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This free application can lead you to a wealth of financial aid, and filling out the FAFSA is not as hard as you may think.

Each year, more than 13 million undergraduate and graduate students receive some form of federal financial aid. To get your share, you must first file the federal governments Free Application for Federal Student Aid. better known as the FAFSA. It determines eligibility for all federal aid programs, from Pell Grants to student loans. It determines eligibility for most state and collegiate-based aid programs. And, it even indirectly determines eligibility for some merit-based aid, since many schools reserve their own (limited) scholarships for students who dont qualify for need-based funds.

How much youre eligible for will depend on the financial and personal information you provide on the FAFSA. Federal processors evaluate the data, determine your familys ability to pay, and then tell you how much you and your family should contribute toward college, aka your Expected Family Contribution.

The form has been simplified greatly in recent years, but it can be still be a little intimidating; however, its well worth the effort to fill it out and easy to do if you take it step-by-step. And dont forget, its free to file, so you have nothing to lose.

Getting started

You can pick up a FAFSA in your guidance office by mid-November or online at www.fafsa.ed.gov ; however, you cant file it until January 1 of the year in which you plan to start college (thats January 1, 2015, for those who hope to start college in September, 2015). You should file as soon after that date as possible, since a great deal of financial aid is delivered on a first come, first served basis. Money is awarded until it runs out; late filers get nothing.

Unfortunately, many students miss out on financial aid opportunities because they fail to meet the filing deadlines. The best financial aid awards (those heavy on grants and lighter on loans) are generally given to the earliest applicants.

Gather your papers

To make sure youre one of the early birds who receives the most aid possible, work with your parents to start collecting the necessary financial records over the winter holidays. To get organized, you might try putting your paperwork and information into two folders:

Folder 1: Income and Expense Information

All income and expense data come from the prior year (2014 for the 2015/2016 award year). Heres the financial information youll need to collect:

• Taxable income for both parents and student, including wages, pensions, capital gains, interest, dividends, annuities, unemployment compensation, alimony received, rent collected, and business income.
• Non-taxable income for both parents and student, including workers compensation, welfare benefits (excluding food stamps), housing and food allowances, child support received, untaxed Social Security benefits, untaxed income from pensions and annuities, veterans non-education benefits, tax-exempt interest income, deductible payments made to a retirement plan (such as an IRA or Keogh), and earned income credit.
• Expenses such as U.S. income taxes paid and child support paid.

Folder 2: Asset Information

You must report the net worth of all these assets as of the date you sign the form, so before you record any totals, be sure your family pays off all its bills and pays down any consumer debt, like credit card balances.

• The value of cash, savings, and checking accounts held under the names of parents and the student.
• Net worth of all the parents and students investments (except for retirement plans), including stocks, bonds, CDs, money market funds, mutual funds, commodities, trust funds, education IRAs, state-based college savings plans (except pre-paid tuition plans), and real estate holdings (rental property and second homes). You need not include the equity in your familys primary residence.
• The net worth of any family business and/or farm (excluding farms that are principal residences).

Be accurate

In completing the FAFSA, be as accurate as you can. Mistakes will cause your application to be returned. These errors may include giving monthly amounts instead of yearly amounts, writing in the margins, checking the ovals (rather than filling them in).

If a question or two seems confusing, call the federal student aid hot line at 800-4-FED-AID, or ask a guidance counselor or financial aid administrator. Many colleges now have toll-free numbers for exactly that purpose. If a question still proves troublesome, explain your problem in a letter to the schools financial aid administrator. Note: youre less likely to make mistakes if you apply online. FAFSA on the Web includes worksheets, online help, detailed instructions, and a built-in editing tool that helps prevent errors and reduces rejections. You can also get an idea of what the process entails, plus an estimated aid package, using the FAFSA4caster at www.fafsa4caster.ed.gov .

Once youve gathered all of your financial data, the FAFSA is pretty straightforward. Answer each question unless the FAFSA specifically tells you its a step you can skip. Lets review each section:

1. Student name, rank, and serial number

Questions 117 cover the personal basics: the students name, e-mail address, permanent address, Social Security number, date of birth, permanent phone number, drivers license number, citizenship status, and marital status.

2. Student background

Questions 1831 deal mostly with:

• The students educational plans.
• The highest level of education completed by the students mother and father.
• The students state of legal residence.
• The types of aid for which he or she wants to be considered (for example, loans and/or work-study). To maximize your chances for receiving aid, you should indicate a willingness to accept loans and work-study. You can always change your mind later.
• Registration for the Selective Service (military). If youre male, age 1825, you may use this section to register. (In most instances, male students must be registered to receive federal student aid.)
• Drug offenses. If youve never been convicted of a drug offense, simply check the No box and move on. If, however, you do have a past drug-related conviction, your aid may be limited.

3. Student income and assets

The first three questions (3234) ask about your tax filing statuswhich tax return you will file and whether you have already completed this tax return. If at all possible, complete your return before you tackle this part of the FAFSA. Much of the information is the same. For example, your adjusted gross income, U.S. income tax paid, and number of exemptions. The FAFSA even gives you the exact 1040 line reference numbers.

Questions 3547 cover student income and assets. Dependent students may find that some of these income and asset questions do not apply. In this case, enter 0. An unanswered question can get your FAFSA returned with a request for additional information. This will hold up the processing of your form and could jeopardize the amount of funding you will receive.

4. Dependent vs. independent

Questions 4854 address the students dependency status. Students who meet one of these criteria may skip Step 4youre an independent student and your eligibility for financial aid will be determined without consideration of your parents income and assets.

Youre independent if you are:

• 24 years old by December 31 of the award year.
• A graduate or professional student during the award year.
• Married (or separated).
• A parent or have other dependents who currently receive more than half their support from you.
• An orphan or a ward of the court.
• A veteran of the U.S. Armed Forces.

Schools may also determine dependent status based on unique living circumstances, such as being raised by grandparents. Ask your school if you are unsure of your own dependency status.

5. Parents personal data

In questions 5569, dependent students must provide information about their parents marital status, Social Security numbers, number of household members (including the number who will be enrolled in college at least half time), state of legal residence, and the age of the older parent. Each of these elements affects the calculation for your Expected Family Contribution (EFC), so answer the questions carefully. For example:

• Older parents are expected to contribute less since they are closer to retirement.
• Parental contribution is divided by the number of students in college.
• If the parents are divorced or separated, include only the financial data on the parent with whom the student lives for the greater part of the 12 months preceding the date of the application. If that parent has remarried, the student must include that stepparents income and asset data as well. Note: Some colleges request information on the other natural parent and may expect a contribution from that parent as well.

6. Parents tax filing status

The next three questions ask you about your parents tax filing status. Again, try to complete tax returns before you tackle the FAFSA. Most colleges will eventually ask to see a copy of your familys signed tax return, and your FAFSA numbers must come within a $400 tolerance range. If you are outside this range, the college will ask you to make corrections to your form. Again, this could put you at serious risk for losing valuable funding.

The FAFSA also asks whether you are eligible to file a 1040A or 1040EZ (even if you filed a regular 1040). If you and your parents can answer yes to this question and your annual incomes are below $50,000, your familys assets will be excluded from consideration entirely.

7. Parents income and assets

Questions 7383 cover parental income and assets. It is important to indicate whether earned income is from two workers or only one. Where there are two workers, the family receives an additional allowance that helps increase the applicants eligibility for aid. This allowance also applies to a single parent household when that parent has earnings from work.

The EFC calculation is based primarily on the familys adjusted gross income (AGI), however, it is designed to reflect the financial strength of the household, so it counts untaxed income as well. Worksheets A and B (Questions 78 and 79) are used to collect this data, while Worksheet C (Question 80) covers items that families may exclude from income, for example, child support paid, taxable work-study earnings, scholarship aid that was included with AGI, Hope Tax Credits. and Lifetime Learning Credits .

Be exact in your numbersand above all else, truthful. The FAFSA now collects your parents Social Security numbers to make it easier for the Department of Education to verify income reported on the FAFSA with the Internal Revenue Service (IRS) .

Many people think the net worth of their assets will eliminate them from aid consideration. Parents, however, receive an allowance to shelter some of their assets and even then they must contribute only a small percentage of the balance, less than 6%.

8. Independent students only

Independent students must answer a couple of quick questions about the number of people in their household and the number of household members who will be enrolled as college students during the upcoming academic year. Answers to these questions affect your EFC.

9. List your colleges

Good news: you fill out the FAFSA only once regardless of how many colleges youre considering. Questions 8697 ask students to list the colleges that are to receive the processed data and indicate their housing plans at each. (Do you intend to live on campus, off campus, or with parents?) This helps aid administrators better determine their cost of attendance.

To make sure your data goes to the correct school, record each schools federal school code. Youll find these codes online (www.fafsa.ed.gov ) or in your high school guidance office.

If you cannot locate the correct school code, be careful to include the schools complete name, address, city, state, and zip. (The processor wont know whether U of M refers to the University of Michigan or the University of Maryland .)

10. Sign and date the form

Finally, students (and parents) must sign and date the form. In doing so, they certify that (if requested) they will provide information (for example, a copy of their tax return) to verify any recorded data.They also declare that they are not in default on any federal student loans and promise to use any federal student aid for educational purposes only.

If the form was completed by someone outside your immediate family, that person must sign and date the form as well. There is nothing wrong with getting help with your FAFSA; however, the Department of Education wants to knowthat way it can clear up innocent misunderstandings, as well as detect patterns of fraud.

Note: never mail your tax return with your FAFSA. Processing centers are only interested in the financial data you provide on your FAFSA. They have paper shredders that destroy any income tax returns included in the envelope. Also, dont mail your tax return to a college or university unless requested.

What happens next?

Three to four weeks after families mail in their FAFSA, they will receive a multi-part document called a Student Aid Report (SAR). If you recorded an e-mail address on your paper FAFSA or you filed your FAFSA online, you will receive an e-mail that links you to your SAR online.

The SAR lists all the information you included on your aid application and tells you how much money youll be expected to contribute to college costs. This is your EFC (Expected Family Contribution). The information will also be sent electronically to the schools you designate and your home states scholarship agency (as well as the state agency of every school on your list).

Review your SAR very carefully. If there are any mistakes (for instance, if a $500 has become a $5,000) send the correction back to the processor immediately. It is now up to the college financial aid administrator to take all this information, determine your eligibility for student aid, and develop your financial aid package.

Have a question about filing the FAFSA?

It’s important to ask questions about your FAFSA as you have themit’s is a complicated document, and you should certainly clear up any confusion you may have to ensure you fill it out correctly.

Don’t have a financial advisor on retainer? Start by asking the financial aid services office at the school(s) you or your student is planning to attend (or already attending). They are there to help! You can also pose your questions to FAFSA directly here .