How to hit the FAFSA ground running

The FAFSA (Free Application for Federal Student Aid), the starting point to apply for need-based financial aid, becomes available October 1. And while most colleges have admission application deadlines that fall later (many in 2018), the sooner you file your FAFSA after October 1, the better.

This Wall Street Journal article shared two great tips to help families get ready for the FAFSA release.

1. Get a Federal Student Aid ID
You need a Federal Student Aid ID, obtainable at fsaid.ed.gov, to complete the FAFSA. But in the past, some families have experienced technical difficulties obtaining this, which meant they had to delay their FAFSA filing. The safe approach? Don’t wait—go to fsaid.ed.gov now and create one ID for the parent, one for the student (the student and parent must each get their own ID).

2. Gather your documents
To accurately report the FAFSA’s requested information, you’ll need your 2016 tax returns, as well as your most recent bank and brokerage statements.

Taking these two steps should help you hit the FAFSA ground running on October 1.

How grandparents can help pay for college

If you’re fortunate enough to have a generous grandparent who’s willing to help pay for college, please consider Mark Kantrowitz’s advice on the topic here. In fact, failure to do so could result in a considerable hit to your eligibility for financial aid.

Kantrowitz stays true to his form here and isn’t making any recommendation that would teach affluent families how to hide their assets or otherwise avoid paying their fair share. But the mechanics of the financial aid formula are such that some seemingly innocuous decisions, like the type of account you choose, or gifting the money to the student instead of the parent, can have significant impact on the other side of the financial aid formulas. Avoiding those mistakes is just being smart, not deceptive.

Does everyone pay the same price at a college?

One of the best analogies I’ve seen about paying for college comes from Kalman Chany’s Paying for College Without Going Broke:

“And not everyone pays the same price for a given college. In fact, going to college is a bit like traveling on an airplane. If you ask the person across the aisle what fare she paid, it may be completely different from your own. Some people may be paying the full fare for college while others pay far less, so you should never initially rule out a school based on ‘sticker price.’”

That’s also the reason every family with a student applying to college should also file a FAFSA to apply for financial aid. Imagine if there were one—and only one—website travelers could use to make sure they got the best possible price for their ticket. If you cared about how much the ticket cost, you’d use the website. You’d have nothing to lose and plenty of money to potentially save.

That website exists when it comes to paying for college. It’s the FAFSA site, and it’s here: https://fafsa.ed.gov.

Make sure to follow the directions from your chosen colleges about what to submit and when, but all of those schools will almost certainly require the FAFSA.

What “meeting 100% of financial need” really means

When a college claims to meet 100% of financial need, it can sound deceptively as if an admitted student will get whatever amount of financial aid they need to attend. But it’s not necessarily quite that generous. To understand “meeting 100% of financial need,” let’s look briefly at how the process of applying for and evaluating financial need for college works.

First, you file a FAFSA, which details the student’s and parent’s income and assets. The government crunches it through a formula, and you receive a report back containing your Expected Family Contribution (EFC)—that’s the amount of money you are expected to pay for the upcoming year at any college. Some colleges also require that you submit additional forms, which can change EFC for their own evaluation, but the FAFSA is always your starting point.

In the event that the Cost of Attendance (COA) at any college that admits you exceeds your EFC, it’s the job of that college’s financial aid department to make up the difference in the form of a financial aid package. That package can contain a combination of grants/scholarships (free money that does not need to be paid back), loans, and work study.

But financial aid offices don’t have to just blindly follow the numbers when they create those awards. In putting financial aid packages together, they might decide to offer a more generous package to a particularly desirable student. That’s preferential packaging at work.

Unfortunately, there are also cases where a financial aid package does not cover the full difference between your EFC and the COA. That’s called “unmet need,” and the higher the number, the worse the news.

So, colleges that claim to meet 100% of financial need are telling you that there will almost certainly be no “unmet need” as part of your financial aid package. That doesn’t mean you’ll necessarily like the package, as for many families, their calculated EFC is actually more than they believe they can afford to pay. And just like all financial aid packages, not all financial aid is necessarily free money, and those that come from schools claiming to meet 100% of need can still include loans and work study.

If you’re concerned about paying for college, I wouldn’t necessarily recommend that you apply only to those schools that claim to meet full financial need, because you’ll be limiting yourself to under 100 colleges (here’s a list courtesy of Mark Kantrowitz). That might sound like a lot, but the list can shorten dramatically if you’re not admissible or just don’t like the schools.

Still, it’s worth paying attention to a college’s track record regarding financial aid awards. If you’re up for some detailed and potentially revealing research, head to College Navigator, maintained by the National Center for Educational Statistics. Search for a college, and then dig into both the “Financial Aid” and “Net Price” tabs. Specifically, you want to look at the average size of the financial aid award, the breakdown of grants, loans, and scholarships, and the average net price for those students on financial aid. That will give you a sense of how many students receive aid, the amount and type of aid being distributed, and just how much of a dent that financial aid is making on the cost for those students in attendance.

A college may meet 100% of your needs as they define them. But that doesn’t mean you’ll necessarily get everything you think you need.

In-state tuition at an out-of-state school?

According to data collected by the College Board, the average tuition and fees to attend a public university are roughly 1/3 what they are to attend a private college, as long as that public university is in your home state. As soon as you venture to new state territory, the costs more than double at most public schools.

So it’s common for families to wonder if it’s possible for their student to establish residency at an out-of-state public school, thereby availing themselves of the cheaper cost for in-state residents.

Unfortunately, while establishing in-state residency is not impossible for a student, as this Consumer Reports piece explains in detail, the lengths to which you would need to go to even have a remote shot are pretty drastic.

If college costs are a concern and you want to make sure you have some viable public university options, first, do all the things that make you more admissible to most colleges—take challenging classes, get good grades, spend some (not inordinate) time improving your test scores if necessary, etc. Also, complete the FAFSA and any other financial aid forms your chosen colleges require. Now here are a few tips to help you choose appropriate schools.

1. Consider your in-state options first.
The easiest way to get an advantage is to leverage one that’s already available to you. Depending on your state, most public universities are not only cheaper for their residents, but also easier to gain admission to than they are for students applying from out of state. If your state doesn’t have public schools that appeal to you, remember that applying to a college is not the same as actually attending that school. In this case, you’re giving yourself more potentially viable options. That’s almost always a good thing, especially when you’re concerned about the cost of college.

2. Apply to schools that are most likely to admit you.
This is a great strategy for both private and public colleges. The more likely a college is to admit you, the more likely you are to get a financial aid boost, a practice called “preferential packaging.” Every year, our Collegewise students receive generous and often unsolicited offers of financial aid and scholarships—including from out-of-state public schools—simply because their college lists included some schools where they were strong applicants and were almost certain to be admitted. This is yet another reason why it’s so important to file your FAFSA—many schools will not consider you for preferential packaging without a FAFSA on file.

3. Consider a regional exchange program.
Some public schools enter into agreements with each other that allow students to attend neighboring states’ public schools at a discounted rate. Read to the bottom of the article referenced above and you’ll find links to those programs.

Almost all colleges are more expensive than they used to be. But public universities can be some of the best available bargains in education if you (1) choose your schools carefully, and (2) apply for financial aid.

Looking for “need-blind” colleges?

“Need-blind” colleges are those that make admissions decisions without considering—or in many cases, even having knowledge of—whether or not a student will require financial aid to attend. If you’re a family who’s concerned not only about paying for college, but also that your financial need could somehow be held against you in the admissions process, financial aid expert Mark Kantrowitz has put together this helpful list of the 100 colleges that identify themselves as need-blind.

It’s important to understand, however, that just because a college is not on this list does not mean that they make admissions decisions based on who can pay and who cannot. And it certainly doesn’t mean that you should hesitate to apply for financial aid at any school, need-blind or not. I’ve written on this topic several times in the past, but for new readers, here are the past posts that I hope will not only assuage your fears that applying for financial aid will somehow be held against you, but also encourage you to file the necessary forms for the aid you need to attend college:

Can applying for financial aid hurt your chances of admission?

Applying vs. needing

Should you indicate that you will apply for financial aid?

Seek good certainty

I always remind seniors who are weighing their college options that some amount of uncertainty is normal. That’s the way that big decisions like a job offer to accept, a new city in which to live, and yes, a college to attend, work. You do as much research, thinking, and soul searching as you can. Then you just have to listen to your gut and make the leap. Don’t assume that you necessarily have to be sure of this choice when you make it. In fact, that uncertainty is often the best part.

But here’s one thing you can be absolutely certain of–if you take on student debt to attend college, you’re going to have to pay it back.

Whether you’ve already identified your post-college career or haven’t even chosen a major yet, life will always offer uncertainties. You may fall in love with a career option that just doesn’t pay very well. You may not get into the graduate school that you hoped to attend. You may land–but then be laid off from–your dream job. These things happen even to smart, successful people. And if they happen to you, you’ll need to be flexible and resilient to keep going.

But your student loan lenders will not care how your plans changed or what unforeseen circumstances you’re facing. They’ll want to be paid on time. That’s a certainty.

This is not an argument that you shouldn’t take on student debt. I think that’s a decision that each student needs to make with their family. And there are certainly adults who are not only thankful that they took on the debt required to attend the college they did, but also very proud that they responsibly paid off what they owed.

But the more debt you assume when you start college, the bigger role that debt will play in your post-college plans. The less debt you owe, student loan or otherwise, the more freedom you’ll have to make decisions based on what’s best for you, not best for your creditor, and the more flexible you’ll be able to be when life has different plans. And nobody ever lost sleep at night because they just didn’t owe enough people more money.

The more uncertainty you have about your college and your future career, the more cautious you should be taking on a potentially large debt to attend. If the only thing you can be sure of today is that the school you’re about to choose won’t leave you with hefty student loans when you graduate, that’s a pretty good certainty to carry with you to college.

What’s this about “front-loading?”

The Chicago Tribune recently ran “Decision time approaches for college applicants,” which included this important reminder for families as you compare financial aid awards:

“Be sure to read the fine print in the [financial aid] offer. Does the school promise that the awards will be renewed as long as you maintain acceptable grades? According to Mark Kantrowitz of Cappex.com, a college advice site, about half of all colleges practice ‘front-loading’ of grants, where the grants for the freshman year are far more generous than in subsequent years.

He notes that at www.CollegeNavigator.gov, you can search each school, click on the ‘financial aid’ tab, and compare the percentage of students receiving grants, as well as compare the average grant amount for first year students with all undergrad students.”