If you are planning to attend college soon or you are a returning college student, you should complete the Free Application for Federal Student Aid (FAFSA). Preparing to file a FAFSA is a crucial step for students and families planning to finance higher education. If you have never filled out a FAFSA before, you may be feeling lost or clueless. Read our article to discover what you need to know about FAFSA and how to prepare to apply.
Timing is Key: While the FAFSA becomes available on December 31, 2023, colleges won’t receive your data until late January. This means you have some time to prepare and choose the best filing date. Garcia advises not filing on December 31st itself, as colleges won’t receive your data until later anyway.
FSA ID: Both students and parents need to create a Federal Student Aid (FSA) ID, which can be done on the federal student aid website. If you’ve filed the FAFSA before, use your existing FSA ID. However, note that a new FSA ID is not generated immediately, so it’s wise to create one in advance.
Asset Inventory: The FAFSA requires reporting various assets, including cash savings, investments, and business or farm net worth. Taking an inventory of these assets beforehand can streamline the filing process. You can make an organized document with these assets included to ensue your FAFSA process goes smoothly.
Roth IRA Contributions: Making Roth IRA contributions after January 1 can lower your student aid index, potentially reducing your expected family contribution (EFC). This can be a strategic move to maximize your financial aid eligibility.
Consider Contributions to Siblings’ 529 Accounts: Contributions to siblings’ 529 accounts are excluded from the FAFSA formula. If feasible, consider making contributions to these accounts to reduce your assets.
Review Your Tax Return: Certain items on your tax return, such as IRA or 401(k) rollovers, may need to be reported separately on the FAFSA. It’s advisable to review your tax return before filing the FAFSA to ensure accurate reporting.
Choose the Right Filing Date: While some financial aid is awarded on a first-come, first-served basis, most families can wait to file the FAFSA. Take the time to prepare and choose the best filing date for your situation.
FAFSA preparation is a critical step in securing financial aid for college. By following these tips and guidelines, you can navigate the FAFSA process with confidence and maximize your eligibility for financial aid.