Note to my private clients:  Though you can certainly continue reading, please be assured that all of what I am about to say has already been requested, prepared and/or completed for you by my staff and me on your behalf. If you are a new applicant (i.e, the parent of a 12th grader)… once the FAFSA is officially live (Thursday, Jan 1), you will receive notice within the next week (if you haven’t already) that your child’s Financial Aid Applications (FAFSA, CSS Profile and Supplements) are ready for review/submission.  In other words, please enjoy the New Year celebration – your financial aid applications will be prepared/submitted well before the priority deadline(s).  The deadlines are different for returniing students — and we will have applications for our returning students ready for review/submit by Feb 15

For the rest of my readers, especially those who may be new to the college process, I just wanted to write a quick, but important note about the 2015 Free Application for Federal Student Aid (the ‘FAFSA’).  Though you cannot access it until the new version officially becomes available on Jan 1, there are a few steps you can take now (if you’re the parent of a 12th grader) to help you avoid costly mistakes when completing the FAFSA and make filing it less cumbersome.

First some backround on the application.  The FAFSA is the primary financial aid application – it is used by ALL colleges (and graduate schools).  Many schools also require supplements including the CSS Profile (a much more invasive application and analysis used by 300 or so colleges – including most of the 63 that meet 100% of your financial need).  But the focus of this email is the FAFSA, and as in year’s past, the 2015 FAFSA  contains roughly 100 questions about your family’s income, assets, investments, education level, household members, students’ assets, etc.  Your responses to these questions will then be used by the government to determine what is known as your Expected Family Contribution (‘EFC’) –  how much they believe you can afford to pay for college for one child for one year.  Your EFC will then promptly be provided to the financial aid offices at the colleges on your child’s list (maximum of 10) and will be used to formulate your child’s financial aid offer.

I’ve been privy to a preview and I can tell you that there are almost no material changes to this year’s FAFSA… and there is just one procedural difference which will not even be implemented until April (in April, you will be prompted to create a unique log in and pw to access your FAFSA.)  This is a good change since an added layer of security is very much in order – today you can access your FAFSA with just your child’s birthday and social security number.

Also of note, you still can only list 10 schools on your initial Application – I’ve developed a ‘work around’ for my practice, but it’s a little cumbersome – both to do and to explain in an email.  Suffice to say that if your child has applied to more than 10 schools, you should check the priority financial aid deadlines for each (available on the school’s websites) and make sure that those with the earliest deadlines make the first cut.  YOU DO NOT WANT TO MISS ANY PRIORITY FINANCIAL AID DEADLINE.  Also, the FAFSA will provide you with the graduation rate(s) of the colleges on your list – please note that these are the 6-year rates (not the 4-year rates that you should be evaluating.  For an objective 4-year graduation rate, you should check collegeresults.org.

Finally, as implied by the acronym, the FAFSA itself is free to complete/submit – that is provided you go to the correct site to access it.  (go to www. FAFSA.ed.govDO NOT go to www.FAFSA.com – this site is actually a company that will charge you when you try to submit the afpplication)  You’re welcome.

Once there, you’ll be prompted to apply for your FAFSA personal identification number (PIN).  This is a 4-digit code that will allow you to electronically ‘sign’ and submit your child’s application.  Actually you’ll need to have two PINs – one for you and one for your student.  Since the site gets pretty busy once it’s live, I suggest you apply for your PINs now at www.pin.ed.gov.  (Note to my clients who are still reading — I’ve already applied for and received your PINs)

On its face the FAFSA is not particularly difficult to complete – then again neither is a1040.  What is difficult (for both) is understanding the complex instructions, not to mention the various rules, regulations (thousands of pages of them -literally) and loopholes that go into the government (and institution’s) formula(s)!   Some of the more common and more costly mistakes people make include improperly valuing a  business, mis-identifying and using non-custodial parent information,  overstating the equity in your investment property and/or mistaking a parent asset for a student asset and vice versa.  These ‘mistaken answers’ to seemingly simple questions can wind up costing you thousands of dollars in grants and scholarships that you might have otherwise been eligible to receive.  The College Board estimates that about 90% of forms have big money ‘mistakes’ on them, while the Department of Education states that 40% of families leave money on the table.  And yes this applies to high net worth and six-figure earners.  I know this from personal experience with my practice; but you don’t have to take my word:  it was The Wall Street Journal that initially confirmed that six-figure earners were routinely qualifying for five-figure awards.    The reality is that nearly every student planning to go to college should plan to fill out at least a FAFSA.  There’s more than $150 billion up for grabs and at some schools you’ll need to submit the FAFSA just to be considered for some of their non-need based scholarships (those awarded for merit and talent).

With all that in mind, I would say that the number one mistake you can make with regards to the FAFSA is ‘blindly’ submitting it without first understanding how it works — and more importantly — understanding how you can make it work for you.   You should know what your expected contribution is (and whether/how you can reduce it) well before you hit  ‘submit’ on the live application  and are TOLD what you will be expected to pay for one year of college for one child.  Unfortunately, without any prior planning, this number is usually shocking (and not in a good way).  But for those who plan ahead, that number can often be reduced… significantly.

If you are parents to a college bound 12th grader and are currently considering strategies to reduce your EFC, the time to act is now.  If you are not sure what an EFC is, the time to act is definitely now – the priority financial aid deadline for many schools for first-time applicants is often February 1st, and we urge all families to meet that deadline.  Financial aid is often awarded on a first-come, first-served basis, and as I indicated last week we are expecting a record number of applicants to be vying for money from a shrinking award pool.  Twelflth graders:  you have about a month before the priority deadlines at most colleges!

The FAFSA (and the CSS Profile) will ask you for income information for 2014.   Since most families have not completed their taxes yet and may not even be sure of their year-end numbers at this time, it is appropriate and EXPECTED that you will use estimates on the FAFSA.  Once your taxes are completed and submitted, you can make adjustments to your form.  Note that you will not receive a final offer until you have filed your taxes so this is not a year to procrastinate with the IRS.

For parents of 10th and 11th graders who are planning to send students to college some day – please take heed… 11th grade parents, your financial aid base year is about to begin! The government will use your 2015 income to determine your family’s eligibility for scholarships.  The time to make adjustments to your holdings to ensure that you qualify for the maximum amount of aid is before your form is filed and ideally before your base year begings so that your plan is in place before the ‘look back’ period.
Let me just close with this:  ‘Financial aid’ is not what it used to be.  As I said earlier, families with six-figure incomes often and yes, routinely, qualify for five-figure awards.  I know this to be true not just because the Wall Street Journal has said so (which they have),  but because I see it happen every year.  The financial aid process is not about filling out a form.  It’s about knowing which schools your child is considering will discount and for what reasons… and about learning how the various rules work and can work for you so that you are able to make college affordable.  I’ll be discussing these rules, formulas, the 2015 FAFSA and CSS Profile…  and how the college admissions and funding processes intersect now at my workshop in Pinecrest on Jan 8 in Pinecrest and in Weston on the 14th.  Click here for more details and to register.  There is absolutely no cost to attend, but missing out on this info could cost you a fortune.  If you are the parent of a college-bound teen, I urge you to join me for one of these classes.

Wishing you and your family a very Happy New Year!  Thank you for reading and my best wishes for a safe, prosperous and joyous 2015!

Regards,

Peter

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