If you’re worried about paying for your child’s college education, keep this statistic in mind: during the 2011-12 school year, the U.S. Department of Education reported that 85 percent of all full-time, four-year college students were receiving some form of financial aid. Consider planning way ahead of time to develop a college savings strategy that fits with your finances. If you need more resources to cover additional costs, get to know the Free Application for Federal Student Aid, better known as FAFSA (https://fafsa.ed.gov).
FAFSA is the universal application for current and prospective U.S. college students to receive college financial aid. It is the gateway to grants, student loans and work-study programs on the federal and state level.
If you have a kid headed for college, it’s a good idea to learn about the FAFSA as early as possible. The universal form is the first step for any current or prospective student who needs help paying for higher education. For the 2014-15 academic year, the College Board reported that annual tuition, room and board (http://trends.collegeboard.org) averaged $18,943 at in-state public universities, $32,762 for out-of-state students and $42,419 at private, nonprofit schools.
Students fill out the FAFSA, but if your child is a dependent student, you should gather the information together. Dependent students are generally under 24, unmarried and not working full-time, and they will need your financial data to complete the filing. Students with special family circumstances (including absent parents) may still qualify for federal and state aid under certain conditions, but should check directly with financial aid representatives at target schools for specific options.
The process starts with the student choosing a personal information number (PIN) that gives them multi-year access to the financial aid system. They will follow up with their own Social Security, contact and address information. Parents will submit their most recent federal income tax data and other proof of income; Alien Registration Numbers are required from parents who are not U.S. citizens. More detail is available on the FAFSA site.
FAFSA filing opens after January 1 every year with June 30 as the final deadline. Keep in mind, though, that a student’s current or target school financial aid deadlines (https://fafsa.ed.gov/deadlines.htm) can be significantly earlier based on the state in which they plan to attend college.
Before this process begins, however, tax and financial advisors should be consulted to discuss the full range of savings and investing options that can minimize the need for student borrowing. For assistance in completing the FAFSA form, parents and prospective students should consider contacting financial aid administrators at prospective schools or where the student has been accepted for admission. Some schools offer workshops in filling out the form and organizations like College Goal Sunday (http://www.collegegoalsundayusa.org/) offer that assistance in 39 states.
Parents and students should also check their own networks for help. Employers, professional organizations (related to the student’s field of study), fraternal societies and private foundations are great potential resources for no-strings scholarships and grant money. If a dependent child works a summer job at a major company (fast food, retail and beyond) he or she can check if the employer offers scholarships or education benefits to part-time workers. It is also important to keep an eye on the news for the latest changes to federal and state financial aid and student loan rules.
Bottom line: Knowing as much as possible about college financial aid now can help parents and students make the best plans for covering those expenses. Whether college is months or years away, it’s never too early to start planning and saving.
Jason Alderman directs Visa’s financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney.
Published: March 5, 2015 - Volume 13 - Issue 47