11 Sep Should We File The FAFSA??
The FAFSA—the Free Application for Federal Student Aid—opens in three weeks. No one enjoys collecting all the required documents and information, which includes IRS tax returns for the previous two years; current bank statement balances; investment balances (including stocks, bonds, and trusts); K-1 documents; corporate tax returns (if you own a business); social security numbers; 529 account balances; and mortgage statements for any real estate owned.
And worse than collecting all the documents: completing the form!
But this doesn’t mean that families should not complete the FAFSA, even if they do not think they will qualify for financial aid. Why? Here are some important reasons.
The FAFSA Might Be Required for Merit Aid
Some colleges only award merit aid (which is not related to financial need) to students who have completed the FAFSA. Unfortunately, there is no “clearinghouse” that lists these colleges. While families can check with each college their student is applying to and ask whether the FAFSA is required for merit aid, it is probably easier to just complete the form in the first place.
The FAFSA Is Required for Federal Loans
Families that are not eligible for need-based financial aid may still want to borrow money to pay for college. Some families believe it’s important for students to pay for a portion of their college costs, to have some “skin in the game.” If students want access to Federal Unsubsidized loans (which are available to students regardless of need and range from $5,500 to $7,500 a year) they must complete the FAFSA. Similarly, if parents want access to federal Parent PLUS loans they must complete the FAFSA.
Circumstances Can Change
If the pandemic taught us anything, it’s to expect the unexpected. While a family may not need financial aid right now, it’s possible that in subsequent years (due to job loss or job interruption, for example) they will need it. Some colleges have policies precluding families from applying for financial aid if they did not file the FAFSA at the time of application. Even if that is not the policy at the college a student attends, should circumstances change it’s convenient to have the FAFSA on file.
FAFSA and Admission Chances
But what about the impact of filing the FAFSA on admissions chances? Families sometimes worry that filing the FAFSA will adversely impact admissions decisions at need-aware colleges (colleges that take students’ ability to pay tuition into consideration when making admissions decisions). But simply filing the FAFSA does not mean a student is applying for financial aid. The Common App has a question asking if students want to be considered for financial aid and that is what alerts an admissions office that a student is applying for aid. If the student checks the “no” box, filing the FAFSA should not impact the admissions review.
Importantly, if a family is still uncomfortable filing the FAFSA before an admissions decision is made, they have the option of filing it after a student has accepted a spot at the college. This way a family could still be eligible for federal loans and would have the FAFSA on file should circumstances change in the future.
And here is one more reason why families should file the FAFSA: many are surprised to discover that they are, in fact, eligible for need-based aid. The formulas colleges use to determine who gets aid is not as transparent as it could be and sometimes families that least expect it get financial assistance—so that alone may be reason enough for every family to complete the FAFSA when it opens on October 1st.