It’s FAFSA Season
Ok, so maybe FAFSA (the Free Application for Federal Student Aid) doesn’t exactly conjure up warm and fuzzy feelings like, say, the Christmas season does, but for many students and their families, it may still result in feelings akin to “visions of sugar plums” dancing in their heads if the outcome is right.
FAFSA is a form completed by current and prospective college students in the United States to determine their eligibility for student financial aid, and the application period for the 2023-2024 school year recently opened on October 1. It is different than the CSS Profile, which is also required by some colleges.
While the application period doesn’t close until June 30, 2023, it’s best to file as early as possible because states and schools have limited funds. Also, some states have different application periods that may close sooner. Arkansas, for instance, closes its FAFSA period in January.
Each college can also set individual deadlines for receiving the processed FAFSA. It’s a good idea to contact your chosen college to find out when they need to receive the processed FAFSA 2023-24 application.
The FAFSA is the primary tool for determining a student’s financial aid, and is a prerequisite for federal student loans, grants, and work-study. Additionally, most colleges require the FAFSA before distributing their own need-based aid and, in some cases, merit based financial help.
Students must provide information about their income, their family’s income, assets, and family size. This information helps determine the expected family contribution and what aid the student could receive. And while it likely will take a few hours of your time to complete, the payoff could make it well worth the effort.
The FAFSA determines financial needs by analyzing a family's income, assets, and other household information. In general, it works like this:
- parent income is counted up to 47% (income equals adjusted gross income from their tax return, plus untaxed income/benefits, and minus certain deductions);
- student income is counted at 50% over a certain amount ($7,600 for dependent students or $11,820 for independent students);
- parent assets are counted at 5.64% (home equity, retirement assets, cash-value life insurance, and annuities are excluded); and
- student assets are counted at 20%.
As you can see, a family's income is an important factor, often the most important. But the FAFSA doesn't consider income as of right now, instead, it considers income from two years prior, which it gets from tax return.s So, for the FAFSA 2023-2024 year, you will need income information from 2021 tax returns. For asset values, however, the FAFSA wants the current value of your assets as of the day you fill out the form.
To submit the FAFSA, you can do so online at www.studentaid.gov. If you haven't filed it before, both parent and child will need to create an FSA ID, which can be used for all years of college. It’s also important to note that the FAFSA must be filed each year, though returning college students can file a renewal FAFSA, which should take less time.
The filing of the FAFSA has in the past often seemed a daunting task. Recent changes, however, made by The FAFSA Simplification Act of 2021 have made it less so. The number of questions on the FAFSA have been reduced from 108 all the way down to 36. Other changes were made to help more students qualify.
So what happens next, after the FAFSA is submitted? What is called your Expected Family Contribution, or EFC, is calculated using the information on the application. This is compared to a college’s expected cost. That cost minus the EFC is the student’s financial need. Colleges will use this information to help put together a financial aid package for the student, if at all possible.
For more information on the FAFSA and other student support services, got to www.studentaid.gov.