FAFSA season – read this first!
As someone who is often asked for advice and information on completing the FAFSA form, I thought I would just weigh in on some of the problem areas that we might come across that might influence our perspective on the FAFSA form. Often I come across the standard industry replies of “The first ones in get most of the money” but without knowledge of the family’s individual situation, we could be harming ourselves rather than helping.
Should I complete the FAFSA form immediately?
Here are some things to consider:
- Have I sent in any applications yet? It is of no good for us to rush to complete the FAFSA form (without proper guidance or planning) when the school does not even have my student’s application yet. There will be no record of the student to match it to, no name, no e mail address, no telephone number, no student number ………… will there really be a benefit for me to rush to get this part done before my application is in? The school cannot offer me any money until they have ALL my information.
- Have I worked out what my estimated EFC is yet? If I have not had the proper advice on this, then I might be reducing my financial aid. I know that my taxes from last year will count if I complete it this year, but my assets are counted as of the day I submit the form.
- Just one small example of how giving thought to this first my make a difference – My student has $2000 in their savings account. This means that our EFC number is increased by $400 and could reduce financial aid [$500 for IM schools], and this could be for 4 years at some schools. It could be better for me to empty their savings account first (to buy their laptop that we were going to anyway, or their linen for their dorm room, or their ticket home for Thanksgiving next year), or even put that amount in the parents’ name as that would increase the EFC by less. If I have not thought through these scenarios first, then it might be beneficial to wait for a few weeks to complete it until I have done some research and received wise counsel. Now just imagine what the impact could be for my family if I have $100,000 in MY savings account or even a 529 plan if I have not thought this through first? The savings could be tens of thousands of dollars if I have received proper advice first BEFORE completing the FAFSA form.
- It is crucial to think through the impact of each asset could have on your EFC. I could save tens of thousands of dollars if Ieceive proper advice BEFORE completing the FAFSA form.
Should I use the DRT on the website?
We will almost always have to eventually use the DRT (IRS data retrieval tool), but here are some things to consider:
- Have I done an accurate estimate for my EFC – both FM and IM – before I use the DRT so that I know what my inputs should be? With new changes being made, once I click on the DRT tool, I become “blind” to what income is being used for calculations. I will not be able to check for accuracy. This information will be sent directly to the school and I will not know if I should be appealing those numbers. Remember that most of the online EFC calculators are not including ALL the information – such as what type of assets or student income and assets – and so we have found that you cannot trust those numbers to be accurate. Although it will take a little more work, we suggest completing the FAFSA manually first and then after verification, or at a later date, (even early next year after my student’s acceptance and merit aid offer), using the DRT later to verify the info.
- The new FAFSA bug and DRT for 2018 – 19 effects single parent filers and is currently a problem. This would include parents who are divorced, separated, never married or widowed. In the 2018-19 FAFSA, the father or mother question is causing confusion. The question should not have appeared as it is in the system. If the mom is a single parent and files as the “Mother”, and nothing for the “Father”, then it causes confusion with the DRT. We suggest that the Mother files as “Father” until they make this format gender neutral as “Parent 1 or Parent 2”
Here are some steps that might be helpful:
- Establish the FSA ID for both the student and a parent
- Go to the FAFSA site ( https://fafsa.ed.gov/index.htm )
- Create a New FAFSA
- Use Student FSA ID to start process
- Complete FAFSA manually using 2016 Tax information and current asset information
- Do Not Use DRT for Initial Submission do it manually
- This may require more work
- It will allow for an initial estimate of the EFC before the DRT is turned on
- Use EFC Answer Key to simplify FAFSA mapping
- Sign and Submission FAFSA using FSA ID
- Print out SAR since it will have Manual EFC number
- Submit FAFSA using DRT at some future date (2 options)
- Shortly after the manual FAFSA is processed OR
- Once there is a committed to a specific college
As we can see here, it is really important for parents to have the correct advice based on each family’s own specific family information. This planning should ideally be done in the Freshman, Sophomore or Junior years, or better even earlier, if we want to have the option of the greatest savings through college financial planning. Saving on my child’s college expenses ultimately affects our retirement as parents.
Whether it be for College Planning or Retirement Financial Planning, let’s PLAN
To schedule a time to meet with us please
e mail davec@collegeplanningamerica.com or call 714-813-1703
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