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What You Need to Know about the FAFSA

September 17, 2020
Woman holding book; What you need to know about the FAFSA

 

If college is in your future, plan on filling out a FAFSA

Applications for next school year available starting October 1

Today it seems as if we are in a world of acronyms. People frequently refer to the IRS, CDC, ADA and USPS without even thinking of describing what they are. Abbreviations are all the more common in texts where LOL, YOLO, LMK and ILY often monopolize screens.

But if you're going to college or even thinking of going to college, you better keep one primary acronym top-of-mind - FAFSA. The Free Application for Federal Student Aid (FAFSA) is a key first step in helping make a college education more affordable. It is the be-all and end-all of most financial aid programs currently available. Each year The Education Department provides more than $125 billion in aid to students, but you won't see a penny of it without a FAFSA. 

The importance of completing a FAFSA and completing it as soon as possible cannot be overstated. The form, which assesses a family's income and assets in order to calculate the expected family contribution and school's financial aid package, is the key to any and all federal financial aid. This includes federal work-study, scholarships, federal student loans and PELL grants. In addition, many state and institutional financial aid programs rely on the FAFSA when determining if a student qualifies for aid, as well as the amount of aid.

Each year the FAFSA opens on October 1. By filing your FAFSA as close to the opening date as possible, you improve your chances of qualifying for the most grant, scholarship and work-study aid. Although the deadline for completing the paperwork is months away, certain aid is awarded only to students who apply the earliest. The federal government deadline for filing is the June 30 after the school year for which aid is requested. So, for the 2020-2021 school year, the deadline is June 30, 2021, and for the 2021-2022 school year, the deadline is June 30, 2022. If you do wait until the June deadline (and assuming there are still funds available), it's possible to receive your grants and loans retroactively to either cover what you've already paid to college or to apply to the following semester, depending on your school's individual requirements and restrictions. 

The deadlines for state and institutional financial support, however, are much earlier. It's important to check the specific deadlines for your state and chosen college. But again, it's important to be way ahead of any such deadlines to maximize the value of your total financial aid package.

You only need to file one FAFSA whether you're seeking federal, state, institutional or any combination of financial assistance. But you must file a new FAFSA for each year that you're in college. There is no cost to file a FAFSA and the application process typically takes about 30 minutes, assuming you have the proper documents at your fingertips such as:

  • Your social security number
  • Driver's license number
  • Current tax and income records. Note that, for the purposes of the FAFSA, you need to use your prior-prior-year tax returns and not your prior-year records. So, for the 2020-2021 school year, it's appropriate to use your 2018 tax return.

The FAFSA form can be accessed through the Federal Student Aid website. On this site you'll also find a FAFSA4caster tool that estimates the type and amount of aid you will receive based on the responses on your FAFSA. If you're feeling a bit overwhelmed by the questions and process, be sure to attend FAFSA Day which is a statewide educational initiative typically hosted in October to help students and their families best navigate the application process. You can check with your intended college or university regarding a specific date and time in your area. 

Once you've submitted your FAFSA application, wait to receive your financial aid award letter which is typically sent out between three days and three weeks from the date of  your submission. The letter will detail the amount of free aid that you've qualified for, as well as how much in federal loans you are able to borrow. You are able to make changes to your FAFSA after it's filed, if necessary, and you have the right to appeal the financial decision if you feel you have not received enough assistance.

Many people mistakenly think that it's a waste of time to complete a FAFSA, believing that their parents make too much money to qualify. This is definitely not the case, because not all financial aid is based on need. Even some merit scholarships require a FAFSA in order for the student to be considered.

Some colleges and universities also require a College Scholarship Service (CSS) profile in addition to a FAFSA. Today nearly 400 colleges - mostly private schools plus some state universities - use the CSS profile to award institutional grants and scholarships. Although similar to a FAFSA, the CSS profile uses a different methodology to compute financial aid, so the amount determined by a CSS profile may be different than what is calculated by the FAFSA.

Specifically, the CSS profile gathers more information and considers additional family assets that the FAFSA does not. And unlike the FAFSA, the CSS profile is not free. The cost is $25 to submit the CSS profile to the first school and then $16 for each additional school you want to receive your CSS profile. Since each school has a different deadline for CSS profile submissions, it's important to check on dates that are pertinent to you. 

Going to college is an exciting, worthwhile experience for most students. But it's also an expensive one. Make sure you put yourself in the best position to receive as much financial help as possible by filling out, at minimum, your FAFSA... and do it soon!

The information and recommendations contained herein is compiled from sources deemed reliable but is not represented to be accurate or complete. In providing this information, neither Cortland Bank or its affiliates are acting as your agent or is offering you any tax, accounting or legal advice. 

By selecting any external link on www.cortlandbank.com, you will leave the Cortland Bank website and be directed to an unaffiliated third-party website that may offer a different privacy policy or level of security. The third-party is responsible for website content and system availability. Cortland Bank does not offer, endorse, recommend or guarantee any product or service available on that entity's website.

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