Tax time = FAFSA time. Yes it is true folks, as Joe College has mentioned in a previous blog it is time to be filing your FAFSA form. The Free Application For Federal Student Aid is required by institutions in order to determine a family’s financial need. At the Center for College Planning, we file the FAFSA with hundreds of families every year. In doing so, we have compiled a list of some frequently asked questions that might help your family as you complete the FAFSA.

• By filling out the FAFSA form will I automatically receive both student loans and scholarships?
The FAFSA form does not award any scholarships or loans. It is a form that allows colleges to calculate your family’s Expected Family Contribution, commonly referenced as the EFC. The EFC is based primarily on your family’s income and the number of students in college for the upcoming academic year. Each individual Financial Aid office will then use the EFC to determine your financial need at their particular school, and then they will offer you federal grants and federal loans accordingly.

• The FAFSA form asks for 2008 tax information but I haven’t completed my taxes yet, can I fill out the form?
Yes! In order to make sure your FAFSA is submitted by your school(s) deadline(s) you may have to estimate the information you provide. This can be done using your 2007 tax information and a final pay stub(s) from 2008. Once you file your 2008 taxes, you will need to log back in to your FAFSA online and make the appropriate updates.  Then simply resubmit your FAFSA.

• Can I fill out the FAFSA form without my parent’s information?
The short answer to the question is yes, however it is strongly discouraged. New this year, the FAFSA will allow students to complete and submit the form without parental information. However, unless you qualify for independent student status, by leaving out parental information, you will not be eligible for as much federal student aid. Therefore, whenever possible, you should include parental information.

• Can you tell me how my assets (or savings) play into this and how it will affect my EFC?
For parents, there is an asset protection allowance (APA). What this means is there is a certain amount of your parent’s assets that will not even be considered in the family’s ability to pay for college. This is based on marital status and age of the eldest parent. For a married couple with the eldest parent at the age of 53, the APA would protect $59,800. Any assets above that amount would be looked at between 0-6% contributed to the EFC.
For students, there is no asset protection allowance. The FAFSA calculation will assume a contribution of 20% of the student’s assets to the family’s ability to pay for college (or EFC).

• Is it beneficial for my student to take a year off from school to work and save money?
I recommend this only if the student actually plans to save the money they earn. I say this because of how the student income is considered on the FAFSA form. The first $3,750 of a student’s income is protected. Fifty percent of any income earned above $3,750 is added into the family’s ability to pay for college (or EFC).  Therefore, if the student works and spends more money then they save, more than likely it will have a negative impact by making the EFC higher.

• I am collecting social security. Where does it go on the form?
Untaxed social security is not reported on the FAFSA. If you are being taxed on social security it should have been added into the adjusted gross income (AGI) on your taxes and would be reported as part of the AGI on the FAFSA.

• I lost my job at the end of last year, so my income for last year (2008) is much higher than what it will be for this year(2009), what do I do?
There is a new question on the FAFSA that addresses this situation. It asks “are you/spouse a dislocated worker?” This will make financial aid offices aware that someone is no longer working. You may not answer yes to this question if you quit, were fired, or simply stopped working. Many parents who have been laid off due to the slumping economy have found this question helpful. If you become a dislocated worker after you have filed the FAFSA, let the Financial Aid Office at your student’s school know immediately.  They may be able to assist you with additional aid.

This is a sampling of the sorts of questions we receive at the Center for College Planning. What kind of questions might you have?  What sort of problems have you faced when filing the form? Leave your questions in the comment section or give our office a call at 1-888-7-GRADUATE, ext. 119.

Rich