What All Families Should Know About the FAFSA

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What Is It?

The FAFSA stands for Free Application for Federal Student Aid. It is a form used to apply for federal grants, work-study, and loans. Many states and colleges use FAFSA data to award their student aid as well.

When Do I Need to Submit?

The FAFSA is available every October for the next school year. Many schools offer awards on a rolling basis, so it is important to fill out the FAFSA as soon as possible. FAFSA deadlines for each state and college are available on the college’s website and fafsa.gov/deadlines.htm.

Why Should I Complete It?

Some schools will not consider students for merit scholarships until they’ve submitted a FAFSA. Regardless of income, it is most likely in the family’s best interest to complete the FAFSA to open the opportunities for non-need based financial aid.

How Do I Complete It?

  • The simplest way to start an application is to create an FSA ID that allows the student to complete the process online. Parents and students should have separate FSA IDs to sign the FAFSA electronically.
  • Near the beginning of the FAFSA application, there is an option to create a “save key,” which is a temporary password that allows applicants to start their FAFSA form and save it without finishing it. The save key does not need to be kept private like the FSA ID. Save keys are helpful if the parent and student work on the FAFSA from separate locations.
  • There is an option to automatically transfer tax information using the Internal Revenue Service Data Retrieval Tool (IRS DRT). If the IRS DRT is chosen, tax information will not be displayed within the application and instead will show as “Transferred from the IRS.”
  • The student should list all schools they intend to apply to on the FAFSA regardless of acceptance status. Some states may require that a state school be listed first to be considered for aid. Individual state requirements are available on studentaid.gov.

What Scholarships Are Available For Students That Are Not Need-Based?

The primary opportunity for non-need-based scholarships is merit-based, either through a private organization or the specific school the student plans to attend. Additional opportunities for non-need-based aid may be available through religious or community organizations, local businesses, organizations that relate to the student’s field of interest, etc.

In addition to scholarships, depending on the family’s income, there could be opportunities to benefit from certain education-based tax credits, such as the American Opportunity Credit and the Lifetime Learning Credit.

Conclusion

Completing the FAFSA is just one of the many essential steps to prepare for college. Sending a child to college requires thoughtful preparation in a variety of areas. Your Freestone Client Advisor can work with you to build a college planning strategy that aligns with your family’s unique situation and needs.


Important Disclosures Nothing in this article is intended to provide, and you should not rely upon it for, accounting, legal, tax or investment advice or recommendations. We are not making any specific recommendations regarding any financial planning or tax planning strategy, and you should not make any financial planning or tax planning decisions based on the information in this article. The intention of this article is educational, and it is intended only to discuss a few limited aspects of complex planning strategies. This article is not a comprehensive or complete summary of considerations regarding its subject matter. Each individual is in a different situation and has different items to address, and the options   in this article are not appropriate for everyone. Please consult your Freestone client advisor and a professional tax advisor regarding options specific to your needs.

Posted By: Stephane d'Ippolito, CFP® Managing Director of Financial Planning & Mairin Murphy, Associate Financial Planner