Oct 06, 2016
My Biggest Student Loan Regrets
It's important to understand the ins and outs of student loans before applying. Discover Student Loans provides advice for avoiding common student loan regrets.
When it comes to preparing for college, you may be focusing on your college applications to get into your dream school. But there's another application that is just as important: the FAFSA®.
The FAFSA, short for the Free Application for Federal Student Aid, helps students determine if they qualify for federal and state aid. Because such aid can come in a variety of forms, including grants and federal student loans, and because many colleges use the FAFSA to determine student eligibility for certain scholarships, it is a key component of paying for higher education.
To prepare for filling out the FAFSA, it's important to gather the required materials so you have them on hand and can make the process as smooth as possible. Here's what you need to complete the FAFSA.
Make sure to have your Social Security card on hand so you can correctly input your Social Security number (SSN) on your application. Your SSN is a unique number assigned to only you and is an important part of your application. If you are not a US citizen, you can use your Alien Registration Number instead to fill out the application.
Having an FSA ID can help streamline the FAFSA application process. The FSA ID is a specific username and password. The FSA ID replaced the PIN from years past. Create a FSA ID here if you don't have one. You are not required to use the FSA ID while completing the FAFSA, but it can make the process a lot easier. Using the FSA ID, you can sign your application and get it processed quickly. Additionally, you can use the FSA ID to help you pre-fill out the FAFSA with your information in the future.
For the 2017-2018 academic year and beyond, applicants will need to provide information from tax returns completed two years prior. So, for those completing the FAFSA for the 2017-2018 school year, 2015 tax information is required. For the 2018-2019 school year, tax information from 2016 is required. To streamline the process, you may be able to use the IRS Data Retrieval Tool to import your information.
If you are considered a dependent student, which you probably are, your parents' tax returns and asset records will need to be provided as part of your FAFSA.
For the FAFSA, you will need to gather your bank statements and investment records to show your current assets, as well as records of any untaxed income you may have. Starting in the 2017-2018 academic year, some investments and savings will need to be reported and may affect your financial aid.
As with the tax information, dependent students will need this information from their parents as well.
"The FAFSA is used to calculate the Expected Family Contribution (EFC), which is what the government thinks families should contribute to their child's education," said Robert Farrington, millennial money expert and founder of TheCollegeInvestor.com.
Students and parents can be surprised by the EFC projections, as the formula established by law doesn't factor in household debt.
When you fill out the FAFSA, you can list up to ten schools that you are considering attending. It's important to list the schools, as they will receive the FAFSA information electronically and will use the information to determine your financial aid eligibility, including types of aid you will receive and the amount of each. Even if you are undecided, be sure to list whatever schools you are considering. It's important to note that the schools you apply to can't see what other schools you are applying to.
The FAFSA for the 2017-2018 academic year will be available starting October 1, 2016 instead of January 1 as in years past. It's key to fill out the FAFSA as soon as possible, well before the June 30 federal deadline and your state's deadline, as it can play an important role in your college funding.
"The biggest trick is to file the FAFSA as early as possible, because need-based financial aid can run out quickly at many universities," says Farrington.
Also, once you are done with your application, you may want to follow up with your school or contact the financial aid office if your financial circumstances change due to job loss, illness or divorce. It's also important to stay on top of future deadlines as you will be required to fill out the FAFSA every year you are a student to receive financial aid.
"If you fail to fill it out, you can't even get a federal student loan," says Farrington. "As such, just get in the habit of filling out the FAFSA each year you are planning to go to school."
For additional help in determining your eligibility for financial aid, check out our FAFSA assistant tool.
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