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Dear College Made Simple Reader,
Did you know one of the most common mistakes families make in the financial aid application process is waiting to file taxes before completing the FAFSA?
We see it every year. Families wait until April – income tax month – to complete their FAFSA form.
Because financial awards are often first-come first-serve, you’ll want to fill out the FAFSA as close to January 1 as possible (that’s the earliest you can submit your FAFSA).
In other words – if you want the best shot of getting state or federal money, the sooner you submit a correct application, the better.
Of course that also means filing your taxes as soon as possible. I’ll talk more about that, and offer a few more important tips, in today’s College Made Simple.
Key Tips for the Financial Aid Application Process
Taxes. As I mentioned, the earlier you submit your FAFSA, the better. That means providing your best approximations and estimates of income and taxes — based on pay stubs, W-2s, etc. Consider using your prior tax returns and current year-end pay stub to get estimated figures.
Remember, you can always make changes to your FAFSA — after your taxes are finalized. You do that by going online to the FAFSA web site and filling in the correct numbers.
By the way, a common tax error is reporting your taxes due instead of your total income tax. They sound similar but there is a difference.
Read the instructions carefully, and always consult a licensed tax advisor for any tax-related issues.
Follow the directions. While the FAFSA can seem confusing to many people at first, detailed instructions are provided for most questions.
Take note: Make sure you don’t leave any items blank on the FAFSA form. If the appropriate response is zero, then enter zero. Blanks could delay the processing of your financial aid information.
Also, when reporting income or writing dollar figures, do not write cent value. The reason: the extra digits can be counted as dollars. For example, $432.95 is read as $43,295.
Understand the EFC, income and assets. As you are probably aware, income typically counts against your Expected Family Contribution (your “EFC” – which is the amount of money the Department of Education believes you have available to pay for schooling) much more than assets do.
You’re expected to pay a higher percentage of income than of assets – exactly how much depends on who is doing the paying – the student, a parent, or another family member.
In other words, the smaller you can legally make your income, the better your financial aid package will likely be.
Also keep in mind that it’s the student who is expected to pay the highest percentage of income and assets – so reduce these (money that your child/student has) first.
Be honest. You may be tempted to fudge the numbers – even just a little bit – on the FAFSA. Just know this: the government could impose fines and up to 5 years of jail time, AND you could be required to pay back moneys received.
Worst of all, you may be declared ineligible for any aid going forward. In the end it’s just not worth it.
Finally, when it comes to the financial aid process, by all means, do as much research as you can.
And if you’d like the feedback of professionals who understand the “ins” and “outs” of the financial aid space, feel free to take us up on our Free College Funding Analysis, which we make available to help families determine a proper course of action as to what would be best for them in their particular situation.
It’s 100% free, and the worst case scenario is that you’ll learn exactly where you currently sit – and if there’s anything at all you can do to better your family’s situation.
To your college success,