to determine your financial aid eligibility.
Most important mistakes in financial aid application involve FAFSA. Here are five of the main ones:
- Failing to File FAFSA – According to the American Council on Education, a large number of people in the low-income group most likely to receive Pell Grants did not even attempt to apply – 20% of dependent and 25% of independent students. Likewise, wealthier families often fail to apply, not realizing that not all assets are counted toward the EFC, and that other mitigating factors come into play.
- Putting off FAFSA – Since FAFSA requires information from tax forms, some wait to file FAFSA until tax forms are filed. Unfortunately, most aid programs are first-come, first-served, and have limited funding. If you are having trouble getting the necessary tax information, estimate the numbers and update the information later.
Make sure you know the deadlines for the schools in which you are interested. Different schools have different FAFSA deadlines – anywhere from February to May for an upcoming fall semester.
- Making Simple Mistakes – Simple errors such as leaving a field blank can cause FAFSA processing to be delayed. Other common errors are using nicknames instead of legal names, entering the wrong marital status or household size, filing the FAFSA for the wrong year or based on the wrong year's information, and using the wrong parent's income/asset information in cases of divorced/split families.
The FAFSA form can be confusing, but there are many resources for assistance, both online and at schools. The online FAFSA form contains useful edit checks, and there is a pre-application worksheet available to help you.
While it is not a mistake per se, some experts say that you should never answer no for interest in work-study. You are not obligated to apply if you check "yes".
- Asset Mistakes – Retirement accounts and equity in your home do not count as FAFSA assets; including them can drastically increase your EFC. College savings plans are parental assets, not student assets, and thus count for less (since student assets are counted at a higher rate than parental assets).
Don’t leave out untaxed income such as Social Security, but verify that it is not double-counted (listed in both untaxed income and adjusted gross income).
- Misunderstanding Individual College's Requirements – Aside from the deadline differences, some universities will require additional forms – usually the College Scholarship Service (CSS) Profile. This is a similar needs assessment form, but has different rules regarding assets.
A university may even require extra forms based on a status, such as applying under early acceptance or to a particular curriculum. Make sure you understand the requirements of each school to which you apply.
Send the FAFSA, as well as any other required forms, to every university you have any interest in at all. Do not assume you cannot afford it based on tuition. A great, unexpected aid package may be available to you… but first, you have to ask.
Understand what forms are required for the schools you want to apply to, take care in filling them out, seek help if you need it, and do not put things off. Follow those rules to maximize your financial aid options and get into the best school possible. That is, unless the Acme Welding Academy happens to be your first choice.