Fun with FAFSA

Forget the goblins of Halloween or even the fact that many of the big stock market crashes occur during the month. Now there is yet another reason to dread the spooky month of October—it’s time to complete the dreaded the Free Application for Federal Student Aid or FAFSA form. Of course I am only slightly exaggerating, but as of October 1, families will be able to start the process of applying for college funding for students attending school in academic year 2018-2019. FAFSA is the gateway document because it is used to determine how much students and their families will receive in terms of college grants, scholarships and loans.

To see what’s cooking this year, I contacted my go-to college funding resource Kelly Peeler, founder & CEO of NextGenVest, a service that helps students navigate the financial aid and student loan processes. She said that this year, as in years past, the biggest hurdle when it comes to qualifying for aid is that people are not spending the time to complete the form. “They get frustrated or overwhelmed with the process” and this year, in light of the massive Equifax data breach, “they may be worried about sharing their tax information or Social Security numbers”. (Quick note: if you have frozen your credit due to the Equifax breach, you may want to unfreeze it before you complete the FAFSA.)

Peeler also says that a lot of families erroneously believe that that they will not qualify for aid, despite the Department of Education’s comments to the contrary. The DOE web site notes: “While your income is taken into consideration, it does not automatically prevent you from getting federal student aid” and “contrary to popular belief, there is no income cut-off when it comes to federal student aid.” Factors like the size of your family, whether parents are close to retirement, whether there are siblings in college and the price of tuition all come into play.

Completing the FAFSA is easier now that the IRS is back to sending your tax information to the Department of Education via the IRS Data Retrieval Tool. The tool was suspended last spring due to the high incidence of tax fraud, but will be available for this FAFSA season. That’s great news because it automatically completes the online FAFSA form with the necessary tax information from your 2016 return.

Also on October 1st, you should be logging on to the College Board’s CSS/Financial Aid Profile, which is used by nearly 400 colleges, professional schools, and scholarship programs to award non-federal aid. The CSS requires more work, because it is a more detailed accounting of the family’s financial life, but according to the College Board, that additional information may be worth it, because each year, “the CSS Profile unlocks access to grant aid in excess of $9 billion for thousands of students.” Check your colleges’ information to determine whether they require the CSS Profile. Peeler advises submitting both the CSS and the FAFSA as early as possible because some money is awarded on a first come, first serve basis.

As I have noted many times in this column, there is no doubt that a college education is worth it. College graduates earn more over their lifetimes and have lower unemployment rates than those who stop their education after high school. That said, assuming a massive debt load to acquire that degree could rob both parents and kids of future financial opportunities. That’s why before you start the college planning and FAFSA process, you need to have honest and sober conversations that take into account the realities for the entire family.