This is a segment of Bautis Financial’s college planning series, which includes webinars, podcast episodes, blog posts and downloadables to aid college-bound students and families in the admissions process. Visit our college planning hub for more valuable resources.
The Free Application for Federal Student Aid (FAFSA) is an online form completed by current and prospective college students used to determine eligibility for student financial aid. Many states and colleges also use the FAFSA to grant state and institutional financial aid.
The FAFSA is available on the Federal Student Aid website or mobile app. In order to begin the application process, you will create a FSA ID to access and sign the application. If you’re a dependent student, your parent(s) will need their own FSA ID(s), too.
What Does the FAFSA Have To Do With Financial Aid?
After completion, the government reviews information submitted in your application to calculate your Expected Family Contribution (EFC). Your EFC is how much money you and your family are expected to pay for your education.
Once the EFC is determined, it’s up to your college or university to create your financial aid package. Each institution’s financial aid office determines need-based aid by subtracting your EFC from its total cost of attendance. Need-based financial aid could be in the form of federal grants, direct subsidized loans or work-study opportunities.
However, it is not guaranteed that colleges and universities will meet your full financial need.
Apply for student aid using the FAFSA Form.
The FAFSA opens October 1, 2021 and the deadline to apply is June 30, 2022.
Question: When does the FAFSA application open?
Answer: The earliest date to access the FAFSA is October 1, 2021. This is the first date that parents or students can file for the 2022-2023 year.
Question: Should we fill out the FAFSA if our child is a junior in high school, or do we wait until their senior year?
Answer: You cannot fill out the FAFSA until your child is a senior in high school.
Question: I have two students entering college, can we fill out the forms once, or does the FAFSA have to be filled out for each child?
Answer: The FAFSA must be submitted for each child. The application will allow a parent to copy the parent information from the first student to the second student, but you must still complete all the other information for the second student.
Question: Can I file the FAFSA one time, or do I have to file every year?
Answer: The FAFSA must be filed every year.
Question: What is the significance of the base year for financial aid?
Answer: The FAFSA bases income and tax information on federal income tax returns filed during the base year. For example, the base year for students attending college in the fall of 2022 is 2020. When parents are filing the FAFSA for the 2023-2024 school year, they will use their 2021 federal income tax return.
Applicants cannot substitute their base year’s tax income tax return for another year’s, such as 2020, which COVID-19 made financially difficult for millions of households. If a family’s base year income is not reflective of their financial situation today, they can appeal to a college’s financial aid office for a professional judgement.
Question: If parents were married during the base year, but got divorced or separated right before filing the FAFSA, what marital status should they use?
Answer: The FAFSA requires that parents note what their marital status is as of the day the application is filed. If parents separate or divorce after filing, they can’t go back and change their marital status. However, they can appeal to a school for a professional judgement.
If the parents’ marital status has changed since the base year, the parents will need to separate or combine their income information, depending on the current marital status.
Question: Who files the FAFSA if parents are divorced?
Answer: The custodial parent, or the ex-spouse who physically housed the child during the 12-month period ending on the day the FAFSA is completed.
It makes no difference which parent claimed the child on a tax return or paid child support.
Question: What happens if a parent dies before the financial aid forms are submitted?
Answer: If a parent has died, only the income and assets of the surviving parent should be reported. The deceased parent’s income, including any Social Security income, should not be included.
If the parent has died after filing for aid, the surviving parent or child should contact the school with this information and request a larger financial aid package.
Question: What is a professional judgement?
Answer: Colleges have the power to adjust a student’s financial aid package through a process called professional judgement. This involves a family appealing for a better award based on special circumstances (some outlined above) or financial issues that are not able to be addressed in the application.
Question: Can COVID-19 be a justification for a financial aid appeal?
Answer: Some impacts from COVID-19 could be a justification for financial aid approval. The most common reasons include job loss, pay cuts, furloughs and unreimbursed medical expenses.
Question: Should you report retirement assets on the FAFSA?
Answer: The FAFSA asks about the student and parents’ investments, but you should not include any qualified retirement assets, such as Individual Retirement Accounts, 401(k)’s, 403(b)’s, KEOGH, SIMPLE, 457, SEP, Roth IRAs, Roth 401(k)’s, pension plans or annuities for either the parent or the student on the application.
Money that is not saved in qualified retirement accounts must be reported, even if the parents have reached retirement age.
Question: How are assets in a custodial 529 plan treated for financial aid purposes?
Answer: Even though assets in a custodial 529 plan are the property of the student, the FAFSA assesses the money inside these accounts as if the parent owned them, at up to 5.64%.
Question: Do contributions to qualified retirement accounts in the base year get counted as part of the family’s adjusted gross income?
Answer: Retirement assets do not get counted as assets in the financial aid formulas, but base year contributions to retirement accounts do get counted as untaxed income and these contributions are added back when calculating aid.
Aid is based on total income that is comprised of adjusted gross income, untaxed income and any federal benefits.
Question: If your income is too high, most likely resulting in ineligibility for financial aid, should you still complete the FAFSA?
Answer: You should not assume that someone won’t qualify for need-based aid. It’s worth filling out the FAFSA despite specific financial circumstances, at least for the first year a child attends college.
Question: I still have more questions about filing the FAFSA, where can I go for help?
Answer: You can ask questions about the FAFSA directly to the US Department of Education via https://studentaid.ed.gov/contact, or call the toll-free hotline at 1-800-4-FED-AID (1-800-433-3243).
Begin your journey of mastering the college admissions process with Bautis Financial. Whether you’re a parent or guardian, student or school counselor, book a free consultation to discuss how our financial advisors can be a college planning resource.