Now that everyone is excited about the FAFSA, it’s nowhere to be found. Not last year’s, not this year’s. If you want a head start on collecting info, here is last year’s FAFSA Worksheet. Swap 2017 for 2016 and 2018 for 2017 and you’ll see exactly what documents and other information are needed.
And of course, the concrete step you can take today to prepare for the FAFSA is to get an FSA ID. Parents and students each need one. For married parents, only one parent needs to create an FSA ID.
529s really started to gain popularity after 2001, when qualified distributions became tax-free. Up until then, UTMA accounts were a more popular option to save on behalf of a child, and they have remained widely used. However, as financial aid calculations and rules have become more codified, the UTMA has become far less beneficial as a college savings tool. That’s because an UTMA is treated as a student asset, meaning it gets no Continue reading UTMA to 529 Conversions
It’s the busy season for insurance and annuities hucksters who tell parents of college-bound students that spending their assets to buy an insurance policy will yield all manner of financial aid benefits. Before you start making expensive moves that end up costing more in the long run, you should figure out what will really benefit you. Continue reading FAFSA Asset Do’s and Don’t’s
This is a quick refresher on how the FAFSA works. The most important part of how it works is this: The FAFSA calculates your Expected Family Contribution. It is not the tooth fairy. The schools to which you apply use your EFC to determine your aid package. The FAFSA does not obligate them to meet your need; however, for purposes of Title IV funds (federal student aid), it does obligate schools to use standard criteria in packaging aid awards. The second most important part is this: much like preparing your taxes, you Continue reading FAFSA Basics
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. Continue reading Preparing for the FAFSA
The Department of Education has released the EFC Formula Guide for this fall’s FAFSA. The Formula Guide is the detailed calculation behind Expected Family Contribution, FAFSA version. Families who will be completing the FAFSA this fall should take a look. Continue reading FAFSA Formula 2019-2020
Step 1 in figuring out how to pay for college is estimating your EFC. You can use the FAFSA4caster, or the more detailed EFC Formula Guide (note that’s for 2018-2019; the 2019-2020 version should be released this month). But EFC is just a starting point: schools aren’t required to meet your need, and they certainly aren’t required to meet it through gift aid. That’s why net cost and aid packaging are important concepts to understand. Continue reading EFC, Net Cost and Aid Packaging
On our recent college odyssey, we heard about a lot of need-blind admissions policies, and no loan/100% of need met financial aid policies. These are mostly good things but perhaps not as good as they sound on the surface, so it’s worth unpacking them. Continue reading Need-Blind, No Loan, 100% Need Met Policies
With the change to prior-prior tax year reporting on the FAFSA and CSS PROFILE, it seems that keeping track of what data dates pertain to what is becoming increasingly complicated. This table summarizes the relevant years or dates for each school year.
|FAFSA/ PROFILE Income Year
|Assets As Of October*
|AOTC Tax Year**
* Assets are as of the filing date, which may be as early as October or into the following year depending on the school’s filing date.
** Remember that the AOTC can only be claimed for four tax years, so families should decide whether the fall of freshman year is better than spring of senior year for claiming. With the income limit of $160,000 (married filing joint) or $80,000 (single), some families might not be eligible every year.
Parents may find that different strategies are needed during different years. For example, a family with a student beginning college in fall of 2020 might reduce pre-tax retirement contributions this year (to increase taxes, which are deducted from income on the FAFSA and therefore reduce EFC) and then maximize contributions beginning in 2021 to reduce AGI for AOTC claiming purposes.
Families who are a few years out from college should calculate their EFC, but as college approaches and students start identifying schools they’re interested in, net price calculators become far more valuable. There can be vast differences between EFC and net price, and even significant school-to-school differences in net price due to different aid policies. Continue reading EFC vs Net Cost