Answers to Your College Questions
Blog posts tagged in FAFSA
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.
What is the FAFSA and what does it do?
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.
It is that time of the year for parents of high school seniors to complete their FAFSA (Free Application for Federal Student Aid) for the 2014–2015 academic year.
There are two ways you can complete your FAFSA: using estimated 2013 tax information or exact 2013 tax information. If you plan to file your taxes in early February, I recommend that you wait to complete your FAFSA using actual 2013 tax information. However, if you are not likely to file your taxes until late February, March, or April, I would advise using tax estimates on your FAFSA, and returning to the form to make updates after your tax returns have been filed.
After filing your FAFSA (your Free Application for Federal Student Aid), you will receive a very important number in your Student Aid Report—your EFC. The EFC, or your Expected Family Contribution number, is critically important to determining the cost of your college options. But many families don’t understand what this number actually means and how colleges use it.
So what is the EFC? Look to these four commonly asked questions to fully understand your EFC and how it will affect your college costs.
As parents of high school seniors begin to file the FAFSA, some are having difficulty completing the form accurately. To ensure that your FAFSA is completed correctly, be sure to avoid these seven commonly made errors:
- Listing non-working income (i.e., social security income) in the untaxed income category. If your non-working income already shows up as a part of adjusted gross income, you do not need to list it twice. Untaxed income and adjusted gross income are added together to arrive at total income. If you list non-working income in the untaxed income category, you will increase your EFC (expected family contribution) number.
- Listing the equity of your home or the value of retirement plans as an asset. These items should not be included.
- Listing student’s college savings as a student asset as opposed to a parent asset. In the 2013–2014 FAFSA, college savings accounts should be listed as a parent asset. This will reduce the EFC number.
- Not including all members of a household. When listing members in a household, anyone who lives in the parents’ household and receives more than 50 percent support from them, such as grandparents or older siblings, should be included.
- Listing parent income in the student income line item.
- For divorced families, including a parent who should not be included. Only the parent and/or stepparent with whom the student resides most of the time (i.e., for more than six out of the last twelve months) should be included. Divorce decrees or tax return exemptions are not involved in this decision.
- Waiting to complete the FAFSA until tax returns are filed in April. If you plan to file your taxes after mid-February, it is wiser to complete the FAFSA now using estimated information and then update your Student Aid Report (SAR) after you’ve completed your taxes.
Get more help with the FAFSA and other financial aid documents, plus understanding loan options, financial aid award letters, and more with the Financial Fit® program.
Soon, after January 1st of 2013, parents of high school seniors will be filing the Free Application for Federal Student Aid—the FAFSA—in their pursuit of financial aid for college.
The federal government uses the FAFSA to calculate families’ EFC number. EFC is a term that is often misunderstood; it stands for Expected Family Contribution. Many people believe that the EFC number is the exact amount that schools expect families to spend on college. This is not the case. Actually, your EFC is the number that colleges will use (along with information they garner on a student’s application for admission) to develop their award letters. The award letter—which lists eligibility for all scholarships, grants, student loans, and campus employment options—allows families to determine their official net price of the college.