How To Make The Most Of FAFSA For Maximum College Funding Help

October 01, 2018

If you are the parent of a college-age student or will be someday, you have a new best friend with an unusual name, and her name is FAFSA. FAFSA and I go way back.

My relationship with FAFSA

I first met her decades ago when I was preparing to launch my own college career, and she has recently come back into my life. I have one daughter heading off to college this fall and another daughter a scant two years behind her. As a result, FAFSA and I are once again spending lots of quality time together. She likes to ask a lot of pesky, intrusive financial questions, but if you are patient, thorough, and have the correct answers, FAFSA can be a very generous friend.

Getting to know FAFSA better

Who is this FAFSA, you ask? The Free Application for Federal Student Aid (FAFSA) is a standard application for financial aid filed by students (and parents thereof) attending undergraduate college programs, career schools, or graduate school.

Not just for need-based financial aid

Lest you think that your income is much too high for FAFSA to take any interest in your plight, I’ll encourage you to reconsider. While FAFSA is used to apply and qualify for practically all forms of needs-based financial aid, such as grants and loans, it is also widely used for many scholarship programs. FAFSA is not for student loans alone – many universities and state programs utilize FAFSA data to award aid from their own scholarship and grant programs.

I’ve gotten to know FAFSA intimately over the years, and if you say (and properly verify) all the right things, she just might connect you with some college cash.

Time is a cruel mistress

One of the first things to remember about a successful relationship with FAFSA is to always be on time. Always. The window for completing the FAFSA each year is between October 1 and June 30. For example, my daughter started her freshman year in college in August, 2018. That means we started working on her FAFSA during the fall of her senior year in order to complete the paperwork as close as possible to the October 1, 2017, FAFSA availability date for the 2018-2019 academic year.

We could have waited as late as June 30, 2018, (the end of the academic year) to complete this task, but that could be a costly mistake. According to Savingforcollege.com, students who file the FAFSA early (within the first three months) on average receive twice the amount of grant money as do students who file later. The lesson here is don’t leave FAFSA waiting; she just might give away your grant or scholarship money to an earlier applicant. Oh, and you’ll need to repeat this process every October until your student graduates.

More ways to cozy up with FAFSA

Other than filing early and often, are there any other ways to woo FAFSA and possibly score additional funding for college? Oh yes. Here are a few additional college aid strategies for you to explore:

  • Gifts from grandparents. Make these gifts to the student’s parent(s), not to the student directly. Gifts from grandma and grandpa are counted as “untaxed income” if made directly to the student. However, giving the money to Mom or Dad is ignored by FAFSA. Alternatively, grandparents can make a 529 plan contribution to a plan owned by either the student or a parent (but not owned by grandparents!).
  • Minimize your net worth. Do not include the value of money in parents’ retirement plans, qualified annuities, or the value of the family home when computing your family’s net worth on the FAFSA. This is a common mistake, and it can make you appear unnecessarily wealthy for financial aid purposes.
  • Marital status matters. If parents are divorced or separated and do not live together, can the student live most of the year with the lower-income or least wealthy parent? If so, only this parent should provide financial information for FAFSA.
  • Viva la Independence! Can or does the student live on his/her own and is no longer claimed as a dependent on parents’ federal income tax?  This one is tricky, as these conditions alone may NOT be sufficient to claim independent status in the eyes of FAFSA and avoid reporting parental financial information. Generally, single students with no dependents who are under the age of 24 must still include parental assets and income on the FAFSA, even if they are totally self-sufficient and live separately from Mom and Dad. There are exceptions, however. The Federal Student Aid Office of the U.S. Department of Education provides an extensive list of criteria necessary to claim independence for FAFSA purposes, including marriage, having children or dependents of one’s own, military service (active duty or veteran), and several other extenuating circumstances.

FAFSA is your friend

Sure, it can feel like a hassle to sift through all of your financial data and go through the FAFSA process every October in anticipation of the coming academic year. However, individual circumstances can and do change, so you want to keep FAFSA up to speed with what’s going on in your financial life each and every year. Otherwise, FAFSA only knows what you told her last year, and you both might be overlooking some valuable college financing options if you don’t keep her fully informed.

Besides, taking a thorough inventory of your financial situation once a year is always a good practice, even if you aren’t applying for college financial aid.