Preparing for the FAFSA

Next year’s FAFSA will be available on Oct. 1. That doesn’t mean you need to rush online and complete it on Oct. 1. Here are a few things that should factor into your timeline for completing it.

Deadlines: Besides the federal deadline (midnight Central time on June 30, 2019), each state and each college has its own FAFSA filing deadline. Even within a single state, multiple programs may have multiple deadlines. Same goes for colleges: early action or early decision will require an earlier FAFSA submission. What you should do between now and Oct. 1 is find out the deadlines that apply to you, and whether any scholarships or grants for which you’re eligible are first come, first served.

Calculation: If you are likely to be a need-based aid candidate (and the vast majority of students would be need-based at at least some schools in the US), then you should understand the calculation and make any possible last-minute adjustments prior to filing. Here are some examples:

• Student income from a summer job: If your student worked this summer, money sitting in their savings account can and will be used against them on the FAFSA. (Remember, student assets are assessed at 20%; parent assets at 5.64%.) A couple of options for student savings: fund a Roth IRA if it’s not needed for college; if it is needed for college, deposit it in a parent-owned 529 account. Alternatively, have the student pay back-to-school expenses and reimburse them after the FAFSA has been filed.
• Parent retirement contributions: Parents intending to fund retirement accounts should deposit those funds into the retirement account before filing the FAFSA. With this year’s especially ungenerous asset protection allowance, you’ll want every possible dollar out of your accounts prior to filing.
• Year-end expenses: Families who make year-end charitable contributions or who plan to incur other large expenses before the end of the year should pay those prior to filing.
• Ongoing expenses: Assets are counted on the day you file. So file after you pay your credit card bill and your mortgage/rent.
• Future assets: If you participate in an employer plan like an ESPP, you’ll have to report the market value of the shares if you file after the close of the ESPP period. Likewise, a year-end bonus that goes into your checking account in a lump sum will count. Find out these dates ASAP so that you can plan around them.

And of course, don’t forget the whole “ducks-in-a-row” aspect of FAFSA filing. Make sure you and your student have created FSA IDs; that you have bank, brokerage and 529 statements and any other records pertinent to your financial situation, such as child support received, available; and a list of schools in which you’re interested.