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What is FAFSA?

FAFSA or Free Application for Federal Student Aid is a form that is filled out by university students and parents to apply for federal financial aid, which includes grants, scholarships, student loans and work-study programs. In addition to the federal government, schools, states and private financial institutions also use the information from the FAFSA to determine a student’s eligibility for non-federal aid.

Each year, the Department of Education issues a new FAFSA for the subsequent academic year. You can either use the online version of FAFSA or you can obtain a printed copy of the application form from your high school counselor. If you intend to use the online version, then you would have to apply for Personal Identification Number (PIN). For this you would have to submit your name, date of birth, social security number and address. Once, you get your PIN, you can fill out the form and submit it online or print it and send it by mail.

While the printed version of FAFSA becomes available in the second week of October, the online version becomes accessible on January 1. Although the last date for the submission of FAFSA is June 30, but you can submit the form in either format as early as January 2. Most colleges and universities award financial aid on first come, first serve basis. Hence, to improve your chances of receiving financial aid, try to submit the FAFSA latest by March 1.

There are 102 questions in FAFSA, which are segregated into six sections. The primary aim of these questions is to retrieve your academic, personal and financial information. You would also be required to divulge your dependency status, colleges you want to receive your FAFSA results and your identification information. For filling out the FAFSA properly, you would need previous two year’s copies of your income tax returns.

Once you submit the FAFSA, the government will scrutinize it thoroughly, and then send you a Student Aid Report (SAR). The SAR typically includes a summary of your financial aid information and the EFC (Expected Family Contribution). The colleges enlisted in your FAFSA will also receive SAR. When you apply for admission in these colleges, you will be asked to submit additional financial information. Thereafter, your eligibility for financial aid will be calculated, and then you will be notified about the kind of financial aid package the college can award you.

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FAFSA Mistakes to Avoid

As you begin getting ready for college, the financial aid process truly begins after the application and admissions process is finished. Most colleges will not even consider a financial aid offer without having a student and their family fill out the basic financial aid forms.

One of the most important forms that all colleges request is the FAFSA or Free Application for Federal Student Aid. This is also one of the most dreaded forms by most students, parents and families in general. There are many books, articles and websites that are dedicated to the sole purpose of helping you fill out the FAFSA. There are also plenty of local companies that will charge you a fee of $250 to $750 to help you fill out these forms and file them with your selected colleges.

But if you are reasonably intelligent (as I believe you are) and patient enough to read the directions, these forms are not only manageable, but can be filled out within a couple of hours time. First get all your information gathered as outlined on the FAFSA website, then sit down at your computer and get started.

Mistakes to Avoid:

First, make sure you actually file the form. Some families feel that they will not qualify, so they don’t even file the form. Many colleges will not even consider you for private aid if you do bot file the FAFSA.

Next, especially for your student’s freshman year, file early. Get your taxes done early or use the previous years return. Financial aid for freshman is based to a great extent on the information from the FAFSA. Many colleges follow a first come first served basis when they are handing out financial aid, private endowments and scholarships. So getting the first year in early can save you money.

Never let you child fill out the FAFSA form by themselves. Most of the information is foreign to them so they will either be asking lots of questions, guessing or ignoring information. You want the college to have current and accurate information to use for calculating your financial award.

Never leave an answer blank. If the answer is zero, use a 0, if it is not applicable, write n/a. Always place an answer to each question on the form so there can be no reason for your application to be delayed, flagged or returned as incomplete.

And the final mistake that many families make is to forget to sign their FAFSA. Either with pen and paper or electronically for both the student and parents. If you do not sign the form it will be returned as incomplete.

There are many other tips for reducing your adjusted gross income, reducing FAFSA included assets along with your Expected Family Contribution (EFC) and making sure that you do not include assets that you legally do not need to disclose on the form.

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Is an Inheritance Considered Income on the FAFSA?

Inheritances are not a common financial event, thankfully; but they sure can create some confusion for the FAFSA and CSS Profile processes.  Most parents and students assume that because money is received out of an inheritance it must be income.  This is not necessarily true.

First of all, you need to be aware that neither the FAFSA nor Profile mention inheritances as income.  There are those catch-all questions such as on the FAFSA which asks for all income not recorded else where on this form and includes the example of having bills paid on the student’s behalf.  There is however no further description of what that income might be.  If you search the FAFSA and government student aid websites, you will find no mention of inheritances except as a brief example of a student whose financial picture changed over the summer and then may not want to borrow as much money as before.  If you search the Profile related websites, the only context of inheritance is regarding the valuation of inherited assets.

So in other words, the FAFSA and the Profile are silent regarding inheritances.  In such a case, the smart money is to rely upon the recognized authority in defining income.  This is typically the Internal Revenue Service (IRS).  The IRS does not define inheritances as income.

Then how do inheritances affect a student’s financail aid filings on the FAFSA or CSS Profile?  They affect the filings through the valuation of students’ and parents’ assets and the income generated from those specific assets while in the possession of the immediate family.  That income could be capital gains, dividends, or interest earned.

For example… A grandparent dies in June 2009 and leaves $250,000 to the parents in cash, and $15,000 in cash to the student.  This inheritance would not be reported in any income column on the FAFSA.  However, at the time of filing the FAFSA form in February 2010, the parent still has $200,000 of the inheritance and the student has $5,000 left of the inheritance.  These assets will be reported on the FAFSA form as savings or investments.  In addition, the parent’s $200,000 generated $1,000 in interest for half the year, and the student’s $5,000 did not generate any income.  The $1,000 in interest will be reported as interest income on the FAFSA.

Keep in mind, some colleges and universities may consider inheritances as income for their individual forms.  Double check those forms before assuming the guidelines above apply to institutional paperwork.

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4 Guidelines For Claiming Rental Property As a Business on the FAFSA

Rental Property on the FAFSA has always been an area of contention in my mind.  The manner these assets are listed on the FAFSA can mean the difference of thousands of dollars in financial aid.   For the government to tell you what is and is not a business enterprise that is making money kind of frosts me.  The 2009-10 FAFSA Application and Verification Guide states the following…

At times a student or parent will claim rental property as a business.  Generally, it must be reported as real estate instead. A rental property would have to be part of a formally recognized business to be reported as such, and it usually would provide additional services like regular cleaning, linen, or maid service.

If at all possible, you want to claim real estate as a small business, and therefore qualify for the small business exemption on the FAFSA form.  Here are a few guidelines to follow which make claiming real estate as a business much easier.

1.  Organize under a separate legal entity – Don’t hold rental properties directly in your name and expect them to fly with a financial aid officer.  They should always be organized under a C-corp, S-corp, LLC, or similar entity.  This is by far the most important qualification to be considered a business asset.

2.  The more activity the better – If you just have one piece of property that you rent out, or if you have a vacation cottage on a lake that maybe you rent once or twice during a season; don’t expect that to be considered a business asset.  The more activity you have in real estate the better.  You need to be able to demonstrate substantial levels of material participation and activity.  If you have multiple properties and active participation in managing them, it will strengthen your case.  This is one area where going big and acquiring more assets will help you.

3.  Show associated activity – The following activities showing in your corporation may also indicate more business activity, rather than just rentals:

  • Develops or redevelops
  • Constructs or reconstructs
  • Acquires
  • Converts
  • Operates or Manages
  • Brokers
  • Other business activity associated with the property

4.  Other activities – There are other signs or activities which will add weight to listing real estate as a business operation:

  • Registering for appropriate state and local permits
  • An employer identification number (EIN)
  • Fictitious name registration or DBA for the business
  • Separate business checking account

These four guidelines will definitely strengthen your hand in getting that small business exclusion on the FAFSA form.  But it is not a black and white standard.  Some schools will let you keep the exclusion, others will not.  My recommendation is when in doubt, list the property as a business.  Make the school take the initiative to prove it otherwise.

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College Financial Aid – FAFSA Made Easy

Filling out your FAFSA is what determines how much money you will get in financial aid. This process is generally done online, over the Internet. It makes it much easier and convenient for everyone that is involved. If you choose, you can still fill this form out manually and send it in by mail. There are many drawbacks and downfalls to sending it in by mail. If at all possible, you will want to fill this out over the Internet.

FAFSA stands for the free application for Federal student aid. It is shortened to FAFSA, which makes it easier and more common for everyone to discuss. You will hear many people in the financial aid office use this word; make sure you know what it is.

Deformation you fill out online is fed into the computers that the government uses. All of your parents financial information will lead up to and expected family contribution. This is one of the main factors that determine how much money you are eligible to receive in the form of grants and financial aid from the government of the United States.

Your high school counselor should have a copy of the FAFSA for you to look over with your parents. If you like, you can fill it out before you proceed to do so online. However, filling out your FAFSA online has become very easy and convenient over the years. You can save your application at certain points and come back to it later if you need to. You can also use what's called an electronic signature, in substitution for your real signature when you submit the application. This stage you from having to print out, sign it, and mail or fax it in.

Go online to Google and type in FAFSA. They should take you to the website. There, you can fill out the application. When filling out this application, you can use estimates if you do not have the actual numbers you need. Lying is not permitted, but an educated guess should be okay. If for some reason your estimates are way out of line, you will have a chance to correct them later. The goal is to get your FAFSA turned in as soon as possible. The government gets many applications, and they have to look over every single one of them. It may be required you submit more information or you may have made a mistake on your application. After they look over it the first time, you will be required to correct it if you have errors. This is why it is very important to get it turned in as soon as possible.

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Sonography Education: Financial Aid Begins With FAFSA

Students interested in attending their CAAHEP accredited sonography program of choice often need help paying for tuition, fees and books. There are many different types of financial aid, including federal and state grants, government backed loans, scholarships administered by the school’s financial aid office, tuition waivers and others. When beginning the search for funding through the financial aid office, one of the first things the student will be asked is whether the FAFSA form has been submitted.

FAFSA: A First Step for Sonography Students

Today, most students can qualify for some type of student aid. Family income is no longer the only criteria considered, but income will influence the type of aid the student qualifies for. Eligibility does require the following:

  • Be a U.S. citizen, eligible non-citizen or U.S. national
  • Have earned a high school diploma or passed the General Educational Development (GED) tests and earned a Certificate of High School Equivalency
  • Have a Social Security Number
  • If a male aged 18 to 25 years old, be registered with the U.S. Selective Service
  • Not be in default on student loans
  • Cannot owe federal student grant refunds
  • Has not been convicted of selling or possessing illicit drugs while receiving federal student aid

If the student can meet the eligibility requirements, it is time to complete the FAFSA application. FAFSA is the acronym for “Free Application for Federal Student Aid.” It is a U.S. Department of Education-Office of Federal Student Aid form that is used to determine the student’s need for financial aid or the Expected Family Contribution. It is the first step in qualifying for financial aid.

Completing the FAFSA Form

Sonography students should complete the FAFSA form well in advance of applying for financial student aid through the school’s financial aid office. The form can be filed with the Department of Education beginning in January of each year. Each year the federal deadline can change, but it is June 30, 2015 for the 2014-2015 academic year.

Timing is important because federal aid is distributed on a first-come first-serve basis. In addition, the school may have a filing deadline that must be met. The filing deadline may be the date the FAFSA was submitted to the federal processor or the date the federal processor returns the needs analysis to the financial aid office.

Once sonography students choose the CAAHEP accredited programs they want to apply to, it is important to check with the financial aid office at each school. Each one has a different set of rules, and missing the FAFSA deadline will make the student ineligible for federal aid as a minimum. Many schools use the FAFSA needs analysis in the distribution of all available financial aid, and not just the federal dollars. Therefore, there are state deadlines for filing the FAFSA form also.

The Department of Education encourages students to file the FAFSA form as soon as possible after the first of January. The form can be filed online or a paper copy sent through the mail.

Know the Deadlines

The federal government has developed a helpful program called the FAFSA4caster that enables people to enter some basic information and get an estimate of federal student aid eligibility. The estimate is presented on a “College Cost Worksheet” which also has room to add estimated amounts of other sources of funding the student may have available.

There are many deadlines to keep in mind when starting the application process:

  • Federal FAFSA deadline
  • State financial aid deadline
  • University, college, or medical center financial aid deadline
  • Scholarship deadlines

If the sonography student is applying for a bank loan or other private financial aid outside the school’s process, there will be additional deadlines. The applications must be processed in time to obtain the money before the school’s tuition and fees are due.

Applying for financial aid of any kind requires being organized. A good approach is to make a list of deadlines to ensure none is accidentally missed. The process is too important to risk missing application deadlines.

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Conquering Your Financial Aid Application: FAFSA

Why file your financial aid application before the 15th of February? Conquering your financial aid application.

The most important piece in the college admission process is going to be financial aid because it will come down to money which will determine whether you will attend a college of your choice or not. This is why you should apply for financial aid as soon as you and your parents can get your taxes done because the application will require your financial information and your parents' or parent financial information. If you qualify for any federal or state (free) moneys, the sooner you file your financial aid application the better off you will be. There are a predetermined number of dollars that are earmarked for federal grants and state grants and once the moneys are given out, you will have to wait until the next semester to see if some money frees up. You may have to wait until the following year to attend college.

Besides filing your FAFSA, you should check the website of each school that you will apply to or have applied to for any other financial aid application that you have to file.
Every student should file the application no later than February 15th of his or her senior year.

Who should file for financial aid? (FAFSA)

Everyone should file the application whether they think they qualify for federal and state grants or not because even if you don't qualify for any free money, the institution will need your financial profile in order for them to give you any of their money. Any free money (grants) or loans will require your financial profile. If you are applying to any institution of higher education, you will need to file a financial aid application.

What drives the Expected Family Contribution number when you file your application? Is it income driven or asset driven?

The Expected Family Contribution is income driven for the most part. Other factors that will influence this number will be the number of people living in the household, the age of the older parent, the number of individuals enrolled in college and the number of properties owned by your parents. EFC is the amount money that the institution will expect you to come up with to pay for your education. This is your financial responsibility. The EFC is always higher than what you expect based on your current financial status. FAFSA is not asset driven and it does not dig deep into your family's finances.