Since this piece was written in January 2016, the FAFSA filing deadlines have changed. For the first time, the FAFSA will go live October 1, 2016. Visit our new blog about this change by clicking here. Skip to the 2nd paragraph below for some important FAFSA tips to keep in mind!
Priority filing deadlines for financial aid (Free Application for Federal Student Aid, FAFSA) are upon us. Many colleges are February 1st! Everyone's favorite station is WIFM - "What's in it for me?" Well, by meeting the priority filing deadline you put yourself at the front of the line. If any aid is available from the university, you will have “priority” over those that do not submit by the deadline. You probably won't have your 2015 taxes completed and that is fully expected. You simply click the box that says “Will File” taxes on the form. Use your prior year tax return and get as close as you can.
Filling out the FAFSA is never fun, but you have to do it. Remember, both the custodial parent and the student must create an FSA ID so you can electronically sign and submit the FAFSA. It takes less than 10 minutes, I promise.
I strongly recommend going through this process with your student. Don't do it for them. I am not naive to the fact that parents complete the FAFSA 99% of the time. However, by the letter of the law, this application is your student's submission for financial aid and as the parent you are simply providing the information.
Paying for college is truly a lesson in consumerism for young adults. They need to understand that this is not just the best 4 years of their life, but an investment in their future. Completing the FAFSA qualifies them for Federal Direct Stafford loans. These student loans are in your student's name, and 7 out of 10 students will utilize them. Talking about money is never easy. Working with your student and showing them how you plan to pay for college is a great opportunity to have a meaningful conversation about money.
In addition, work with them so they understand that if/when they take out a loan there is interest, and they will be expected to repay the loan when they graduate. Work through a sample real life budget with them like this one (click here). The total you can take out over 4 years in the stafford loan is $27,000 and most families use every penny. Use a loan calculator to estimate payments and how that will impact their budget upon graduation.
Finally the concept and impact of taxes on a paycheck is also unfamiliar territory! Simple example - If you are paid $4,000 a month, you will only see $3,000 of it in your pocket. Don't wait until they graduate to have these conversations. Start now! If you need help, I know a guy that is always happy to help with this conversation! His name is Joe! ;-)