FAFSA Form & Financial Aid Form Blog

As the tax season approaches and the deadline for the FAFSA nears, March 1, 2007 to be exact, I thought it would be a good time to go over some common mistakes to avoid when filling it out. The first mistake I see people make is not having their tax information up to date. If you are unable to get your taxes in on time you still want to fill out the FAFSA. The longer you wait to fill out your FAFSA the less chance you have on receiving money. What you want to do is fill out the FAFSA to the best of your ability using the year before tax information. You can always update your FAFSA when you get the new taxes back. This is perfectly legal and recommended by the DOE. If you are still not sure what to do always check with your schools financial aid office or check out FAFSA Online.

Mistake #2!! Always check your work. Make sure you have filled everything out with the right information in the right order. It sounds like common sense but time and time again people put their name out of order, parents fill out the student’s part of the FAFSA with their information, and they leave questions blank. Just because a certain area doesn’t apply to you doesn’t mean to leave it blank. By doing this you are hurting your chances on getting money awarded to you. What you want to do is put the number O in instead. You may think there the same thing but the DOE doesn’t. In doing their calculations every number matters.

Finally, not that any of you upstanding citizens out there would do this, but, DON”T LIE on your FAFSA. That is the one sure way not to receive any money and its illegal. Also, with the new rule changes it’s no longer necessary to hide inheritances or college funds. They are no longer factored into your total EFC (Expected Family Contribution). Now that you know what not to do it should make your experience a little less painful.

Some Helpful Links

Ms. Stafford and Financial Aid Podcaster’s BLOG
ActEducationLoans.com

1. Federal law suspends your eligibility for federal student aid, if you have been convicted for the possession or sale of illegal drugs for an offense that occurred during a period of enrollment for which you were receiving federal student aid (grants, loans, and/or work-study).
2. Even if you are 23 years old, living on your own, paying your own way…the Gov’t still views you as a dependent student…meaning they still use your parents’ income to determine your specific “financial need”…(my advice: just wait a year until you are 24 and considered an adult in the eye of the Feds)
3. Legal Emancipation from your parents does NOT qualify you as an independent student.
4. If you transfer schools, you MUST update your FAFSA online. You will not be able to receive loans at your new school unless you do this.
5. FAFSA is not a loan!!!! It is a government form that determines your eligibility for all types of aid, including loans.

I know it seems as if the first of the year just passed, but if you have not thought about completing your FAFSA for this year you should start to do so ASAP. The deadline is March 1, 2007 if you intend to start school fall 2007. If you have already filed your taxes for 2006 then you should file your FAFSA now. Since the FAFSA is bases on the previous year’s financial information, you do not want to fill it out until your taxes are complete. In my experience with the DOE (US Dep’t of Education)…when they get swamped…you end up waiting a very long time to get your SAR (Student aid report) in the mail. This report is vital because it tells you what type of Federal Aid/grants you are eligible to receive…giving you, the student, a clearer perspective of how much you will need to come up with to attend college. If you are already in school, don’t forget that you have to update your FAFSA every school year!!! If you do not fill out the FAFSA you will not be able to get any sort of grants or Federal Student loans for that upcoming school year.

Small businesses that are majority owned and controlled by the family no longer have to be reported as an asset. The business must have fewer than 100 employees and the household members who are included on the application must own and control more than half of the business.

Assets held in the name of a dependent student or an independent student without dependents will be assessed at a maximum rate of 20 percent, down from 35 percent in years past.

The maximum assessment rate for independent students with dependents effectively drops to 3.29 percent from 5.64 percent.

Assets held in the parent’s name will continue to be assessed at a maximum rate of 5.6 percent.

Assets held in a dependent student’s name in a qualified account do not have to be reported on the 2007-08 FAFSA — at all.

Qualified accounts include Coverdell Education Savings Accounts, Section 529 prepaid tuition plans and Section 529 college savings plans.

This change was probably the result of a legislative drafting error, says Mark Kantrowitz, a financial aid expert. Congress wrote a law saying that qualified accounts in the name of a dependent student will no longer be considered student assets. But it never said they would be treated as parent assets instead.

Parents who think their dependent children might be eligible for financial aid can take advantage of this loophole by moving money from an UGMA/UTMA account into a 529 college savings plan in the student’s name before filling out the federal application. Then they won’t have to list the account on the 2007-08 application.

If Congress changes the law, families will still benefit from this switch because the account will be likely counted as parent assets and assessed at the parent rate (maximum 5.64 percent) instead of the student rate (maximum 20 percent).

In the past, prepaid tuition plans were not reported as an asset on the federal aid application. Instead, they were treated as a “resource,” which was even worse because they offset financial aid dollar for dollar, Kantrowitz says.

The new form asks if the student has been convicted of a drug offense while receiving federal student aid, a change from previous forms which asked in general. A yes answer can still result in no financial aid.

Higher income-protection allowances for students go up slightly this year — to $3,000 from $2,200 for dependent students. For independent students, the allowances go up by $1,050 or $1,700 depending on their marital status and whether they have children. This gives you the flexibility to earn more with summer jobs.

If you are like many college students and are thinking about transferring schools, then you want to make sure you update your FAFSA before going forward. I get numerous calls from students who just assume that the money from their old school will automatically transfer over to their new school. This is not true and unless you cancel out your old loan from your old school you may be responsible for that loan even if you are not attending that college.

Furthermore, since different schools have different costs of tuition, the amount you may be awarded can also be different. Just because you got awarded a certain amount at one school doesn’t mean you will get that same amount at the new school. In order to assure that you get any money please remember to update your FAFSA. I can’t stress this enough. That is not the final step however. Just like when you first applied at your old school you need to wait for the award letter and then fill out the application for a Stafford Loan. This can be done at the Stafford Loan Website. Hopefully I was able to provide a little clarity on the subject and remember if you ever have questions it is always best to ask your schools financial aid office.

HELPFUL LINKS:

www.studentloannetwork.com

www.fafsaonline.com

www.studentscholarshipsearch.com