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Filing the FAFSA can be a confusing process, but never fear! Our college financial expert, Frank Palmasani, has the answers to your most pressing questions.
The FAFSA is the official document used by the federal government to calculate your Expected Family Contribution (EFC). This EFC number is used by colleges to determine your eligibility for all need-based programs, such as federal grants, work-study employment, and student loans. It is also used by many state agencies to calculate your eligibility for state grants and by colleges to calculate your eligibility for college need-based grants.
The EFC, or Expected Family Contribution, is not what you can afford and it is not what you pay the college. Rather it is a number that determines your eligibility for programs. Generally, the lower your EFC, the greater your student’s eligibility for these programs.
If a family's EFC is lower than 6,000, they would likely be eligible for a Pell Grant. If the EFC is higher than the Cost of Attendance of the desired college, it would be considered a high EFC, and need-based programs would not be available to those families.
It is not mandatory but it is highly recommended. Even if a family does not anticipate being eligible for grant money, their student will need to file the FAFSA if the student plans to borrow money to pay for college or work on a college campus.
You will need to gather information for the Parent’s Adjusted Gross Income: each working parent’s wages, the amount paid in federal taxes, and finally, the amount held in savings and investments in the reported categories. All of this information should be compiled for the student as well.
Taxable income is automatically listed in the question on adjusted gross income. Untaxed income can be a number of things, but it is primarily child support or voluntary contributions one makes (in the current year) to a program at work that reduces taxable earnings like a 401k, 403b, etc.
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You should report all savings and investments except the value of retirement plans, the equity of one’s home, or the value of a business if there are less than one hundred employees.
The student must have a personal identification number to sign the FAFSA and one parent must have a personal identification number with which to sign as well. These PINS can be obtained in advance of filing at pin.ed.gov.
No, you can file the FAFSA using estimates based on your 2012 return. However, once your taxes are complete, you should return to the document and change those estimates to the actual values from the return.
Not likely. Most of the EFC is driven from income. Income is as reported on the tax return. Some of the EFC is determined from assets and, of course, assets are controllable. You can position your assets however you want before you file the FAFSA. There are certain types of assets that do not get reported on the FAFSA. These assets are the equity of one’s home and the value of retirement plans.
The key to the separated and divorced situation is identifying who the student lives with most of the time. Once this is determined, it is then the responsibility of the family to include all of the income and assets from that household only.
Let me show you an example. Let’s assume that I am divorced and my daughter (the student) lived with me for more than six months during the last twelve-month period. If I had remarried, the income and assets that I would report would be mine, my new spouse’s, and my daughter’s—not those of my daughter’s mother. If I did not re-marry, it would be mine and my daughter’s only.
It will lower the family’s EFC number. Each student files the FAFSA and on the document a question appears regarding the number of people in your family attending college. Thus, if there are two students in college, the EFC number will be reduced by almost 50 percent for each.
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