NEW YORK (Reuters) - Want to increase your chance to get financial aid for college? File the Free Application for Federal Student Aid (FAFSA) by the end of 2017.
“The sooner the better,” said financial aid expert Mark Kantrowitz, publisher at Cappex.com.
In a 2015 study he did for Edvisors, Kantrowitz found that students who quickly filed for aid in the first three months received double what those who waited obtained.
Time is already ticking. Families were allowed to file the FAFSA for the 2018-2019 school year as of Oct. 1 – this is the second year since the Department of Education shifted to the earlier date, from January.
The FAFSA is used by colleges to determine what families can afford to pay, and whether colleges should give students grants they will not have to pay back or federal student loans that they must repay. Families report their income and assets in the FAFSA and it is sent to colleges selected by students. Some private colleges also request an additional form known as the CSS Profile.
October may seem early for the FAFSA, because many students are still deciding on colleges. But an early start gives families a sense of the financial burden they can sustain, before students make their final lists.
Another reason to file early is state aid, said Kantrowitz. Thirteen states hand out financial aid on a first come, first serve basis until they run out of funds.
Students in four-year college programs received $11,380 on average in grants and scholarships in 2015-2016, according to the National Center for Education Statistics. State grants averaged $3,867 per student in 2015-2016. Private colleges granted $17,965 on average per student.
Parents complain about the grueling task of filling out the FAFSA form, but it is easier this year than the past, said Jessica Thompson, policy and research director for the Institute for College Access and Success.
With a change in technology, parents of first-year students do not have to record income details. Instead, the online FAFSA will upload the data from the IRS Data Retrieval Tool that taps into tax return from the previous year, which is 2016 for the 2018-19 FAFSA filing. (Security measures were put into the tool after a breach last spring so existing college students cannot use it yet.)
Yet it is not so easy that you should have your kid fill it out for you, said Kalman Chany, author of “Paying for College Without Going Broke,” a book that provides strategies for maximizing aid.
Mistakes can be costly. For instance, if you report $100,000 in a 401(k) as an investment account instead of a retirement asset, it could reduce aid eligibility by $5,640. Families need to be especially careful reporting rollovers from 401(k)s into IRAs so they do not appear to have cash available for college, said Chany.
Parents also need to take extra steps to insure colleges have the latest information, said Kantrowitz. An income change due to a layoff, retirement, or serious illness will not be reflected in the 2016 tax return and should be reported to college financial aid offices to ensure needs are assessed correctly. Amended returns also should be reported to financial aid offices, because they will not be captured by the automatic download tool.
The caveat to “the sooner the better” mantra is with families expecting a big influx of cash in the fall. Chany gives the example of parents who have just sold their home and are parking the money in a bank account temporarily while waiting to close on a new home. They could have to pay thousands more for college than someone with the same income but no temporary stockpile. Chany’s advice: Wait until the cash is dispatched into a new home and then file the FAFSA.
Editing by Beth Pinsker and Steve Orlofsky