The FAFSA – Free Application for Federal Student Aid – underwent a major overhaul. These changes can affect how much your family is expected to contribute toward your child’s post-secondary education, but also the amount of financial aid offered for veterans using the GI Bill and applying for FAFSA benefits (Yes, all student veterans should fill out the FAFSA).
The three major changes to the program include:
- Filing in October instead of January
- Actions that affect the Estimated Family Contribution (EFC)
- Filling out the FAFSA
Filing in October instead of January
Although the change only moves up the filing date by three months, it is one change that can have the biggest impact. By filing in October, the form uses the prior year’s income instead of the most recent, which was the norm when the filing date was in January or after federal income tax filing to the IRS were complete. This in turn allows colleges to send out their financial aid award letters sooner thus giving families up to three additional months to compare college costs and offered financial aid. And if there is a major shift in income after the application is submitted, but before the student starts school, an adjustment to the application can be made to reflect the change.
Actions that affect the Estimated Family Contribution (EFC)
Veteran education benefits like GI Bill (to include Post 9/11 GI Bill transferred entitlement) don’t have an effect on the EFC, but these things can:
- Consider purchasing big-ticket items like a car or laptop before submitting the application.
- Pay down as much debt as you can before filing.
- If you set up a college saving account for a child, have it in your name and not the student’s, as student assets can reduce financial aid eligibility.
- Instead of your child saving cash for college, open a 529 account. Put saved and birthday money and any cash gifts (like graduation money) into that account.
Filling Out the FAFSA
- File as soon as possible. Although the deadline is June 30th, financial aid is doled out on a first come-first served basis. By waiting too long, your portion of the $150 billion in federal aid annually could already be gone.
- Fill out the FAFSA carefully. The complexity of the process and information required is similar to filling out tax forms. If a FAFSA is filled out but not submitted within 45 days, it is flushed from the system and must be started all over again.
- Pay attention to the fine print. Not doing so can greatly affect your family’s EFC or even disqualify your entirely of any need-based financial aid. For example, retirement accounts are excluded as income just like veteran education benefits. On average, 40 percent of FAFSA applications contain errors.
- Allow at least two hours to fill out the form and submit once completed. If in doubt, enlist the help of a college counselor.
Because these changes are in effect now for the 2017/2018 academic year, it is too late for students entering college this fall to take advantage of them. But, for those applying in 2018, now is the time to start gathering the information required on the 8-page FAFSA, so you are ready to fill out and submit the application starting on October 1st. Look for the 2018/2019 FAFSA application around October 1st. The information required will be similar, if not the same.
