Those employees who have children either returning to college or who will be college freshmen in the fall of 2019 should now be completing their financial aid applications. This column presents what parents need to know about college financial aid applications and tips for filling them out.
The most popular college financial aid application is called the Free Application for Federal Student Aid (FAFSA) and can be downloaded here. Those students who hope to obtain Federal and state grants must file the FAFSA. Families who intend to borrow through Federal student and/or parent loans also must complete the FAFSA. Filing the FAFSA is also a requirement for any student hoping to obtain a campus work-study job. Nearly all public universities and many private colleges also require the FAFSA to determine who will qualify for their own in-house aid money.
The College Scholarship Service (CSS) Profile is a secondary application that approximately 200 private colleges and some public universities require applicants to complete. Like the FAFSA, the CSS is used by colleges as to which of their students will qualify for their own institutional aid. The CSS Profile may be obtained here.
The CSS looks deeper into a family’s finances by asking more financial-related questions compared to the FAFSA. For example, the CSS inquires about the value of a family’s principal residence while the FAFSA does not. Another example is that the CSS requires information about the assets and income of the noncustodial parent in cases of divorced and separated parents while the FAFSA does not. Note that it is easy to locate which schools required the CSS. On the CSS Profile page, there is a link to the list of CSS Profile institutions.
Those employees who have children entering or reentering colleges or universities for the 2019 -2020 academic school year and seeking financial aid should file the FAFSA and the CSS Profile, if applicable, as soon as possible. Both applications are available each year beginning on October 1st, almost a year before a child starts the school year. Both financial aid applications required the past year’s tax return, meaning that when seeking financial aid for 2019 – 2020 academic year, applicants would use the 2017 Federal income tax returns.
If the parents’ financial situation has changed for the worse since they filed their 2017 Federal income tax return, the parents can ask for a professional judgment from a college or university. College financial aid administrators have the right to adjust a student’s financial aid amount based on information that is not reflected on the FAFSA, CSS Profile, and most recently filed federal income tax return. During the financial aid judgment process, a college or university financial aid administrator can compare income declared on the income tax return with estimate income during the award year.
The FAFSA requires the reporting of the parents’ and child’s current investment assets (non-retirement) account. The CSS also requires reporting of non-retirement and retirement accounts including the TSP. Consequently, it makes sense for parents to file the aid application during a period of down days on Wall Street, several of which have been experienced over the last few weeks, and after major monthly bills have been posted in order to possibly qualify for more financial aid.
While the FAFSA is free to file, families must pay to complete the CSS Profile and send the report to each school on the child’s list. The College Board charges $25 to complete the application and will send the first school report. All other school reports will cost $16 apiece. Waivers exist for up to eight school reports for low-income students.
At this time of year in the middle of the Federal benefits “open season”, Federal employees are facing many decisions regarding their health, dental and vision insurance and flexible spending accounts for 2019. Those employees with children currently in college or who will be first entering college in 2019 have further decisions regarding financial aid applications for their children. While the financial aid application does not have to be filled and submitted right away, it is in the parents’ best interest to apply as soon as possible, especially if the children are eligible for financial-based aid in the form of scholarships and grants. Scholarship and grant money tend to be given to those students who apply early for financial aid and may not be available to qualifying students applying for it later in the spring.
While student loans should always be available, parents and students should be aware that the student loan debt crisis is worsening. At $1.4 trillion, federal student loans are the second-largest debt segment in the country after mortgages. Ideally, students will graduate from college with as little debt as possible. Scholarships and grants are among the best ways for a student not to be saddled with so much debt once he or she graduates. But in order to be eligible for financial aid, parents must first file the FAFSA and perhaps the CSS Profile.
Written by Edward Zurndorfer, who is a Certified Financial Planner™, Chartered Financial Consultant, Chartered Life Underwriter, Certified Employee Benefits Specialist and Enrolled Agent in Silver Spring, MD. He is the owner of EZ Accounting and Financial Services, an accounting, tax preparation, and financial planning firm also located in Silver Spring, MD. He is a seminar speaker at Federal employee retirement seminars throughout the country for the National Institute of Transition Planning, Inc. He is also a weekly columnist for MyFederalRetirement.com. Raymond James is not affiliated with and does not endorse the opinions or services of FEDZONE or Edward A. Zurndorfer or any of the above-listed organizations. The information has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Edward A. Zurndorfer, and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not offer tax or legal services. You should discuss tax or legal matters with the appropriate professional. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Serving Those Who Serve is not a registered broker/dealer and is independent of Raymond James Financial Services
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