FAFSA – The Heart Of The Financial Aid Process

Consider the Free Application for Federal Student Aid or FAFSA as the beginning of any application for federal student aid. Almost everything else in the financial aid spectrum hinges upon this form being completed. Many schools' aid offices won't even know you exist until you have completed this form. It's really that important.

Completing or renewing the FAFSA will become an annual event for you while you're enrolled. It should be written on your calendar every January 1st as this is the earliest you may complete a FAFSA for the upcoming school year. Every year, your school must re-determine your eligibility, and the submission of your FAFSA is what kicks-off the process.

Following is a simple timeline of the application process:

• Step One: Student completes and submits FAFSA
• Step Two: Department of Education calculates EFC
• Step Three: EFC is presented to the school and student via Student Aid Report or SAR
• Step Four: School calculates student's aid eligibility and sends award letter
• Step Five: Student compares award letters and follows further instructions

Nothing in steps 2 - 5 can occur until you have completed your FAFSA. So let's focus preparing to complete the FAFSA.

Completing The FAFSA

As with anything that involves money and Uncle Sam, applying for federal student aid is a process where one thing leads to another. But if you prepare properly, and simply follow instructions, you'll be amazed how easy it is. First, if you plan to submit your FAFSA electronically (recommended), you must apply for a Personal Identification Number or PIN. You can do this by visiting http://www.pin.ed.gov. If you are a dependent student, a parent must apply for a PIN as well. It will take 1 – 3 business days to get your PIN back by email or 7 – 10 days if by U.S. postal service.

Once you’re ready to complete the FAFSA, you’ll want to have the following items handy:

• Federal tax return
• Driver’s license
• Social Security Number
• Any other pertinent financial documents (e.g. bank statements, investment account information)

It's also a good idea to check the eligibility requirements for applying for federal aid. They are:

• Be a U.S. citizen or eligible noncitizen
• Have a valid Social Security number (unless you're from the Republic of the Marshall Islands, the Federated States of Micronesia, or the Republic of Palau)
• Comply with Selective Service registration, if required (see www.sss.gov for more information)
• Have a high school diploma or a General Education Development (GED) Certificate or pass an approved ability-to-benefit (ATB) test
• Be enrolled or accepted for enrollment as a regular student working toward a degree or certificate in an eligible program at a school that participates in the federal student aid programs

Completing the FAFSA online has some distinct advantages over paper:

• You and your school will get the results of your application a lot faster.
• There are built-in help screens to guide you along the way.
• The online application is self-editing to help reduce errors.
• Your data is secured through the encryption software.

The FAFSA is designed to be completed by the student...even a dependent student. Dependent students will be asked to provide financial information for the entire family. For the 2008-09 Academic Year, a student is considered "dependent" IF "no" is the answer to ALL questions below:

• You were born before Jan. 1, 1985.
• You are or will be enrolled in a master's or doctoral degree program (beyond a bachelor's degree) at the beginning of the 2008-09 Academic Year.
• You're married on the day you apply (even if you are separated but not divorced).
• You have children who receive more than half their support from you.
• You have dependents (other than your children or spouse) who live with you and who receive more than half their support from you at the time you apply and through June 30, 2009.
• Both your parents are deceased, or you are (or were until age 18) a ward or dependent of the court.
• You are currently serving on active duty in the U.S. Armed Forces for purposes other than training.
• You're a veteran of the U.S. Armed Forces. (A "veteran" includes students who attended a U.S. service academy and were released under a condition other than dishonorable. For more details on who is considered a veteran, see the explanatory notes on the FAFSA.)

Very often when a student is considered to be dependent, the question arises, who is/are the parent(s)? Here is how the questions regarding parental information should be answered:

• If your parents are married, answer the questions about both parents.
• If your parent is widowed or single, answer only the questions about that parent.
• If your parents have divorced or separated, answer only the questions about the parent that you lived with most during the last 12 months. If you did not live with one parent more than the other, answer only the questions about the parent who provided most of your financial support during the last 12 months.
• If your parent has remarried after being widowed or divorced, answer the questions about both your parent and your stepparent.
• If you have a legal guardian, you cannot use your legal guardian's information on your application. A legal guardian is not considered a parent for these purposes.
• If you have foster parents, you cannot use your foster parent's information on your application. A foster parent is not considered a parent for these purposes.
• If you were adopted, follow the instructions above for parents, based on your parent's current marital status. (Note: For purposes of completing the FAFSA, it does not matter which parent claimed the student on their tax return.)

The components of the FAFSA are comprised mainly of: 1) demographic data, 2) income information, and 3) asset information. And, in the case of a dependent student, the same will be asked of his or her parents. It's good to know that protection allowances are built into the EFC calculation for both students and parents. In other words, not all of your reported income and assets will be counted when determining your financial need. Things such as household size, number in college, and the age of the older parent will have huge impact on your overall need calculation.

Last but not least, roughly 1 out of 3 FAFSA submissions are selected randomly by the Department of Education for verification. If you are selected for verification, it will be noted on your Student Aid Report or SAR. Some FAFSA's are selected for verification due to inconsistent information being reported (e.g. your parents reported having $50,000 in savings accounts, but no interest income was reported). Your school's aid office will contact you for the additional information they need. Usually, all that is required is a copy of all pertinent tax returns and something called a Verification Worksheet. The worksheet will help them validate things such as household size, number in college and income that was not taxed.

Get your FAFSA done as early as possible! Some financial aid funds are simply given to the earliest filers on a first-come/first-served basis!!!

Read Next Article: Analyzing and Accepting Your Award Letter