Using FAFSA to get more financial aid for college

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4 tips for maximizing your FAFSA
By Jean Chatzky

A longer application season -- now beginning on Oct. 1 -- means FAFSA filing time has arrived for families who want to learn earlier about college financial aid for the 2017-18 academic year.

The Free Application for Federal Student Aid, or FAFSA, determines which students qualify for federal grants, student loans and work-study jobs, as well as eligibility for many private awards.

Financial aid from federal and college sources is most often awarded in the order in which the forms are submitted, so file as soon as you can. Here's how to get the most from your FAFSA.

Understand the basics

The purpose of the FAFSA is to calculate your expected family contribution, or EFC -- the amount the government believes your family can contribute for college that year.

Based primarily on your family's income and assets, the EFC qualifies students for federal grants, loans and work-study programs. It's also one of the primary factors used by colleges to determine how much your family can pay when set against the cost of that school and how much the college will contribute to your total aid package.

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"Everyone should fill out the FAFSA," says Beth V. Walker, founder of College Funding Coaches, a college finance planning firm headquartered in Colorado Springs, Colorado. "There are a lot of parents who think they make too much money and that they're not going to qualify for anything, but I think it's a surprise to many people to know that the merit-based aid is handed out many times through the need-based door."

While most families can't change their income, they can maximize their federal aid eligibility by filing the FAFSA as early as possible and by transferring or spending assets held in the student's name.

Dependent undergrads, regardless of their family's income, can receive up to $23,000 in subsidized Stafford loans over 4 years, reports the U.S. Department of Education, while families with adjusted gross incomes of $40,000 or less can usually expect some federal grant aid, says Walker.

Unlike student loans, grants need not be repaid, though some conditions may apply. Before filing, families can get an estimate of their EFC by using the "FAFSA4caster" tool at

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Documents you need before you start the FAFSA

Note: If you're a dependent student, you'll need all these from your parents as well.

  • Your Social Security number
  • Your driver's license number, if you have one.
  • Your alien registration number, if you're not a U.S. citizen.
  • Records of investments, including stocks and bonds and real estate (not including the home you live in), and business and farm assets.
  • Bank statements, savings and checking account balances.
  • Records of untaxed income, including child support, interest income and veterans non-education benefits.
  • Federal tax, including W-2s.

The loopholes

Families can take action to receive as much aid as they possibly can. While most families can't change their income, they can maximize their federal aid eligibility by filing the FAFSA as early as possible and by transferring or spending assets held in the student's name.

"Student assets are assessed at 20%," says Jay Murray, president of Solutions for Tuition, a college planning firm in Lone Tree, Colorado, meaning that for every dollar in an account in a student's name, the government will subtract 20 cents from the student's aid package. This starts with need-based grants. "Parental assets are assessed at (up to) 5.6%."

The exception, Murray says, is 529 plans. These are assessed at the parental rate whether they're held in a parent's or student's name.

Gary Carpenter, executive director of the National College Advocacy Group, a nonprofit organization in Syracuse, New York, says families can also boost their aid eligibility by knowing which assets the government doesn't take into account.

"The FAFSA form does not assess the family home. It does not assess retirement accounts. It does not assess life insurance policies or annuities," says Carpenter. "Also, they do not assess personal assets like automobiles, clothing, furniture -- none of that is assessed."

Smart moves

Families looking to transfer assets from assessable accounts to sheltered ones can do so by:

  • Maxing out their retirement accounts.
  • Paying down the mortgage on their primary home.
  • Purchasing personal items the student will need before filing the FAFSA.

These personal items can include a computer or dorm supplies. Families who need those assets to be available for college costs can simply move funds from an account in the student's name to a 529 plan or one held in the parent's name.

When circumstances change

Sandy Baum, a senior fellow at the Urban Institute, adds that students also should alert their school's financial aid office about expenses that aren't considered on the FAFSA.

"For example, if you fill out (the FAFSA) and your parents made a reasonable income last year and then they lose their jobs, you want to be sure you go to the financial aid office," she says. "Tell them this because they can adjust your aid award to account for those unfortunate new circumstances. That's terrifically important."

By letting your aid office know about factors that aren't included on the FAFSA, such as medical expenses, death in the family, divorce or parental job loss, and by providing documentation, families can keep aid officers abreast of their current financial situation and boost their chances of receiving college aid.

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