It’s that time of year again. High school seniors are beginning the exciting — but stress-inducing — college application process. That means parents everywhere are also sitting down to complete the FAFSA, or the Free Application for Federal Student Aid.
Over the years, we’ve learned that many people don’t fully understand the FAFSA or its purpose. And those misunderstandings can cost them.
Here are the top three misconceptions about the FAFSA.
1. Only people who expect need-based aid must fill out the form
Many people incorrectly believe that the FAFSA is only used for determining qualification for federal grants and loans. As a result, one-third of college students fail to submit a FAFSA, which means they could be leaving money on the table.
Yes, the FAFSA is used to determine eligibility for the federal Pell Grant and Stafford Loan programs, but it’s used for other awards, too.
First, state governments use information from the FAFSA for their own financial aid programs. Additionally, some colleges use the FAFSA to calculate their own estimate of a student’s need—and even to determine eligibility for certain scholarships.
In short, the FAFSA is free to fill out, and it could help you uncover some funding sources. Don’t neglect it.
(Pro tip: You can even use the FAFSA’s forecasting tool before your child’s senior year. This can help you know what to expect before application season even starts.)
2. It’s a pain to fill out, so I’ll put it off until the holidays when I have more free time
Don’t delay. Some schools award aid on a first-come, first-served basis. And even though the federal government gives you until June 30 to submit the FAFSA, most schools have earlier deadlines. So, you are better off completing it as soon as possible.
Although the FAFSA takes about 45 minutes to fill out, it’s often not as onerous as people fear. If you don’t have a financial advisor to assist you, make sure to gather the necessary documents before you begin — like your tax returns, bank statements and 529 account paperwork.
In addition, there are other resources to help you. Check out the IRS import tool, which automatically populates your FAFSA with data from your tax returns. There’s also a new mobile app for the FAFSA, making the process more accessible than ever.
But remember to double-check the information before you submit it.
3. Once I’ve submitted the FAFSA, the financial aid process is over
Not so fast. You’ll need to fill out the FAFSA for each year that your child attends college (and potentially graduate school, too). The form should auto-populate after your first submission, making subsequent updates much easier.
Around three weeks after you submit the FAFSA, you will receive a Student Aid Report (SAR), which provides information about your child’s eligibility for federal aid, including your Expected Family Contribution (EFC). The EFC represents the amount your family is expected to pay per year for college. Your child’s need is calculated by taking the Cost of Attendance (COA) for each school and then subtracting your EFC. The result is your child’s need to attend that particular school.
Most private schools also require an additional form, the CSS Profile, for financial aid. The CSS asks more detailed questions and looks at more sources of wealth than the FAFSA. It typically computes a higher EFC (and, therefore, a lower level of need) than the FAFSA. Unlike the FAFSA, the CSS costs money to complete and to send to schools.
Finally, you will receive a financial award letter from each college your child is accepted to, detailing what kinds of aid they were awarded. Among other issues to consider, make sure to understand which awards are renewing (meaning your child will receive the money every year) and which are non-renewing (meaning it’s a one-time award).
Keep in mind that you can appeal financial aid decisions, especially if your family’s situation changes. For example, if a serious health issue arises or your employment changes, you should update each school on your new situation.
As most parents are painfully aware, college costs are outpacing income growth. Make sure to use the FAFSA and other tools to maximize your child’s chances for financial aid.