The fall is here which means it is also FAFSA time. Unlike Halloween, this should not be a scary time if you are organized and have a little patience. It is an important step in the college funding process, and we believe that every student should complete the FAFSA for a variety of reasons. Completing the FAFSA improves the student’s ability to qualify for financial aid and the student’s loan structure. The FAFSA submission generates your EFC or Expected Family Contribution. The EFC is a critical number in the financial aid process.
Listed below are a series of steps that will help you navigate the FAFSA submission.
FSA ID is Needed
The first step in completing the FAFSA is creating an FSA ID. This user id and password is used to sign the various federal documents and gives you access to some of the federal loan systems. For most students, both the student and one of the parents will need to create their own FSA ID. It is linked to the social security system and will need to be validated before you can use it to sign your FAFSA. It usually takes a few days before it is formally approved depending on the time of the year.
If you are an independent student, only the student needs an FSA ID. Here is a list of the most common independent types:
- Over age 24
- Students with dependent children supporting themselves
- Have an undergraduate degree
- Some foster children and wards of the court
- Some emancipated minor
- Homeless or self-supported
Timing of Submitting the FAFSA
The FAFSA or Free Application for Federal Student Aid is the form families need to complete to qualify for federal financial aid and many state aid programs. Getting organized makes the process go more smoothly. The FAFSA electronic form is available on October 1st for the upcoming college school year of 2019-2020.
Many families believe that the FAFSA should be completed as soon as possible. I am going to disagree, especially this year. The FAFSA website had a major overhaul this past year. In the past few years, there has been a few issues or bugs that occurred at the initial stages of the FAFSA submission process. Due to the overhaul, I am expecting more than normal. By waiting a few days, you may avoid some system frustration, and it will have little to no effect on your financial award.
As part of our newsletter list, we will issue alerts if we identify of any significant issues.
The FAFSA needs to be submitted each year for each student. Some colleges require additional financial aid information such as the CSS Profile or their own supplement forms. For newly entering college students, getting the form in early is beneficial. For returning students, April is the recommended timeframe, if not before based on the college’s deadline.
What to Gather
Let’s get organized. Completing the FAFSA will require both student’s and parent’s information. The two most critical tax documents are the 1040 tax form and w2 salary information. Getting all of this organized now will make the FAFSA completion process much easier when it is time to complete the form. You will need the following information:
- Name, address, and date of birth (DOB is often misreported, check input)
- Social security number for both Student and Parent(s) if filing as a dependent student
- Federal tax information or tax returns including IRS W-2 information for the student (and spouse if you are married) and for parents if you are a dependent student. Forms needed: IRS, 1040, 1040 A, 1040 EZ
- Foreign tax return and/or Tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federated States of Micronesia, or Palau
- Records of untaxed income, such as child support received, interest income
- Length of current state residence
- College list with city and state (especially true for college with multiple campuses)
- Parents current marital status
- Student’s high school name and completion date
- Student’s current academic position
- The education level of the parents
- Cash, savings and checking accounts balances, investments for both student and parent
- Real estate value (not the primary residence) and business and farm assets for the student and parents if she/he is a dependent student. (Family owned business and farms do not need to be included in the asset number)
- Student’s Driver’s License number
- Number of other siblings in college
- FSA IDs for student and one parent
An important note with regards to your income and assets. The income and taxes are reported based on the taxes filed for 2017. If there is a significant change in your income, you should contact the schools and explain the change. Assets are reported as of the day of FAFSA submission. This reporting difference is an important item to realize and is confusing.
Entering Your College List
The FAFSA allows you to input ten colleges at a time. If you have more than ten colleges, you will need to go back and enter the remaining colleges. You will need to wait until the initial FAFSA submission has processed. FAFSA Processing will generally take 1 -3 days depending on the time of year.
Once the original FAFSA is processed, then the student can enter the remaining colleges.
It is recommended that you have the campus location since some colleges have multiple locations. You want to make sure it goes to the correct college. On the other hand, some colleges have centralized the financial aid process, and only one campus will be listed, and your college application needs to indicate the campus.
DRT links FAFSA to IRS
As we stated earlier, the income records for the FAFSA is based on the tax year prior to the academic year. For the 2019-2020 FAFSA submission, their 2017 tax information is used.
The colleges verify the FAFSA information through the DRT interface with the IRS. The IRS Data Retrieval Tool (DRT) is available to parents who have submitted their income tax with the IRS. This tool transfers the tax return information directly onto the FAFSA form. To import this information the tax information needs to match the input exactly. The most common issues are middle initials and abbreviation such as St. for Street.
DRT availability is also vital for people who have filed extensions. The DRT system will not be available for approximately 14 days after the taxes have been filed electronically. If the taxes were a paper submission, it will be much longer. Some of the more complicated tax returns cannot be imported. If you have filed an amended return or are on a payment plan, the DRT system is not available to you.
To access the DRT, a family will need to enter the FAFSA system and go to the tax section of the FAFSA. At that point, the family can access the IRS and transfer the data.
An important note regarding DRT. It is now a blind submission for personal identity security. For the first time FAFSA filers, you may want to input the numbers and submit your FAFSA manually. The manual FAFSA submission will generate your Student Aid Report or SAR. On the SAR is your Expected Family Contribution or EFC. For some people, the EFC can be surprisingly high. By submitting it manually first, you can check your EFC by reviewing the numbers. If you use the DRT system initially, this option is not available. You will need to go back and submit your FAFSA with the DRT, but at least you can formally estimate your number.
Signing the FAFSA
The FSA ID is needed to sign the FAFSA. It is your electronic signature. For the dependent student, both the student and one parent will need to sign the FAFSA. The independent student will only need their FSA ID to sign. You need to realize this is a legal document and should reflect the information correctly at the time of signature.
Divorce and Separated Parents
As you can see, the FAFSA process is highly dependent on the IRS system. If the parents of the filing student are divorced or separated, then the parent who is submitting the FAFSA should be the person who claims the child on their taxes. Many divorced and separated families overlook or do not properly plan for the Data Retrieval Tool process.
Another note, parents who are divorced or separated need to have separate mailing addresses for this to work. Living in the same location will be considered a household and both incomes will be included. If the submitting parent has remarried, then it is household that will be used, and biology is not utilized.
The FAFSA process needs to be completed each year if you want to qualify for federal financial aid or Direct Student Loans. With each submission, a Student Aid Report or SAR will be generated, confirming the changes. As stated above, I feel every family should complete the FAFSA.
As a help in the financial aid process, we have two specific tools that you may want to consider. Our free EFC Calculator will generate an estimated EFC. Here is a link to get access to this tool. We also have our college cost analyzer that is a complete analysis of the financial aid position and college decision. It includes a FAFSA answer key and allows you to compare financial awards easily.
Our mission is to help families make better college financial decision and avoid excessive student debt.
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