Fear Of FAFSA?
It is ironic that people who write (and sell) books related to college search and student financial aid, often advise their readers to “go it alone” and that they do not have to pay for counseling in this area.
“Don’t listen to their words; fix your attention on their deeds.” ~ Albert Einstein
Well, in fact, they are correct. Nobody has to engage a professional college counselor, just as they can prepare their own taxes or manage their own investment portfolio. Obviously, as professional counselors, we believe that families gain enormously from working with a qualified independent college counselor.
In a recent blog exchange, we agreed with a poster who argued the merits that “not everyone has the interest, time, or knowledge to prepare the some 130 asset, income, and dependency questions on the FAFSA”.
In the same exchange, we pointed out that “Even doing one’s homework cannot always prevent mistakes”* and that parents should at least do some homework on how the aid formulas work before attempting to complete the FAFSA, to say nothing of the CSS Profile.
Financial Aid – It’s Not An Easy Process
Let’s be clear, the FAFSA is, in many ways, a daunting document, and completing it and other financial aid documents can fill the most hardy soul with dread.
Confusion and nervousness can become even more acute when the CSS Profile and Institutional Methodology come into play, or when the situation involves divorced and separated parents, or a small business owner.
It must be stated that much of the stress relating to the FAFSA stems from the fact that most families don’t plan the financial aspects of college in a timely manner, and have little or no idea of their Expected Family Contribution (EFC) and financial aid entitlement before they actually fill out the forms.
However, these forms represent only one element in the overall process of college search, admissions and financial aid, and should not be viewed with such trepidation, as long as solid planning has been put in place.
FAFSA Stress – How Do You Find Relief?
“Good plans shape good decisions. That’s why good planning helps to make elusive dreams come true.” ~ Lester Robert Bittel
It may well suit many families to have their FAFSA prepared by a qualified and reputable preparer (just as they do with tax returns). But this does not alleviate the tension of submitting these forms and then waiting to see how much the system is going to impose upon them for their Expected Family Contribution.
A well known financial planning group published a calendar of things to do in 2010. On January 1st. parents of college bound high school seniors were told to complete the FAFSA as soon as possible (and we echo that recommendation).
Yet nowhere was there a recommendation for parents of Juniors and Sophomores to begin to get their financial plan together to optimize their students’ college search process. As financial planners, surely they should be making a clarion call to these parents to get their financial house in order with regard to college funding (see the graphic below).
Quite simply, parents can avoid much unnecessary stress and the uncertainty of financial aid forms by simply understanding the concept of the “base year”, and using a free EFC calculator tool to estimate their Expected Family Contribution (for both Federal and Institutional formulas).
This allows at least one element of a solid college funding plan to be put in place well ahead of any forms having to be completed.
This does not resolve all the issues facing the family, but it will certainly relieve some of the tension.
A Simple Image To Show The FAFSA Base Year (Class of 2011)
Base Year For FAFSA Information
There are several ways for a family to maximize the amount of financial aid, or to avoid being “over taxed”. Since the information to be submitted in the FAFSA and institutional forms is based largely on tax data, the ideal time to put these measures in place is before December 31st. of the Sophomore going into Junior year. Note also that by getting your “ducks in a row by October 31st. you have two months to correct any errors and omissions.
Adjustments during the Junior year may be limited, and by the time it gets to January 1st. of the high school Senior year, there is no time left to plan, and this is when parents acquire that “deer in the headlights” look.
*Note:
On page 27 of The College Solution (which is an excellent piece of work in general terms) there is erroneous information about the impact of 529 savings plans on college financial aid.
While it is true that these accounts are treated as parent assets on the FAFSA for dependent students, the same cannot be said for the CSS Profile. The instructions clearly state, in fact, that 529 savings plans originating with UGMA/UTMA funds are to be reported as student assets.
A parent following this lead would be confused at best having read this part of the book in addition to the instructions for the CSS Profile.
