Whether you’re heading off to college straight from high school or you’re a nontraditional student getting a new degree, it’s time to think about filling out your FAFSA — the Free Application for Federal Student Aid.
While the federal FAFSA deadline isn’t until June 30, 2016, your state or college may have a different (and far earlier) deadline for processing your application and figuring out your financial aid package — so the time to do it is now.
Filling out a FAFSA may seem intimidating, especially since there’s a lot of misinformation out there about the process. To help shed some light on the process, we’re busting eight common myths about the FAFSA — what it is, how it works, and whether it’s worth the trouble.
Myth #1: I’ll never qualify for any financial aid because my family makes too much.
Uncle Sam doesn’t have an income cutoff for financial aid, so you won’t know what you’ll qualify for unless you file a FAFSA. There’s a lot more at play than income, too, such as the size of your family, whether your parents are close to retirement, whether you have siblings in college, the price of tuition at your school, and so on.
Even if you aren’t eligible for need-based federal aid, you’ll still want to file a FAFSA to get access to unsubsidized federal loans, which aren’t need-based, and any aid that your school may award that requires a FAFSA to obtain.
Myth #2: My college savings fund means I’ll never be able to qualify for aid.
This is an often-asked extension to the last question. If your parents were diligent savers who put money away in a college savings 529 plan, does that mean you’ll be penalized as ineligible for other aid?
The truth is that a 529 account is treated like any other parental asset as long as it’s owned by a parent or dependent student, and there’s a low cap on the parental assets that go into calculating a family’s expected contribution to college expenses. The benefit of having the college savings account should vastly outweigh the potential reduction in aid that may result from having one.
Myth #3: If I live on my own and support myself, FAFSA won’t consider my parents’ income.
You’ll have to jump through several hoops to prove financial independence on the FAFSA — living alone and supporting yourself isn’t enough. If you’re 24 or older by Dec. 31 of the school year for which you’re applying for aid, you will be considered an independent. If that’s not the case, here are some other ways you may be able to claim financial independence:
- You’re married, or separated, but not divorced.
- You’re pursuing a graduate degree such as a master’s or Ph.D.
- You’re active-duty military.
- You’re a veteran who was honorably discharged from active duty.
- You have financial dependents such as children.
The above is not an exhaustive list; please check the U.S. Department of Education’s federal student aid website for more information.
Myth #4: The FAFSA only affects my federal student aid.
While it’s true that filling out a FAFSA is the only way you’ll be able to receive federal student aid, most schools also use the form to assess your eligibility for their own non-federal aid programs. Private and state organizations that award scholarships and grants often also use the FAFSA to help determine your eligibility.
Myth #5: FAFSA is the only financial aid form I need to worry about.
Maybe, maybe not. About 300 schools, mostly selective private schools, require a form called the CSS Profile in addition to the FAFSA. The CSS Profile is more detailed than the FAFSA and does not assess eligibility for federal aid. Rather, it helps these schools award their own non-federal aid packages.
If your school also requires the CSS Profile, take note: Your school may set a separate, earlier deadline to receive this document. Check with your financial aid department if you’re unsure.
Myth #6: I need to have good grades to qualify for aid.
At least initially, your grades won’t affect your eligibility for federal student aid — including grants, loans, and work-study positions. (Your grades may affect your eligibility for non-federal aid such as your school’s merit scholarships.)
However, to maintain your federal aid once you’re in school, you’ll need to show “satisfactory academic progress.” Your school defines what constitutes this progress, but it typically will require you to achieve at least a certain GPA and a minimum number of credits each semester or school year.
Myth #7: I only need to file the FAFSA one time.
Wishful thinking, unfortunately. You’ll need to file a FAFSA every year you’re in school. After all, there’s a good chance your financial situation will change from year to year. If your parents win the lottery, Uncle Sam wants to know. On the flip side, if one of them loses their job, or one of your siblings begins college and your parents can’t contribute as much to your tuition, chances are you’ll get more aid to reflect your new circumstances.
Fortunately, filling out the FAFSA online means you won’t have to start from scratch every year. The renewal application means that some of your information will automatically be carried over from year to year — just make sure it’s still accurate.
Myth #8: The FAFSA is so complicated that it’s not worth the trouble.
Again, if you don’t fill it out, you can’t reap the rewards. You can save yourself at least part of the headache by skipping the intimidating paper version and filling out the FAFSA online. In a relatively recent development, the online version now uses “skip logic” — it lets you skip questions that don’t apply based on your earlier responses, saving time.
You’ll also have an easier time if you (or in the case of dependent students, your parents) have everything you need on hand, including your most recent tax return. You can use estimates based on a previous year’s taxes if you or your parents haven’t filed yet, but filing your taxes first will save you from having to update the FAFSA later.
Don’t Wait to File the FAFSA
As we mentioned above, you won’t want to wait until the federal FAFSA deadline, June 30, to file. Many institutions will have far earlier cut-offs for aid eligibility, and some financial aid is doled out on a first-come, first serve basis.
For more information about paying for college, check out some of The Simple Dollar’s previous articles:
- Best Student Loans in 2016
- Six Biggest Myths About 529 College Savings Plans
- Year-By-Year College Financial Checklist
- How to Save For Your Child’s College Education
- The Best 529 Plans in America
- Is This the Perfect Investment for Your Kid’s College Fund?