THE BASICS

• FAFSA (Free Application for Federal Student Aid):  The parent AND student submit income and savings data to the federal government.
• Financial Aid:  The unique combination of grants, work-study, scholarships and loans assigned by the university to meet financial need.
• Financial Need:  The difference between the cost of the school(s) selected and the family contribution  (College Cost – FC  = Financial Need).
• FC or EFC (Family Contribution):  The FAFSA formula calculates that amount the family is expected to pay for college based on family income, savings, and family size.
  

SENIORS – FILE FINANCIAL AID by Feb 15

• The senior AND parent must apply for a PIN ( www.pin.ed.gov ) before completing the FAFSA online.  Save this PIN for signing your FAFSA and making revisions to your FAFSA.
• Students should file an online FAFSA (Free Application for Federal Student Aid) as soon as possible after Jan. 1 (for most people that is early Feb.) www.fafsa.ed.gov .  Student and parent will input info from their 2008 federal tax form.  You may use estimated values if you file your taxes later.
• FAFSA forms must be filed by Feb 15 to qualify for state aid.
• For assistance with the forms call 1-800-4-FED-AID (1-800-433-3243).
• Complete one FAFSA for each college student in the family and list one or more colleges to receive your financial data.
• Look for the family contribution number (the amount you are expected to pay) on your SAR (Student Aid Report) which will be emailed to you.
• Award letters should arrive from colleges listing the exact financial aid package – the mix of Scholarships, Grants and Loans you are awarded.
• Make your final decision with colleges by May 1.

What is FAFSA?  The Free Application for Federal Student Aid is the form used by the federal government to determine your family’s ability to pay for college. 
It determines your eligibility for financial aid, which includes: grants, work-study, scholarships and loans.
Complete the FAFSA as soon as possible after January 1. 
Early submission maximizes your chances of receiving aid. 
File by Feb 15 to qualify for state of MI money.

    FAFSA APPLICATION  PROCESS                          

1.   Get a PIN  :  The Personal Identification Number (PIN) is the code that the U.S. Dept of Ed uses to identify the student AND the parent. 

A PIN allows you to:
- Electronically sign your FAFSA when you apply online
- Check the status of your FAFSA
- Make corrections to your personal information online

To obtain a PIN,  visit www.pin.ed.gov 
( A separate PIN is needed for both student AND parent)
·  You submit your name, date of birth and social security number 
·  It takes about three business days to receive a PIN by e-mail.  

2.       Compile Federal Taxes  Both the student and parent must copy amounts from lines from the 1040 or 1040EZ forms.  Taxes do not need to  be submitted, only completed.

3.       Complete a sample FAFSA worksheet:   Print a Pre-Application Worksheet and use it as a guide before committing answers online.  DO NOT enter online answers directly from the paper FAFSA!  Web vs paper FAFSA questions are in a different order

4.       Complete your FAFSA www.fafsa.ed.gov Save your FAFSA online if you can’t finish it in one session: Click the “Save” button at the bottom of each step to save info for 45 days. Use a password (which you select at the start of the process) to retrieve your information later.  

E-filing   benefits 
The system “edit checks”  your information and will instantly alert you of any mistakes.
You will receive your SAR in  3-5 days  vs. 4-5 weeks if you fill out the paper version.   

CAUTION The FAFSA is FREE!  Do NOT use www.fafsa.com  – they look very official but will charge you to complete a FAFSA for you.

5.       Print out a copy: Keep a completed copy for your records.

6.    Review your Student Aid Report (SAR)

The SAR holds the results of your FAFSA. Review it carefully for accuracy. If you filed electronically, you should receive your SAR in 2-3 weeks (4-5 weeks if you filed a paper FAFSA).

7.     Find your EFC on your SAR  This is the total amount parent and student will be expected to contribute.

Why is there an asterisk after my EFC?  It means your SAR has been selected for verification (happens to about 30% of SARs). It means your prospective college will compare your SAR with your tax form to verify your financial status. If asked for verification, submit the forms requested to your prospective college’s financial aid office ASAP.

FAFSA Tips

• The word ‘you’ always means the student
• The correct year is the year the student will be in college – NOT the current year or tax year
• Do not enter false information as a way to qualify for more aid. Doing so is a federal crime and can be punishable with fines or prison.
• Fill out the FAFSA every year, even if you don’t think you will qualify for aid. It may be a prerequisite for scholarships.
• Professional Judgement:  If your family has unusual circumstances – medical bills, change in employment, other parochial tuition – contact each college financial aid office directly NOT the FAFSA people
• File a FAFSA for every college student in your family
• Stepparent:  Income and assets of both parents must be included
• Divorced/Separated:  List only the parent the student lived with most during the last 12 month
• List up to 6 schools to get your financial data from 1 FAFSA.  To add more schools, you need to amend a submitted form
• File a renewal FAFSA each year
• Say “YES” to WorkStudy or Loan consideration – saying NO does not get you more gift aid

Myths and Realities About Paying for College

Myth: Private colleges are more expensive than public colleges.
Reality: Private colleges usually cost more than public institutions because taxes pay the difference. However, private colleges usually offer more scholarships and after student aid may cost less than a public institution. 

Myth:  You need good grades to get financial aid
Reality:  While a high GPA may qualify you for more scholarships, most federal aid programs are based on need.

Myth:  Colleges will reject me if they think I need too much money
Reality:  Most schools use a ‘need-blind’ system with admission separate from financial aid.  Some use a ‘need-aware’ approach – top students are admitted regardless of need while borderline students with little need have an edge over other borderline students with great need.

Myth:  I can negotiate a better deal by playing off colleges against each other.
Reality:  Most colleges loathe the idea of negotiating.  It is better to ask a school to consider an adjustment to your package by giving them other grade, test scores, or financial information.

Myth: Athletes get a large portion of the available scholarships.
Reality: Only 1 percent of undergraduates received athletic scholarships. 

Myth: Only minorities get extra help.
Myth:  Members of the ‘middle-class’ have a big disadvantage qualifying for aid.
Reality: The majority of student aid is awarded on the basis of financial need. Generally, students from racial or ethnic minority groups are more likely to receive grants because they are more likely to have financial need.   Students from middle class families are more likely to receive scholarships based on academics.

Myth:  Millions of scholarship dollars go unclaimed every year
Reality:  The millions number is estimated and unfounded.  Unclaimed scholarships go unclaimed for a reason – students do not meet the employer or redheaded, left-handed cricket player from Maine criteria.

Myth:  A student can claim to be independent to qualify for more aid
Reality:  You must be over 23, a veteran, a parent, in grad school, or an orphan to be independent.

Myth: You shouldn’t bother with a FAFSA because your family income is too high
Reality:  If you choose a college that costs more than your family contribution, you demonstrate need and qualify for aid.  Many schools require a FAFSA to be filed in order to earn a merit scholarship – even if you will not qualify for grants. 

Myth:  There's not as much financial aid as there used to be.
Reality:  In 1965, $600 million was available for financial aid.
              In 2005, federal student aid programs provided roughly $90 billion

Myth:  Colleges will often make the 1st year affordable and then reduce aid once they ‘have’ you

FAFSA FAQs             www.fafsa.ed.gov

If you're having trouble with the FAFSA, call the Federal Student Aid Info. Center at 1-800-4-FED AID (1-800-433-3243)

Who is the reporting parent if separated, divorced, or stepfamily?

• If the parents are divorced or separated, only the income and assets of the parent with whom the student lives is counted (income includes any child support and/or alimony received).
• If that custodial parent has remarried, the stepparent's financial information must be included.
• If the parent was widowed during the year for which financial data is being reported, only the surviving parent's income is used.

When should I file the FAFSA?
To maximize your chances of receiving financial aid, submit your FAFSA as soon as possible after January 1 of the year for which you are requesting aid. Aid is generally awarded on a first-come, first-served basis — a late application may cause you to miss out on available funding.  The deadline for MI state aid is March 1.

I probably don't qualify for need-based aid. Should I complete a FAFSA anyway?    
Yes. Many families mistakenly think they don't qualify for aid, and prevent themselves from receiving financial aid by failing to apply for it. In addition, there are a few sources of aid such as unsubsidized Stafford and PLUS loans that are available regardless of need. The FAFSA form is free. There is no good excuse for not applying.

I want to apply to three schools. Should I submit three FAFSAs?
NO. You can select up to six schools to receive your FAFSA data by listing them on your application.

Is My Financial Need the Same at ALL Schools?   No.  Financial Need depends on cost of attendance

Are my parents responsible for my educational loans?   
Not for Stafford or Perkins Loans – those are in the student’s name. The student is held responsible for repaying educational loans
Parents are only responsible for the Federal PLUS loans or if the student is under 18.   
Voluntarily, if your parents (or grandparents) want to help pay off your loan, you can have your repayment billing statements sent to their address or automatically deducted from a parent’s bank account.

Who is a dependent student, who is independent?
An independent student is NOT expected to have a parent contribution. 
You are independent if you are:

• a veteran of the military
• a student who supports children of their own
• attending graduate school
• at least 24 years old
• an orphan or ward of the court
• a married student (the spouse's financial info must be included).

If you don't fit one of these categories, your parents’ financial info must be included on the FAFSA. 
Note:  It does NOT matter who claims the student on the tax return or if the student is self-supporting
Is My Family Contribution the Same at ALL Institutions?
Yes.  Your EFC does NOT change based on price.

What if a family has multiple college students? 
If more than one family member attends college the total amount the parents can afford to contribute is divided into equal portions for each student. 

Why is there an asterisk after my EFC?
It means your SAR has been selected for verification (happens to about 30% of SARs). The federal government has asked the college to verify your data by comparing your SAR with your tax form to verify your financial status. If asked for verification, submit your tax returns to your prospective college’s financial aid office ASAP.

How do I apply?   (www.fafsa.ed.gov )  www.studentaid.ed.gov/completefafsa

Why should I file online?       Families should file online
• You are alerted to potential errors and can correct them before the application is processed
• Calculations are performed automatically
• Secure: Software encryption is enabled to protect your personal financial information
• Faster: You will receive your SAR by email in 3-5 days

• Get a PIN      www.pin.ed.gov 

What’s a PIN for? A PIN allows you to electronically sign your FAFSA and make corrections to your FAFSA
Who needs a PIN? A separate PIN is needed for student AND parent
Submit  name, date of birth and social security number to receive a PIN.
When should I apply for a PIN? Jnauary of senior year – before filing FAFSA
Can I use my parent’s PIN? NO. The student and parent need separate PINs.
Can you change your PIN? YES.  The student or parent can change the PIN to something easier to remember by selecting CHANGE MY PIN from the PIN website.
What if I forget my PIN? The student or parent may request a duplicate PIN at www.pin.ed.gov  If an email address is on file, a response will be generated within 4 hours.

• Compile Student and Parent Federal Taxes Both the student and parent must copy amounts from lines from the 1040, 1040A or 1040EZ forms.  Taxes do not need to be submitted, only completed.
• (Optional but suggested) Complete a paper FAFSA worksheet: Completing a Pre-Application Worksheet will make entering the data online an easier task – the questions are in the same order as the website. 
• Earned Income: This is your salary, wages, and tips.
• Untaxed Income: Such as Social Security benefits, AFDC, child support, welfare, pensions, housing allowances, and veteran’s benefits.
• Tax-Deferred Income: This includes the amount contributed to IRA, 401k, and Keogh payments for the prior tax year. You are not required to include the total balance in these retirement funds, only the amount contributed during the prior tax year.
• Federal Tax Paid: This includes income tax paid. Do not use the amount of tax withheld on your W-2, but the actual federal income tax paid.
• Liquid Assets: This includes cash, savings accounts, and checking accounts.
• Other Assets: This includes other real estate equity (not your principal residence) and the net worth of any investments (stocks, bonds, mutual funds, CDs, etc.). Do not include the value of the family home or the value of any retirement funds or pensions.
• Submit a FAFSA  Records needed

q  Parent and student PINs.  The student PIN is entered at the beginning to identify the FAFSA, the parent PIN is entered at the end as a signature
q Parent and Student SSN and drivers license number
q Parent AND student income tax returns, W-2 forms and 1099 forms for the previous year. 
q Records of untaxed income received such as welfare benefits, social security benefits, earned income credit, veteran's benefits or clergy housing allowances.
q Current bank statements and records of stocks, bonds, mutual funds and other investments.
q Current mortgage and investment statements

Save your FAFSA  if you can’t finish it in one session: Click the “Save” button at the bottom of each step to save info for 45 days. Use a password (you select it at the start of the process) to retrieve your information later.
The Confirmation Page:  After submission, a confirmation page will appear including an estimated EFC.

• Review your Student Aid Report (SAR) The SAR will show your official EFC on the front-page upper right. If you filed electronically, you should receive your SAR by email in 2-3 days. Review it carefully for accuracy.  Save it.  Print it.  Make any corrections through the website if necessary.

FAFSA Tips

• Fill out the FAFSA as soon as possible after January 1. Early submission maximizes your chances of receiving aid.  File by March 1 to qualify for state of MI money.
• The word ‘you’ always means the student
• The correct FAFSA year is the year the student will be in college – NOT the current school year
• Fill out the FAFSA every year, even if you don’t think you will qualify for aid. It may be a prerequisite for scholarships.
• Professional Judgment:  If your family has unusual circumstances – medical bills, change in employment, other parochial tuition – contact each college financial aid office directly NOT the FAFSA people
• File a FAFSA for every college student in your family.
• If your parents are divorced or separated, the parent with whom you lived the most during the past 12 months is the parent responsible for filling out the FAFSA. This is not necessarily the parent who has legal custody.
• If the parent responsible for completing the FAFSA has remarried, the new spouse must report their income and assets.
• List up to 10 schools to get your financial data from one FAFSA.  To add more schools, you need to amend a submitted form
• Submit a FAFSA even if you think you will not get need-based aid
• Say “YES” to Work Study or Loan consideration – Answering "yes" does not obligate you to accept a loan; saying NO does not get you more gift aid
• Even if you qualify for the simplified needs test, you should still complete the asset information section of the FAFSA. Some states and schools use this information for computing their own financial aid awards
• Retirement savings are not reported as assets

College Support Agreements for Divorced Parents
It is best for parents who are in the process of getting divorced to prepare a written college support agreement in addition to a child support agreement. Such an agreement should specify:

• who is responsible for how much of the college expenses
• how many semesters of support will be provided
• whether there is an age limit (i.e., up to age 24, when the student becomes automatically independent)
• any restrictions on which colleges the child may attend
• what constitutes college costs (just tuition and required fees, or also room and board, transportation, health insurance, textbooks)
• whether there are any requirements the child must satisfy to receive continued support, such as achieving a minimum GPA and taking a minimum number of credit hours.
• whether the college support is to be paid directly to the school, to the custodial parent, to the child, or to a combination.
• Often the percentage of college costs is divided proportionately between the parents according to income after subtracting non-discretionary expenses such as taxes, basic living expenses and health care. This is the same as the "income shares formula" used by most states for child support.

Section 529 plans are popular vehicles for funding the college education of children of divorced parents, as they permit the non-custodial parent to limit their financial obligation by prepaying for a set percentage of college costs.
Although child support requirements terminate in most states at when the child reaches the age of majority (usually age 18 or 21), there is often an exception for children who are enrolled in a postsecondary educational institution or have special needs. Even if child support has terminated, the non-custodial parent might still be required to provide college support.
Studies have found that children who have kept in contact with the non-custodial parent are more likely to receive greater support. Fathers with joint legal custody provide more college support than fathers without custody, and fathers with visitation rights provide more college support than those without visitation rights.

Common FAFSA Errors      

Many errors can be avoided by filing electronically.

• Reporting taxes withheld from the W2 form instead of taxes PAID from the 1040. The total of your withholdings can be higher or lower than the total income tax. If you got a refund, it was higher. If you owed additional tax, it was lower.
• Don’t use a nickname or any name different from the name on your Social Security card.
• The words "you" and "your" on the FAFSA always refer to the student, not the parents.
• In the question that asks about bachelor's degrees, answer "no" if you will not have completed your first bachelor's degree by July 1.
• In the question that asks about your interest in different types of aid (e.g., work-study and student loans), answer yes" to each question. Answering "yes" does not obligate you to accept a loan. Answering "no" will not get you more aid.
• Do not skip the questions about the educational attainment of your parents. These questions may qualify you for first generation college scholarships.
• Forgetting to report ALL the sources of untaxed income-Social Security, Earned Income Credit, housing allowance, retirement plan contributions, child support and Aid to Dependent Children (ADC).
• To be considered a veteran, you must have served on active duty.  If your service was only for training purposes (e.g., National Guard or Reserves, or a ROTC student), you are not considered a veteran.
• Remember to count yourself, the student, as one of the people who will be college students during the award year.
• If your parents are divorced or separated, the parent with whom you lived the most during the past 12 months is the parent responsible for filling out the FAFSA (not necessarily the one with legal custody). If the parent who is responsible for completing the FAFSA has remarried, your stepparent must report his or her income and assets, even if they weren't married during the previous year. Prenuptial agreements have no bearing on this.
• If you filed an IRS Form 1040 even though you were not required to file a 1040, you should fill in the oval to indicate whether you were eligible to file a 1040A or 1040EZ to qualify for the simple needs test.
• Do not include employer contributions to retirement plans part of the payments made to such plans on Worksheet B. Only the employee's contribution should be listed.
• Rental properties are counted as investments, not business assets, unless they are part of a formally recognized business.
• Worksheet C asks for income and benefits that are to be excluded from taxable income. Most students will report money earned from work-study here. If any grant or scholarship aid was reported on the income tax form, it should also be reported here.
• Even if you qualify for the simplified needs test, you should still complete the asset information section of the FAFSA. Some states and schools will use this information for computing their own financial aid awards.
• Prepaid tuition plans are not reported as assets.
• Pensions and the cash value of a life insurance policy - known as a whole-life policy - are not reported as an asset.
• One of the questions asks for permission to release the information to your state aid agency. Do not answer "no" to this question if you wish to be considered for state aid.
• If you are a male between the ages of 18 and 26 who have not already registered with Selective Service, you should register using the appropriate question on the FAFSA.
• If someone other than you or your parents complete the FAFSA for you, that person must complete the "Preparer's Use Only" section. Preparers must complete this section even if they are not paid for their services.