Tuesday, February 10, 2015

Getting Pretty for the FAFSA: How to Look Good for Financial Aid

It's the Free Application for Federal Student Aid, but to many of the nearly 22 million students who applied for financial aid last year, it's simply the FAFSA. Done correctly, this document can help you pay for college. Below are some easy tips to avoid common FAFSA mistakes that can be a headache to correct and can keep you from getting all the money you deserve.

Make Your Money Count
A surefire way to inflate your income, lowering your potential aid, is to skip or miscalculate the fields in the "additional financial aid information" section. The values you enter here are "income offsets," which are subtracted from your adjusted gross income. Read the FAFSA instructions carefully to see if these categories apply to you.

Get the Assets Right
Ironically, it's not uncommon for families to over-report their assets. Erroneously entering assets can have a big impact on your financial aid. As a general rule you can exclude the following:

  • The home you and your family live in
  • Your car and other personal possessions
  • Whole life insurance 
  • Retirement plans
  • A family farm or business (under certain conditions)

Know Your Family
Understanding who "counts" in your household will go a long way. Usually this means you, your parents, your siblings, and anyone else living in your parents' home and receiving more than half of their support from your parents. Entering the incorrect household size or number of household members in college can affect the living allowance the FAFSA calculates for you. Check the definitions on your FAFSA or ask the financial aid office of the school where you're applying or are enrolled if you're unsure.

Accuracy Is Your Ally 
Financial aid offices may audit your FAFSA, which can delay financial aid. Audits are random, but incomplete or inconsistent data increase the odds of being selected. Have the right tax documents (IRS Form 1040, W-2, financial statements) handy when filling out the FAFSA. If you file your taxes before you complete the FAFSA, you can also use the IRS Data Retrieval Tool to upload your tax information directly from the IRS database.
Note: while it's generally okay to estimate income on the FAFSA to meet early deadlines, be prepared to update it once you've filed your taxes.

By Maia Hoover Copyright 2014 brass Media, Inc.

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