Early filers for college financial aid reap benefits
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[October 12, 2017]
By Gail MarksJarvis
NEW YORK (Reuters) - Want to increase your
chance to get financial aid for college? File the Free Application for
Federal Student Aid (FAFSA) by the end of 2017.
“The sooner the better,” said financial aid expert Mark Kantrowitz,
publisher at Cappex.com.
In a 2015 study he did for Edvisors, Kantrowitz found that students who
quickly filed for aid in the first three months received double what
those who waited obtained.
Time is already ticking. Families were allowed to file the FAFSA for the
2018-2019 school year as of Oct. 1 – this is the second year since the
Department of Education shifted to the earlier date, from January.
The FAFSA is used by colleges to determine what families can afford to
pay, and whether colleges should give students grants they will not have
to pay back or federal student loans that they must repay. Families
report their income and assets in the FAFSA and it is sent to colleges
selected by students. Some private colleges also request an additional
form known as the CSS Profile.
October may seem early for the FAFSA, because many students are still
deciding on colleges. But an early start gives families a sense of the
financial burden they can sustain, before students make their final
Another reason to file early is state aid, said Kantrowitz. Thirteen
states hand out financial aid on a first come, first serve basis until
they run out of funds.
Students in four-year college programs received $11,380 on average in
grants and scholarships in 2015-2016, according to the National Center
for Education Statistics. State grants averaged $3,867 per student in
2015-2016. Private colleges granted $17,965 on average per student.
Parents complain about the grueling task of filling out the FAFSA form,
but it is easier this year than the past, said Jessica Thompson, policy
and research director for the Institute for College Access and Success.
With a change in technology, parents of first-year students do not have
to record income details. Instead, the online FAFSA will upload the data
from the IRS Data Retrieval Tool that taps into tax return from the
previous year, which is 2016 for the 2018-19 FAFSA filing. (Security
measures were put into the tool after a breach last spring so existing
college students cannot use it yet.)
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Messages and artwork are pictured on the top of the caps of
graduating students during their graduation ceremony at UC San Diego
in San Diego, California, U.S. June 17, 2017. REUTERS/Mike Blake
Yet it is not so easy that you should have your kid fill it out for you, said
Kalman Chany, author of “Paying for College Without Going Broke,” a book that
provides strategies for maximizing aid.
Mistakes can be costly. For instance, if you report $100,000 in a 401(k) as an
investment account instead of a retirement asset, it could reduce aid
eligibility by $5,640. Families need to be especially careful reporting
rollovers from 401(k)s into IRAs so they do not appear to have cash available
for college, said Chany.
Parents also need to take extra steps to insure colleges have the latest
information, said Kantrowitz. An income change due to a layoff, retirement, or
serious illness will not be reflected in the 2016 tax return and should be
reported to college financial aid offices to ensure needs are assessed
correctly. Amended returns also should be reported to financial aid offices,
because they will not be captured by the automatic download tool.
The caveat to “the sooner the better” mantra is with families expecting a big
influx of cash in the fall. Chany gives the example of parents who have just
sold their home and are parking the money in a bank account temporarily while
waiting to close on a new home. They could have to pay thousands more for
college than someone with the same income but no temporary stockpile. Chany’s
advice: Wait until the cash is dispatched into a new home and then file the
(Editing by Beth Pinsker and Steve Orlofsky)
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