With the start of the New Year, the time for filling out and submitting the annual Free Application for Federal Student Aid (FAFSA) has commenced. For many students planning to attend college this year (or those already in college), the FAFSA remains their best chance of securing some form of financial aid.
The FAFSA is significant because it determines the amount of aid a student could receive from the federal government, the state government and schools. For the 2015-16 year, students can apply for federal college aid from Jan. 1, 2015 to June 30, 2016.
Estimates suggest that about 21 million students will fill out the FAFSA for the 2015-16 academic year. Students could use these funds for four-year universities, two-year colleges and trade schools.
An Overview of the FAFSA
The FAFSA typically gathers information about a family’s income and assets. This information enables it to compute the:
- Family’s expected contribution toward college expenses and,
- Student’s eligibility for federal student aid
Every year, the federal government provides over $150 billion in grants, loans and work-study funds. To receive this aid, students need to complete the FAFSA. However, some federal student aid programs tend to have limited funds. Similarly, the evaluators award other grants on a first-come, first-serve basis.
Therefore, students submitting the FAFSA as early as possible could expect to receive better levels of grant funding. Typically, students who submit the FAFSA from January to March tend to receive more grant funding. Students must also note that applying for aid is free. Therefore, they must not pay anyone when applying for aid.
Based on the information provided, evaluators will determine whether the students qualify for federal grants, federal loans or a combination of the two. The option to avail of alternative loans is also available. However, students would need to note that these loans would not offer terms that are as convenient as those provided by the federal government are. In addition, these loans will also stipulate a higher rate of interest. This would automatically result in higher monthly payments that could be inconvenient.
FAFSA – Who Needs to Apply?
The staff with FAFSA encourage all students to apply for aid because many schools require this for providing institutional scholarships. This is regardless of the financial situation of the students. In addition, families with more than one student in college are eligible for receiving higher levels of college aid. Significantly, the evaluators do not consider retirement savings when determining the eligibility of a student.
It is not just students who plan to attend college this year that need to fill out the FAFSA. The FAFSA continues to be a requirement for continuing or expanding aid for existing college students as well.
In addition, some programs require students to file the FAFSA, even though they are different from government or school aid. For example, if you’re eligible for a Federal Pell Grant, you also remain eligible for various private scholarships. However, unless you file the FAFSA, you won’t know whether you’re eligible for the Federal Pell Grant.
It is worth noting that submitting the FAFSA does not obligate students to accept the aid provided. Instead, it merely indicates the various grants and loans that the students are eligible for receiving.
The Aspects to Consider When Filing the FAFSA
Filing the FAFSA is easier than ever. The IRS Data Retrieval Tool enables students to transfer the required tax information automatically to the FAFSA. This does not only increase the accuracy levels of the information provided. It also saves a lot of time. The FAFSA website mentions that the IRS Data Retrieval Tool will be available from Feb. 2.
Students can also file the FAFSA before completing their 2014 taxes. To do this, they could simply base their calculations on estimated income levels. The tax data would be available within a couple of weeks of filing taxes electronically. Thereafter, students could refer to the IRS Data Retrieval Tool for making the necessary FAFSA corrections.
Prior to submitting their application, students must double check the information they provide. This review could help them in avoiding unnecessary delays. They must also ensure that they have typed the Social Security numbers for their parents and themselves in the appropriate spaces provided.
The electronic application will remain incomplete until both, the student and the parent sign the FAFSA electronically. For this, they will need to use their respective Federal Student Aid Personal Identification Numbers (PINs). Students have the option of applying for student and parent PINs while they complete the FAFSA online. Alternatively, students could visit the Federal Student Aid PIN website and obtain the PINs, before they proceed with the FAFSA.
Some of the most common documents required while filling the FAFSA include:
- Income tax returns and,
- Investment statements
Other information required includes demographic details such as age, gender and the number of dependents.
Recently, a report mentioned that Sharon Mayes was one of three people to win the $1 million prize in the Virginia Lottery’s New Year’s Millionaire Raffle. After state and federal taxes, she took home $710,000. At present, she plans to use the prize money for paying off the student loans for her three children, while setting aside the remainder for retirement.
Unfortunately, not everyone can rely on lucky raffles and awards for repaying their student loans or for paying for college. The vast majority need to rely on the more mundane process of submitting their FAFSA as early as possible. To ensure that you submit your application well within the prescribed deadlines, click here to check the FAFSA deadlines applicable in your state of residence.