For federal college aid, do your homework early

Every January, parents of college-bound students have a homework assignment: Send in your Free Application for Federal Student Aid (FAFSA) form.

This form must be filed if you want your son or daughter to be eligible for federal and state aid. It can't be sent in before the first of the year, but the sooner it's done after that, the better.

"It can often be first-come, first-served for the school aid," says Tom Joyce, vice president of corporate communications for Sallie Mae. "It makes sense to get to the front of that line."

Wait until spring to file and your son or daughter could miss out on some important aid.

"You could be left taking out a lot of loans," Joyce says. "You could miss out on school aid you'd be eligible for."

So place filing the FAFSA at the tip-top of your 2005 resolutions. The sooner you get started, the better your teen's chances of landing financial aid for college.

Start by checking out the FAFSA application. An online application is available at the U.S. Department of Education's Web site.

Be sure to block out a few hours of time to fill in this form carefully. Have some aspirin handy.

The form asks parents for everything from federal tax forms and W-2 forms to current bank and mortgage statements to investment records. Students will need a copy of their own W-2 forms and federal tax forms and a list of the colleges they would like to attend.

The process can be challenging, and though many parents believe they can get it completed in a minimal amount of time, it is better to devote extra attention to it.

Check and double-check
Mistakes can be costly. If there's a mistake on your FAFSA application, the form will be sent back to you and your son or daughter will lose their place in the line for financial aid. A mistake costs you time and it could cost your son or daughter precious aid money. So fill out those FAFSA forms carefully.

"Really double- and triple-check," Joyce says. "It's worth taking that extra 30 minutes to go through the form again."

A common mistake parents make in filling out a FAFSA is misstating their assets.

"If you do that wrong, it can cost you thousands in lost aid and you'll never know," Goldberg says.

Tips for filling out the FAFSA are available from FastWeb, FinAid, Peterson's and Wiredscholar. For more information about the FAFSA and the federal financial aid process, call (800) 4-FED-AID (433-3243)/ TDD (800) 730-8913. Be sure to be on the lookout for financial aid nights hosted by local high schools and colleges.

Many private and some public universities have additional aid forms that must be filled out. Again, turn in these forms as soon as possible.

About one to three weeks after submitting a FAFSA, you'll receive a Student Aid Report. This report can be viewed online using a PIN signature, if you submit the application electronically. If you print and sign a physical copy, and then forward it by mail, the lengthier waiting period will apply.

The report, when received, will summarize the information submitted on the FAFSA and list your expected family contribution, which is the amount of money the government expects your family to pay in college education costs. Brace yourself.

Sticker shock
"When parents look at expected family contribution, they're going to be shocked," says Mark Kantrowitz, founder of Finaid.

Here's why: Federal financial aid calculations may expect parents to contribute as much as 6 percent of their savings and anywhere from 22 percent to 47 percent of their available income toward college costs. Gulp.

Available income is determined by taking parents' taxed and untaxed income and subtracting a number of allowances including federal taxes, a percentage of state and local taxes, number of parents working and number of kids in college.

The FinAid site boasts a calculator that will help you estimate your expected family contribution.

Colleges and universities will try to make up the difference between the cost of attending their school and a family's expected contribution with a financial aid package.

Study financial aid award letters carefully. One school may meet all your financial aid needs through loans. Another college may only be able to meet part of your needs, but it can do so with grants. A calculator for comparing award letters can be found on the Nellie Mae site.

Some institutions liberally spread their monies and others are more tight-fisted with theirs.

Don't necessarily knock your kid's dream college off the list because of its eye-popping sticker price. Many private schools have deep pockets when it comes to financial aid.

"The reality is the higher the cost of college, the more financial aid that's available," says Jack Joyce, manager for communications and training services at the College Board.

Experts urge families to choose a college based on a student's academic interests and career plans, as well as a college's size and location. Look at costs last.

"Let the kid choose a school by academics and then let's figure out how to pay for it," Goldberg says. "You never know -- a more-expensive school may give you a better financial aid package."

After filing the FAFSA form, you'll want to beat the bushes for sources of private aid, such as scholarships and grants.

Scouring for scholarships
Many scholarships can be tracked down and applied for online. Start by visiting individual college Web sites, and be sure to search for other scholarship sources on sites such as FastWeb, Wiredscholar and the College Board. Avoid sites that charge you to search for scholarships.

"The rule of thumb is if you have to pay money to get money, it's probably a scam -- or certainly not in your best interest," Kantrowitz says.

Don't limit your scholarship search to cyberspace. Pore through scholarship books. Visit the library. Talk to high school guidance counselors. Don't overlook local sources of scholarships and aid such as churches, civic organizations and businesses.

"Local awards don't appear in any database or in any book," Kantrowitz says. "There are quite a few small local awards that you can find out about on bulletin boards outside a guidance counselor's office."

While local awards may come in smaller dollar amounts, there is less competition for them, so a student has a better shot at landing one.

"How else can you spend an hour writing an essay and get a couple hundred dollars?" Kantrowitz says.

It can pay off
"A $500 or $1,000 scholarship can cover the cost of books and fees," Joyce says. "Every bit helps."

If amid all this searching and filing and number crunching you start to waver, take a deep breath and think of the day when your very own college graduate will strut across that stage ready to take on the world.

"Think of it as an investment. An education is one of the best investments you can make," Kantrowitz says. "I don't know of any parent who wouldn't be proud to see their child graduate college."


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