What advice can you give to clients with children approaching college age, to help them stand the best chance of qualifying for financial aid? Here are a few ideas:
All colleges require students who wish to be considered for financial aid file the Free Application for Federal Student Assistance. In addition, many parents complete the College Scholarship Service Profile, a financial aid application developed by The College Board and used by more than 300 private colleges and universities. The CSS Profile, which includes more extensive information than the FAFSA, is often called the “institutional methodology” – as opposed to the FAFSA’s “federal methodology.”
Parents should not wait until their FAFSA filing deadline to begin planning for needs-based aid. DOE has created an online tool called FAFSA4caster that can be used to preview the FAFSA and model “what-if” scenarios.
Most types of financial aid (except Direct Unsubsidized Loans and PLUS Loans) are based on financial need, which is determined largely by the “bottom line” of the FAFSA, Expected Family Contribution. For dependent students, EFC is based on the income and assets of both the student and parents. Most single undergraduates who have not attained age 24 are dependent. For independent students, EFC is based on the income and assets of the student only. Students age 24 and older, or working on a master’s or doctorate degree, are independent.
For dependents, income and assets of both parents usually are considered, even if only one parent is providing for college costs. Income and assets of grandparents (and other relatives) are not included in the FAFSA, even if they are assisting with college costs.
FAFSA income and assets are reported for each “base year,” the full tax year before the academic year begins. For most undergraduates, four FAFSAs will be filed for four separate academic years and base (tax) years.
It’s always a good idea to file a federal tax return before each year’s FAFSA is submitted, so data on the return and FAFSA align. The best way to insure alignment is to file taxes early and then use the IRS Data Retrieval Tool to import federal income and tax data directly into the FAFSA. (When completing the FAFSA, tax filers are redirected to a secure IRS website, where they give the IRS permission to transfer income and tax data to the FAFSA.)
For more information, check out the U.S. Department of Education’s FAFSA homepage.
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