Borrowing for College: Advice about Loans for Students and ParentsSuzanne Shaffer
With the cost of college rising each year, many families look to financial aid to help pay for their student’s education.
In order to qualify for financial aid — both from the federal government and/or from the college — students must file the Free Application for Federal Student Aid, or FAFSA.
Filling out the form isn't as complicated as you may have heard, and it's well worth it to find out if your student is eligible to receive grants (money that does not need to be paid back), work study and federal student loans. And new for this year: there is now a mobile FAFSA app, MyStudentAid, that will make it even easier for students (and their parents) to submit the FAFSA.
Links to helpful information on the FAFSA website:
Is my student eligible for federal financial aid?
A parent's guide to completing the FAFSA from the Department of Education
11 common FAFSA mistakes
The FAFSA help page with answers to Frequently Asked Questions (FAQs)
Learn more about each item on this list here.
A second form, CSS Profile, is used by almost 250 colleges, universities, professional schools and scholarship programs to determine a student’s eligibility for the institution’s own grants and scholarships (which may be need-based, merit aid or a combination). CSS Profile is also available on October 1 and also uses prior year taxes for assessing a student’s financial need. In addition, CSS Profile collects estimates of the current year’s income for both students and parents and projected income for the following year as well, and some colleges may ask similar questions on their own financial aid forms.
CSS Profile is managed by the College Board, the same company that administers the SAT, PSAT and AP tests, so if your student has taken those tests, they will already have a login which makes it easy to get started. There is a fee to submit CSS Profile to the schools your student attends or is applying to but fee waivers are available for eligible families. Find out more about fee waivers as well as information for divorced/separated families, international students and more on the CSS Profile website.
If your student wants to continue receiving financial aid beyond the first year of college, they need to complete the FAFSA (and CSS Profile if it applies) each year. Students must refile the FAFSA to qualify for government aid — federal grants, federal student loans, federal parent loans and work study — and institutional grants and scholarships.
There are a few reasons for this. Families experience job changes, increases and decreases in income, graduations, marriages, births and other life events that affect finances, taxes and financial aid eligibility. One simple but significant change in family circumstances that impacts aid is an increase in the number of children in your family attending college in a given year.
Financial aid formulas also change each year. If a college raises tuition, room, board, fees, etc., it must then adjust its COA (Cost of Attendance) which in turn affects the formula it uses to determine need-based aid. Your EFC (Expected Family Contribution, generated by the information you enter on the FAFSA) is also adjusted each year.
Always file the FAFSA even if you think your family might not qualify for federal aid. Colleges use this form when giving out their own scholarship and grant funds. Even if your student didn’t receive financial aid the previous year, they might qualify for merit aid based on academic performance while in college.
Your student will not have to start a new FAFSA every year. The renewal FAFSA is populated with the previous year’s personal and demographic information. Your student can access the form and its information by using the FSA ID that they used the previous year to file. Gather all documents, personal and financial in advance — find out what you need and view informational videos about how to complete the FAFSA here.
CSS Profile must be completed every year as well. Once your student has logged in to their account with their username and password, they can download a printable application worksheet that will help them gather all the pertinent information for renewal. For the schools that require CSS Profile, your student’s eligibility for merit aid is directly tied to this form.
If your student currently receives financial aid, the school will communicate directly with your student about procedures and deadlines for renewal. Information will also be available on the college or university's Financial Aid Office webpage.
Is your family using 529 savings accounts to help pay for college? Good news: changes made to the FAFSA in recent years will give you more flexibility about which accounts to draw on when.
You may know that qualified distributions (payments) from parent- or student-owned 529s are not reported as income and are ignored by the FAFSA formula when calculating your EFC. However, qualified distributions from 529s owned by a grandparent or third party count as untaxed student income on the FAFSA and can decrease your student’s financial aid.
For this reason, in the past families were advised to hold off until the final year of college to tap into grandparent 529 accounts. Now, with the FAFSA collecting tax year information from two years prior to the academic year when the aid will be received, families can use grandparent or third party 529s to finance the last two years of college without it impacting FAFSA formulations and the student’s financial aid eligibility.
Updated for 2019-20 with contributions from CollegiateParent staff.
More resources for college financial planning — click on the title to read: