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Navigating Financial Aid

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by Andrea Downing Peck

For military families with college-age children or transitioning service members returning to school, filling out the Free Federal Application for Student Aid — better known by its acronym FAFSA — ranks on par with filing taxes.

No fun.

But the FAFSA form, which under went changes for students entering college in Fall 2017, is your ticket to financial aid — not only from the federal government, but typically from your state and university as well.

Here’s what’s new:

The FAFSA now can be filed as soon as October of a student’s senior year in high school. The new FAFSA collect’s “prior prior year” income information, meaning students completing the Back to School by Andrea Downing Peck 2017-2018 FAFSA were asked about income from the 2015 tax year.

Previously a student had to wait until January 1 to file their FAFSA using the most recent year’s tax information. If you hadn’t filed your taxes, you had to rely on estimated tax information or wait until both student and parents had completed their taxes.

Timothy Parros of Parros College Planning in Ann Arbor, Michigan, says the new FAFSA timeline is enabling most colleges to send financial aid award letters earlier. That means families learn their “Expected Family Contribution” (EFC) – the amount a college expects you to pay toward a child’s education for the coming year – sooner, providing more time to compare net college costs.

Veterans’ education benefits, including the Post-9/11 GI Bill, will not affect your EFC. But other decisions you make can make a difference. Here are tips for lowering your EFC:

  • Purchase big-ticket items such as a car or laptop for your college student and consider paying down debt before filing out the FAFSA.
  • Do not place college savings accounts in a student’s name since a child’s assets greatly reduce financial aid eligibility.
  • Suggest grandparents or other relatives who help with college funding open a 529 Plan rather than give cash to your child.
  • Read FAFSA instructions carefully and list only required assets. For example, retirement accounts are excluded.
  • Divorced parents should provide only the custodial parent’s assets.
  • If more than one child is in college at the same time, the “sibling factor” will cut your EFC in half.

Andrea Robayo, director of financial aid at The College Money Guys in Houston, recommends families begin financial planning for the FAFSA by the mid-point of their child’s high school career.

“If you can start planning by freshman year, that’s even better,” she says. “Definitely by sophomore because it’s the beginning of the tax year they will be using on the FAFSA.”

While the federal government awards more than $150 billion in federal grants, loans and works-study funds each year, Parros warns students not to wait until the June 30 deadline to file their FAFSA.

“We recommend filling it out Oct. 1 because it’s first come, first serve on the FAFSA form for federal aid,” he says. “You could potentially qualify for need-based aid, but if you wait until June, all the federal aid could be already given out at the college you are looking at.”

The new FAFSA timeline does have one downside. Using two-year-old financial information can create a false picture of transitioning service members’ finances.

“A lot of people who are retiring have kids in college — we are in the retirement window ourselves,” says Navy spouse Kate Horrell, author of The Paycheck Chronicles blog. “Either we are going to have a dramatic cut in income or a large increase. Nobody knows what direction that is going to go.”

Robayo says families should be prepared to speak directly to college financial aid officials if their twoyear-old income data no longer matches their current household income.

“You can email, call, write letters to schools,” Robayo explains. “Our biggest advice is to be really nice to them. Be friendly and make their lives as easy as possible because then they are more encouraged to help you out.”

Robayo also warns parents not to have their children complete the FAFSA on their own.

“Do you let your 17-year-old do your taxes?” Robayo says. “Then they shouldn’t be doing the FAFSA either.”

Horrell took over filing the FAFSA for her daughter after the application her daughter filled out during the winter “disappeared” when she went to retrieve it in the spring. Un-submitted forms are flushed from the FAFSA system after 45 days, which is just one aspect of the filing process Horrell found challenging.

Horrell calls the FAFSA a “20-minute process that took two hours” because of “frustrating” instructions when creating a FSA ID, a parallel section to the FAFSA used to confirm identity and electronically sign the form.

“The navigation was really poor,” she says.

Despite the FAFSA’s hassle factor, Robayo recommends parents file the form every year regardless of whether their student previously has qualified for aid. She views the form as an insurance policy in the event of unexpected mid-year loss job loss or death of a parent.

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“When you ask the school to realize the new circumstances you are under, the first thing they will ask is ‘Did you file the FAFSA?’ If your answer is ‘no,’ then too bad, so sad, they will see you next year. If you did, they can look at it and adjust accordingly.”

Parros notes roughly 40% of FAFSA applications include mistakes so proceed carefully or consider hiring a private college counselor to assist with the admission process.

“If you don’t know what you are doing, you can disqualify yourself for need-based aid,” he says.