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Shortcuts and other smart advice for filling out federal student aid form

Don't assume you're too rich. The process can be less onerous if you avoid the pitfalls.

January 17, 2010|Kathy M. Kristof | Personal Finance
  • The Free Application for Federal Student Aid is required not only to qualify scholarships and work-study awards but also for federal student loans.
The Free Application for Federal Student Aid is required not only to qualify… (Don Bartletti / Los Angeles…)

If you have a child headed to college or headed back to college, you have an onerous job to do this month. It's time to fill out federal financial aid forms, preferably online.

You may think you're too wealthy to get financial aid and filling out the so-called Free Application for Federal Student Aid is too much of a hassle under those circumstances. Do it anyway.

In addition to qualifying students for scholarships and work-study awards, this form is required for any student who wants to get a federal student loan, which is a relatively cheap and flexible way to finance college and to allow your child to build a credit rating while still in school. Besides, you may be surprised at what aid you can get, experts say.

"People underestimate their ability to qualify for aid," said Lauren Asher, associate director for the Project on Student Debt, a nonprofit student advocacy group based in Berkeley. "And the people who are most likely to underestimate their ability to qualify for aid are the people who are most likely to qualify."

Half the students who could get aid don't -- simply because they don't apply, added Monisha Perkash, vice president of advisory products for SimpleTuition.com, a website that offers college planning products.

These students often limit their college search to institutions that they think they can afford -- typically junior colleges and state colleges and universities, rather than high-priced private schools. The folly is that high-priced private schools often provide so much aid that they become more affordable than less prestigious colleges, she said.

But the only way to find out is to fill out the FAFSA, which is the entry point for all need-based aid. And that's not easy.

The FAFSA includes more than 100 questions and work sheets, some of which are exceptionally confusing. The good news, if you are a relatively low-income parent and can fill out the form online, is that the process will be far simpler this year.

That's because the federal government revamped its online application and now uses technology that automatically eliminates questions that you don't have to answer, given your responses to previous questions.

It also expanded the number of people who are considered 100% need-eligible. These individuals will be required to fill out only a portion of the traditional form to qualify for aid.

However, if you are one of the millions who earn too much to get fast-tracked, you'll have to slog through the entire form. And you can't delay. Some types of institutional and state-offered aid begin to evaporate in February and March. If you procrastinate you miss out.

That said, "make haste slowly," advised Kalman A. Chany, author of "Paying for College Without Going Broke," published by the Princeton Review. "You will get more money by doing things to your best advantage than you would by trying to be the first person to get the forms in. You have to meet the deadlines, but you don't have to be first in line."

What you need to do

Your first step for federal aid is to go to www.fafsa.ed.gov, Chany said, and be careful. Do not simply Google "FAFSA" because that search is likely to lead you to a host of commercial sites that will urge you to pay them a fee to help you fill out the form. The form is free. If they ask for a credit card number, you've strayed to the wrong site.

Open the FAFSA work sheet. It will give you an inkling of what will be on the overall form, but it's a significantly shortened version, Chany said.

Still, it can help you start pulling together the right financial information for both the student and parents. It also tells you how to obtain a personal identification number that allows you to sign your FAFSA form electronically, which will speed the processing.

Look for the easy way out

If you are unemployed, receiving some sort of government aid (such as food stamps) and earn less than $30,000, you are considered 100% need eligible. If you earn less than $50,000 and are eligible to file a simplified tax return, there's a simplified means test.

The online form will allow you to skip dozens of questions, if you meet either criteria and you don't mess up this one question: "If you filed the full-length 1040, were you qualified to fill out the 1040EZ or 1040A?" If you say "no" you have to fill out all the questions. If you say "yes" you skip ahead.

You may assume that you are not eligible to fill out the simpler forms because your tax preparer uses the full 1040, Asher said. However, the preparer may have chosen the longer form because it gave you the ability to take more deductions and credits (and thus pay less tax) even though you were eligible to use the shorter form.

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