January 20, 2010 / 6:16 PM / 9 years ago

Personal Finance: Early birds get better school aid

WASHINGTON (Reuters) - Memo to parents of high school seniors: This is no time to sit back and relax, even if your child has filed all of those college applications.

A student walks on the campus of San Francisco State University in San Francisco, California June 30, 2009. REUTERS/Robert Galbraith

It’s time for you to fill out the financial aid request forms — right now — even before you do your taxes and figure out exactly how much you made in 2009.

That’s because early birds tend to get more generous aid packages. Though most financial aid filing deadlines extend all the way into the summer for the fall deadline, financial aid administrators do often give out more aid early in the season.

With tuition bills rising and more families needing and qualifying for aid, it’s good to get your request in early.

Here’s what you need to know.

-- The most important form to fill out is the Free Application for Federal Student Aid, known as the FAFSA. You can find it at www.fafsa.gov. Other sites that have .com endings may ask you to pay to submit your form, something you shouldn't have to do.

As the Department of Education reminds: “Remember, the first F in ‘FAFSA’ stands for ‘free’ — so use the official government site to submit your application.” The FAFSA is the one form that virtually all financial aid offices require. In addition, you will need to fill out this form if your child wants to take out low-interest federal student loans.

-- There are other forms, too. Many private colleges and universities also require the college board's PROFILE form, available here profileonline.collegeboard.com. Some schools require their own form, as well. Contact the financial aid office of every school your child is applying to, to find out exactly which forms they require.

-- Don't assume you won't qualify. Even families earning well over six-figure incomes can qualify for financial aid from well-heeled and expensive schools, and you have to ask to get it. You can get a rough estimate of how much federal aid you will qualify for at the Department of Education's forecasting www.fafsa4caster.ed.gov

— It’s complex, but less so than it used to be. The Obama Administration claims to have simplified the FAFSA in a number of ways. Many low-income students will be able to skip dozens of questions about their family assets. Several other questions have been eliminated or streamlined. Roughly one in five students who doesn’t submit a FAFSA drops it because the form is too complicated, says Mark Kantrowitz of finaid.org, an information and research site. Persevere.

-- Help is available. The YMCA and other organizations sponsor "College Goal Sunday" (collegegoalsundayusa.org/). It's a day when FAFSA-savvy advisors run free clinics for people who need help filling out their forms. Check the website to see when they'll be in your state. In North Carolina, the state's financial aid officers have declared February 13 "FAFSA Day" and will be providing free advice and assistance on that day.

— You’ll have to guesstimate. You can file your FAFSA now, and update it later, after you get all of the detailed information you’ll need from the tax documents you’ll be receiving over the next month or so.

— Don’t short yourself. Items like retirement plan assets and home equity are exempt from consideration in the federal financial aid formula, so don’t include them when you are calculating your net worth.

— Position your family for maximum aid. If you’ve got money sitting around in a savings account and you have debts, you’ll better qualify for aid if you use the cash to pay off the debts. This works if your family is borderline aid-eligible. If you make so much that you won’t qualify for aid anyway, you may need that cash to help pay for college, so do a rough estimate of your aid eligibility, before you move money around.

-- Be strategic about divorced family income. Colleges like it when divorced parents who have remarried put all of their household incomes on the financial aid form. That would give a student whose parents have remarried and share joint custody as many as four incomes to report, even if all of those parents and step-parents won't help the child pay for college. But you really only have to report the income of the parent with whom the child lives with most, as well as any child support that parent receives from the non-custodial parent. There are strategies available here, notes Kantrowitz. If either household has additional students in college at the same time, you can usually claim those other students on the form, too. For more about how to handle this, read his advice about the finer points of financial aid for divorced parents here

— Share unusual information. The 2010-2011 FAFSA depends on data from the 2009 tax year. But if you looked good on paper for most of the year but recently had a set back, such as a job loss or expensive illness, let the individual schools’ financial aid offices know. They do have the leeway to dole out more than the minimum where they see a special need.

— Plan to revisit all of the above in the spring. After the aid awards come out on April 1, 2010, you may want to circle back to your child’s top-pick schools and ask for more money. You can use new negative info about your family’s finances to justify your request. You can also play one school off against another by letting one know that a competitor has offered more money. That only works sometimes — typically for closely competitive schools that really want your child. But it’s well worth a try.

editing by Gunna Dickson

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