WHEATLAND – Do you or do you have a child that wants to continue their education beyond high school but worried how you are going to pay for college? This article will help get you pointed in the right direction.
October is Free Application for Federal Student Aid, (commonly known as FAFSA) month. This means in order to attend college, it is recommended that you apply in October the prior year of attending college. Technically, you can still apply the year and even the month prior of attendance, but FAFSA funding is dispersed on a first come, first serve basis and funds may or may not be available if you wait until the last minute to apply.
Since the 1940’s, many financial and private institutions offered student loan programs to help pay for college. In doing so throughout many years to come, the federal government began noticing increased numbers of students with financial hardships regarding the repayment of student loans. This student debt resulted in personal bankruptcy and financial ruin for more than half of the educated population in the United States.
After many congressional battles over the nationwide student loan debt, the government began to assist with this overwhelming financial problem. Beginning with the 1997-1998 award year, the Department of Education and Higher Education Amendments of 1992 named FAFSA, the “Free Application for Federal Student Aid” after merging the Pell Grant requirements with the Congressional requirements to help aid in higher education.
The main purpose of the FAFSA is to collect a student’s (and often his or her parents’) financial information to calculate something called the Estimated Family Contribution (EFC). The EFC is the amount that a family can reasonably afford to pay each year for higher education. For example, to figure out how much financial aid you’re eligible to receive, your school will subtract your EFC from the average Cost of Attendance (COA). The bigger the difference, the more financial aid you will receive. If your school’s COA is $80,000 per year and your EFC is $30,000 per year, you could be eligible for $50,000 worth of financial aid. This formula is based upon current income and does not include consumer debt, such as credit card balances and auto loans.
To complete the FAFSA application, you will need the following: social security and driver’s license numbers, most recent tax return with W2s, 1099s, etc., bank account and investment statements, and untaxed income records such as alimony or VA benefits.
When you’ve completed the application, it will generate a Student Aid Report (SAR) which details your Expected Family Contribution (EFC) to your education. When you first see this number, you might panic because it’s so large, but know this: it’s not how much money your family has to pay. Rather, it’s a number that your school will use to determine your eligibility for federal, state, and private financial aid (such as scholarships).
On a side note, to receive any form of federal financial aid, which includes Pell Grants (a grant that you do not have to pay back), Federal Supplemental Educational Opportunity Grants (FSEOG), Perkins Loans, Stafford Loans, PLUS Loans and Federal Work-Study jobs, you must submit the Free Application for Federal Student Aid.
FAFSA may seem overwhelming, but for an hour’s worth of application time, a student can save thousands of dollars. Each educational institution offers financial aid consultants to help answer questions and may even suggest applying for other additional and various scholarships or grants to help with student loan debt. For more information and to begin the process of completing the application, you can visit: http://fafsa.gov.
