The early bird…

From 3 Steps to More College Financial Aid From FAFSA:

Because some aid is awarded on a first-come, first-served basis, the sooner you file your FAFSA, the better. [Financial aid expert, Mark] Kantrowitz says his research indicates that families who file before March 30 typically get more than twice as much aid as those who do it later. If you haven’t filed your taxes for 2015 yet, you can fill out the FAFSA with estimates based on your 2014 tax forms and update your FAFSA once you’ve finished your 2015 return.”

More free FAFSA help

Applying for financial aid always starts with completing the FAFSA. And fortunately, the National College Access Network (NCAN) is hosting free events around the country to help families complete this crucial form correctly. You can get a listing here of the events in your state.

Your FAFSA starting point

College applicants, it’s time to complete your FAFSA (Free Application for Federal Student Aid). But before you do, please head over to the Edvisors free online tutorial which will help you avoid both frustration and mistakes. The tutorial also includes a link to the even more detailed, but still free, Filing the FAFSA: The Edvisors Guide to Completing the Free Application for Federal Student Aid, 2016-17. Both resources have been updated to reflect the most recent changes to this year’s FAFSA, so if you’ve downloaded the previous version of the guide, make sure to get yourself the new one.

Senior family financial to-do

Senior families, please commit to the very important January to-do: Complete and submit your FAFSA (Free Application for Federal Student Aid) as soon as possible.

Every family who plans on sending a student to college this fall should fill this out. Do not make assumptions about your eligibility. Do not make excuses that you won’t qualify or that you’ve heard that applying for financial aid can hurt your chances. There’s a reason why every knowledgeable admissions and financial expert advises that families take this important step—it’s the smart thing to do.

The form just went live on January 1, so you’ll be a responsible early starter if you get going now. But more importantly, many states administer aid on a first come, first served basis. The surest way to miss out is to apply late (or to not apply at all).

What’s ahead and behind

I’ve met families who mistakenly believed that the time to apply for financial aid was after their student had been admitted to college. It’s not a pleasant discovery when they find out that they’ve long since missed the need-based aid boat.

Parents, if you have a student who is applying to begin college in the fall of 2016, please visit the “financial aid” sections on the websites for each of your student’s college choices. Find out what forms need to be submitted, and by when. The FAFSA, the starting point for all need-based aid, should be submitted as early as possible after January 1, 2016. But the colleges may have other forms that need to be completed, too.

Don’t wait for a college, counselor, friend, or neighbor to sound the deadline bell. As much anxiety as the idea of paying for college may bring, I promise that you’ll experience significant relief when you know what’s ahead, not to mention what’s behind you.

A financial aid to-do before December 31

Parents with college-bound students, the income you report on your 2015 tax return will affect your financial aid for the next two years.  If you’ll need financial aid to attend college, Mark Kantrowitz shares some good tips to keep in mind so you don’t look back later and realize you could—and should—have done something differently before December 31, 2015.

Is the debt can of worms open?

The increasing concern about mounting student debt has more families than ever expressing aversion to student loans. That’s a good thing. Student loans are not inherently bad. But the quickest way to get into financial trouble is to borrow money haphazardly without considering the potential return on the investment and whether or not you’ll be able to repay the debt in a timely manner. College is no exception.

But if you have a senior applying to college, this is not the time to exercise that caution.

For example, if you’re eliminating colleges whose sticker prices are beyond your budget, if you decline to check the box on the FAFSA indicating that you would like to be considered for loans and work-study, or if you’re so loan-averse that you won’t apply for need-based financial aid at all, you might be removing some potentially attractive options from the table.

Applying to a college with a large sticker price, agreeing to be considered for loans, applying for need-based financial aid—none of those decisions are tantamount to actually taking out a student loan.

Much as a student can compare offers of admission, a family who applies for need-based financial aid will have the opportunity to compare offers from different schools. Those aid packages can contain grants (free money that doesn’t have to be paid back), work-study, and/or loans. And you’ll have the option of declining pieces and parts of the aid package. You won’t take on debt until you (1) decide to do so, and (2) sign paperwork agreeing to the specific terms of that loan.

I understand why sending an application to an expensive college or applying for financial aid can feel like you’re opening a debt-filled can of worms. But don’t worry. That can remains firmly closed unless you decide to open it. And for most families, that decision won’t come until later this spring.

Little-known scholarship secrets

Mark Kantrowitz shares some excellent tips in 5 Little-Known Ways to Boost Your Scholarship Odds. Though please don’t make the common mistake of searching and applying for these types of scholarships without applying for need-based financial aid, as the latter is where the majority of aid is available.  To apply for scholarships, you first have to find them, as the article describes.  But you won’t have to do a lot of searching to apply for need-based aid. Just follow the explicit instructions on each college’s website, which will almost certainly begin with “File a FAFSA.”

Is there a down side to scholarships?

In addition to applying for need-based financial aid, particularly industrious students might also research and apply for outside scholarships—those that come from corporations, non-profits, and other “outside” sources that are not part of the colleges themselves. But many of those students who win scholarships are later disappointed to learn that some colleges will then reduce their aid package proportionally, reasoning that you no longer need the money that your scholarships are now providing.

This article does a decent job of explaining this practice, and includes some good advice for families trying to decide how much they should depend on potential outside scholarships to help with college financing.

If finances are a primary concern, you should absolutely apply for appropriate outside scholarships. Free money for college is always a good thing, no matter where it comes from. But remember that outside scholarships account for a comparatively small percentage of available aid, and that money you do win could potentially decrease your need-based award. The best way to get the money you need to pay for college is to work hard, apply to the right colleges, particularly those where you have a very strong chance of admission, and apply for need-based financial aid.

Clearing up college savings confusion

This short NPR piece on saving for college has some sound advice from experts like Mark Kantrowitz from Edvisors.

Some of the topics include:

  • How should families balance saving for retirement vs. saving for college?
  • Does the answer to the above question change if the retirement savings can be done through an employer-matching program?
  • Does saving in a 529 plan hurt a family’s financial aid eligibility?

Worth a quick read or listen.