Great Advice for Parents is an annual publication gathered by Inceptia in partnership with NerdWallet to off advice to parents of soon-to-be college students on steps to take, how to plan ahead, and manage the financial aspects of higher education.
GREAT ADVICE FOR PARENTS 20
in partnership with
TABLE OF CONTENTS
LETTER FROM THE VICE PRESIDENT OF STUDENT SUCCESS
WEIGHING YOUR OPTIONS 4 Things to Consider in Choosing a College or Career School Balancing Hopes, Dreams and a Low-Paying College Major Pay for Your Kid’s College? 3 Times to Think Twice COMPLETING THE FAFSA (OR HOW TO GET MONEY FOR COLLEGE!) Don’t Delay Submitting the FAFSA, Your Ticket to Help Pay for College Your FAFSA Questions Answered 8 Easy Steps for Parents Completing the FAFSA Form AFTER THE FAFSA 5 Things to Do After Filing Your FAFSA Form 13 Things to Know When Evaluating Your Financial Aid Offers 7 Options if You Didn’t Receive Enough Financial Aid
MORE TO EXPLORE
The links herein are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Inceptia of any of the products, services or opinions of the corporation or organization or individual. Inceptia bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. Contact the external site for answers to questions regarding its content.
• 2 •
WHERE DO THE YEARS GO? For high school juniors and seniors and their families, you probably find yourself saying some variation of this sentiment more and more frequently. After all, wasn’t it just yesterday they were leaving for their first day of kindergarten, with you full of hope and worry and dreams for their future? Well, the next year or two will feel pretty similar: flying by, full of a mix of emotions, with hope and worry on your mind.
We aim to ease just a little bit of that worry with Great Advice for Parents.
In this, our annual e-guide for high school students and families, we bring you the information you need to make informed choices about college options, costs, student loans, and more. With so much on your plate during these busy days, we know you may be confused about where to even start. That’s why we do our best to make this guide as comprehensive, yet concise, as possible; we cover all the bases without putting you to sleep! With great content from our friends at NerdWallet and trusted resources from the U.S. Department of Education, this year’s guide focuses on the economics of college and the financial aid process. We know that rising inflation and increased costs of living are top of mind for families across the country, and we hope you find this year’s content particularly relevant in navigating current economic waters. As you continue your college planning, there will surely be highs and lows, rejections and congratulations, moments of sadness and happiness. But to be sure, it will all go very quickly. So, try to be present and mindful of the big and small moments that comprise the last days of high school for your student, for they’ll go by in the blink of an eye. Where do the years go? Where will this next year go? With a little planning, and a little Great Advice, the answers are up to you.
Cheers to the year ahead,
Carissa Uhlman Vice President of Student Success Inceptia
888.529.2028 • Inceptia.org •
• 3 •
WEIGHING YOUR OPTIONS
• 4 •
4 THINGS TO CONSIDER IN CHOOSING A COLLEGE OR CAREER SCHOOL U.S. Department of Education Resource Article Choose the college or career school for you with the U.S. Department of Education’s (ED) College Scorecard. Answer your questions about costs, graduation, debt, and typical earnings after enrollment so you can find the school that’s right for your future and your pocketbook. A college or career school education could mean more money, more job options, and more freedom. Yet, with more than 5,600 college and career schools nationwide participating in federal student aid, deciding which school is right for you can be difficult. Maybe you want to attend a school with the best nursing program, the most study abroad options, or the best college basketball team – every person values different things. However, it’s also important to remember that going to a college or career school is one of the biggest financial investments you will make. Just as important as academics and extracurricular activities are the financial factors: how much a school costs, whether students are likely to graduate on time, and if alumni are able to find good jobs and pay off their loans. That is why the U.S. Department of Education developed College Scorecard . It provides clear information to answer all your questions about costs, graduation, debt, and typical earnings after enrollment.
• 5 •
As you’re considering schools, use College Scorecard to compare these four things.
NET COST For starters, you should consider how much you’ll actually be paying on a yearly basis. That’s not necessarily the sticker price – it’s the sticker price minus all the scholarships and grants that you may receive when enrolling in a college or career school. This is called average annual cost, and it’s important because it’s the average amount students actually pay out of pocket. College Scorecard can show you the average annual cost of each school compared to the national midpoint. It can also give you a net price estimate for each school broken down by family income. 1
Here’s an example:
• 6 •
GRADUATION RATE Next, you should consider a school’s graduation rate as a factor. You can use College Scorecard to learn about the different ways degree-granting and nondegree-granting schools determine graduation rates. You may want to attend a school that has a high graduation rate. A school’s graduation rate gives a good indication of whether students who attend that institution are likely to end up with a certificate or degree. For schools like community colleges, you may also want to look at the transfer rate if you’re planning on transferring to a four-year school after attending a two-year school. Retention rate is the percentage of a school’s first-time, first-year undergraduate students who continue at that school the next year. For example, a student who studies full-time in the fall semester and keeps on studying in the program in the next fall semester is counted in this rate. 2
College Scorecard shows you each school’s graduation and retention rate:
• 7 •
STUDENTS PAYING DOWN THEIR DEBT In addition to costs, you may consider if students are able to repay their loans after attending a specific college or career school. College Scorecard can help you find out: • the proportion of students who borrow, • the amount of debt that borrowers typically take on at a college or career school, and • the percentage of borrowers who are able to repay that debt upon leaving. This is one of the most important factors to consider, as you may not want to attend a college or career school where you’re expected to get lots of loans and have little chance of repaying them in the future. 3
• 8 •
POST-ENROLLMENT EARNINGS With the cost of higher education continuing to increase, salary has become a critical factor students and families take into account. Knowing how much students typically earn after attending a specific college or career school will help you find out if those students were able to land good paying jobs, pay off their student loans, and become financially secure. Luckily, College Scorecard contains comprehensive and reliable data on post-enrollment earnings for students who attended all types of colleges and career schools. College Scorecard includes: • The proportion of former students earning over $31,000, which is the average earnings of high school graduates. • The median earnings of students 10 years after they enroll in a particular school.
• 9 •
Here’s an example of what College Scorecard will show you:
Selecting a college or career school is one of the most important decisions you will ever make. Are you ready to begin your search? If so, visit College Scorecard today!
• 10 •
BALANCING HOPES, DREAMS AND A LOW-PAYING COLLEGE MAJOR By Anna Helhoski Humanities majors are more than a punchline. Not everyone can or wants to be a STEM major, and the world would be a poorer place if they were. To have great things to read, music that inspires, perspectives that challenge us – to have a sense of reward and meaning in life – we must have students who pursue college degrees that don’t lead directly to a big paycheck. That turns the pursuit of intellectual curiosity and artistic appreciation into a balancing act: the likelihood you’ll make a good living versus the debt you incur along the way. “I encourage students to find this balance between what they like and what pays,” says Nicole Smith, research professor and chief economist at the Georgetown University Center for Education and the Workforce. “I’m not discounting how beneficial these positions are to our society as a whole, but if you can’t pay back your student loan, you’ll be in a serious state,” Smith says.
Liberal arts grads face longer odds compared with science, technology, engineering and mathematics degrees, but a well-chosen humanities major doesn’t have to be a vow of poverty.
How long does it take to recoup what you paid? To assess the value of earning a specific degree at a specific institution, consider the concept of price-to-earnings premium, spearheaded by Michael Itzkowitz, senior fellow of higher education at Third Way, a center-left think tank. It measures what you pay out of pocket, including loans, against the amount you’ll earn each year above the earnings of a typical high school graduate. The results show how quickly you can get a return on investment in your college major. The majority of liberal arts degrees lead to a “pretty good ROI,” says Itzkowitz, but the specific program you graduate with and the type of degree you earn will affect individual outcomes.
• 11 •
The bachelor’s degree programs that allow graduates to recoup their costs within five years or less include what you’d expect: Registered nursing, electrical engineering and dental assistants all make the list.
Among the programs with no economic ROI at all: drama, fine arts and anthropology.
Itzkowitz says the majority of college programs enable students to recoup costs within 10 years or less. “College is still worth it the vast majority of the time,” he says. Unfortunately, his research also found nearly one-quarter of all college programs of study show graduates failing to recoup their costs in the 20 years after graduation.
There are several tools that can help you compare data on costs, earnings and debt:
• The College Scorecard, a data tool from the U.S. Department of Education. • An interactive map of price-to-earnings premiums from Third Way.
• The Buyer Beware tool from the Georgetown Center for Education and the Workforce. Of course, education and major aren’t the only predictors of income. Your wages will also be affected by where you live, your gender and race, whether you work in the public or private sector, and your experience level. Should you get a graduate degree? Your humanities degree could go much further if you get an advanced degree – generally, the more education you have, the greater your earnings, according to Bureau of Labor Statistics data. But you should continue to weigh cost versus benefit since it’s also easier to rack up debt. A graduate degree may increase your earning potential, or it may just increase your debt. For example, if you majored in liberal arts for your bachelor’s degree you can expect a median annual wage of $50,000, according to the Bureau of Labor Statistics. But if you get a graduate degree in law, taking on more debt, you could earn a median of $126,930. A master’s of fine arts, on the other hand, is unlikely to yield higher earnings: The annual median wage is $42,000. Your other options could include a minor in a field with higher earnings, an internship to get on-the-job experience or finding less-expensive graduate programs if your intended field requires it.
• 12 •
If you’re taking on additional student debt, remember that the federal government offers payment plans that tie the size of your payment to your income. Most private loans don’t.
What are your options if your earnings are low? If you’re already working in a low-paying field and you have student loan debt, look at how you can lower payments or discharge your debt. If you’re having trouble making payments, consider enrolling in an income-driven repayment plan, which ties payments to your monthly income. Your payment amounts will increase as your earnings do, too. Those working in public sector fields should learn the ins and outs of public service loan forgiveness, a red-tape-laden process of getting your loans discharged after 10 years of payments on a qualifying payment plan while working full time in a qualifying field.
Anna Helhoski is a senior writer at NerdWallet.
The article Balancing Hopes, Dreams and a Low-Paying College Major appeared on NerdWallet and was originally published by The Associated Press.
• 13 •
PAY FOR YOUR KID’S COLLEGE? 3 TIMES TO THINK TWICE By Cecilia Clark
The debate over student loan debt often neglects a significant group: parents.
About 1 in every 3 dollars the federal government lent for undergraduate education last year were in a parent’s name. In total, federal parent loan debt is over $103 billion across more than 3.6 million borrowers, according to the office of Federal Student Aid. But parents who want to help their children pay for college often fail to do the math. The Department of Education suggests 9% of parent PLUS loan borrowers default within two years of their child leaving school. “They don’t think about the cost and what the return on investment is and whether they’ll be able to manage the cost after the fact,” says Jan Miller, president of Miller Student Loan Consulting. “You have to make the tough decisions now so that you don’t get yourself in a position later that is unrecoverable.”
Here’s when you might balk at paying your child’s college, and why that’s OK.
Payments will be too high If you borrow $17,500 – about the average amount disbursed to each parent borrower last year – at the current 6.28% interest rate, expect monthly payments of about $197 and a total repayment amount of $23,611 over 10 years. If you borrow that amount yearly for four years of college, payments become about $788 with over $94,000 total repayment, assuming the interest rate stays the same and you make payments on time. Kristen Holt, CEO of Greenpath Financial Wellness, a nonprofit financial firm offering free student loan counseling, says some people have to borrow just to make payments.
• 14 •
“Look at the budget and what you can afford,” she says. “If you don’t, you are going to be in this perfect storm where you have to make [debt] payments on debt,” she says. If you’re feeling guilty, consider Holt’s philosophy: Parents can’t help their children understand options without first knowing their own limitations. College tuition wasn’t in your retirement plan Those over 60 with student loans struggle to cover basic living expenses and are more likely to have Social Security garnished for unpaid debt, according to a 2017 Consumer Financial Protection Bureau report. In addition, a 2021 NerdWallet survey conducted online by The Harris Poll found that 26% of parent PLUS borrowers say they’ll be unable to retire as expected because of their loan debt. Calvin Williams, CEO and founder of Freeman Capital, says he understands wanting to give your child the best. “But if you don’t plan and take care of your retirement, then you could be asking your child to take care of you in your later years. So in many ways, paying for your own retirement is putting your child first,” he says. Consider this: Paying that $788 a month toward college for 10 years instead of investing for retirement could leave you $128,000 poorer, considering a 6% return. You haven’t set boundaries Miller says many of his clients expected their child to help with payments – but it didn’t happen. The NerdWallet survey found that 22% of Americans with parent PLUS loan debt thought their child would take over the payments, but they haven’t yet. “It’s important that parents and students discuss how the cost of college is getting split in a way that’s realistic and comfortable for all involved,” Manny Chagas, vice president of Discover Student Loans, said in a press release. He suggested using free online budgeting calculators to start the conversation. Families should discuss what is important and be open about money, says Elizabeth Sterbenz, a licensed marriage and family therapist specializing in financial therapy. “You want to give your child the moon, but being really realistic about what’s going on really gives a lot of clarity,” she says. “We are all doing the best we can with what we’ve got.”
• 15 •
Considering parent loans? Before committing, ask yourself:
• Are you risking retirement? While your child can borrow for school, you can’t borrow for retirement. • Are you struggling with other debt? Carrying a credit card balance or holding other high-interest debt is a red flag. • Can you afford payments? Do the math. Budget tuition loan payments to make sure they fit. • Do you have an emergency fund? Don’t force yourself to choose between a medical emergency and a student loan payment. Already taken the plunge? If your income is lower, explore income-contingent repayment, which caps monthly bills at 20% of your discretionary income and stretches out the repayment term to 25 years. If your child is financially stable, consider refinancing in their name. They will likely need a credit score in the high 600s and a stable income to qualify. You can refinance in your own name, too. If a disability precludes you from work, ask about disability discharge. This is available for federal loans and some private loans.
Cecilia Clark is a lead writer at NerdWallet.
The article Pay for Your Kid’s College? 3 Times to Think Twice was written by NerdWallet and was originally published by The Associated Press.
• 16 •
COMPLETING THE FAFSA (OR HOW TO GET MONEY FOR COLLEGE!)
DON’T DELAY SUBMITTING THE FAFSA, YOUR TICKET TO HELP PAY FOR COLLEGE By Colin Beresford October marks the open date for the Free Application for Federal Student Aid or FAFSA – and college-bound students should submit the application as soon as possible. Completing the FAFSA allows you to be considered for federal, state and school-based aid. In addition, submitting it soon after the Oct. 1 open date will increase your chances of receiving scholarships and grants that schools include in aid packages. For the 2020-21 academic year, 56% of families used scholarships to help pay for college, according to Sallie Mae’s 2021 How America Pays for College study. Even if you’re unsure you’d qualify for aid, it’s still important to fill out the FAFSA. Most people are eligible for federal student loans. However, what varies is need-based aid, which is calculated based on your family’s finances. Since this aid comes from limited funds, applying early matters.
Here’s what you need to know about applying for aid sooner rather than later.
Get started on the FAFSA now Submitting the FAFSA, particularly if you’re the first in your family to do so, can be complicated. It helps to have all of the necessary information to complete the FAFSA before you start filling it out. And if you need additional assistance, there are online and in-person resources to help you complete the FAFSA. “Some colleges and universities do select students for scholarships and grants based on a priority basis, and when your FAFSA was received could make a difference,” said Joe Cooper of Michigan Technological University in Houghton, Michigan, in an email. Cooper, the executive director of Student Financial Services, added, “If you are able to, completing your FAFSA within the first couple months it’s available is usually a best practice.”
• 18 •
You need to submit the FAFSA every year that you want to be eligible for federal aid. The FAFSA for this upcoming award year, or 2023-24, will remain open until June 30, 2024. If you haven’t yet submitted the FAFSA for the 2022-23 award year, it remains open until June 30, 2023. But deadlines can differ for individual institutions and states, so check which deadlines apply to you. Give yourself more time to make a college decision By submitting the FAFSA early, you also give yourself more time to consider your college choices. If you haven’t enrolled in college yet, you can submit the FAFSA to the schools you’re considering and compare your award letters before you choose one. The aid you’re offered, including federal and school-based, can differ among colleges. Completing the FAFSA early can also give you more time to appeal your financial aid award by submitting a financial aid appeal letter or requesting a professional judgment, regardless of whether you’re submitting it for the first time or not. During the 2020-21 academic year, 29% of families who received a financial aid offer appealed for more aid, according to Sallie Mae’s 2021 study. You can submit an appeal letter if you’re unhappy with the amount of aid you received or if your economic circumstances have changed since you submitted the FAFSA. Nevertheless, submitting the FAFSA early will ensure financial aid is still available when your letter is processed. Regardless, completing the FAFSA in the first place makes you eligible for the more than $120 billion in federal aid the Department of Education distributes each year. And getting it done early “maximizes your potential to be considered for all available financial aid,” Cooper said.
Colin Beresford is a former NerdWallet writer.
The article Don’t Delay Submitting the FAFSA, Your Ticket to Help Pay for College originally appeared on NerdWallet.
• 19 •
YOUR FAFSA QUESTIONS ANSWERED By Anna Helhoski
Filling out and submitting the Free Application for Federal Student Aid, or FAFSA, is the key to getting financial aid to help pay for college if you or your family can’t foot the entire bill. The Education Department provides over $125 billion in aid to students each year. While the supply of cash isn’t infinite, all eligible financial aid applicants can expect to get a piece of the pie. The process – and the application itself – can be confusing, so here is a FAFSA faq that provides answers to questions you may have. BEFORE YOU START IS THE FAFSA REALLY FREE? Yes. The FAFSA is free to fill out and submit. Be wary of companies that charge you to fill out the form. 1 WHAT IS THE FAFSA AND WHY IS IT IMPORTANT? Submitting the FAFSA is the only way to get federal financial aid, including Pell grants, work-study programs and federal student loans. 2
You also often need to file the FAFSA to qualify for state and institutional aid, such as scholarships.
WHAT IF I DON’T QUALIFY FOR NEED-BASED AID? SHOULD I STILL FILE THE FAFSA? All students should file the FAFSA, even if they think their parents make too much money to qualify. That’s because not all financial aid is based on need. For example, you could qualify for a merit scholarship that requires the FAFSA to be on file. If you don’t qualify for need-based aid programs, you typically can still borrow unsubsidized federal student loans. HOW LONG WILL IT TAKE TO FILL OUT THE FAFSA? The Education Department estimates it takes applicants less than an hour to fill out and submit the FAFSA. But it will take you longer if you’re not prepared for the process with all required documentation and tax information. 4
• 20 •
WHEN SHOULD I FILL OUT THE FAFSA? Complete the FAFSA as close to the October 1 start date as possible every year to ensure you receive the maximum amount of aid. In some states, financial aid is disbursed on a rolling basis. That means it’s first come, first served, so find out your state’s FAFSA deadline. HOW DO I FILL OUT THE FAFSA? To submit the FAFSA electronically, use the form on the Federal Student Aid website. Before you can submit, you’ll need an FSA ID. It’s a username and password used to sign in to federal student aid websites. You’ll also need the FSA ID to electronically sign the FAFSA and promissory notes. 6 Alternatively, you can submit the FAFSA by mail. Download and fill out a PDF copy or request a paper copy by calling 1-800-433-3243. WHAT DOCUMENTS DO I NEED TO FILE THE FAFSA? Before you fill out the FAFSA, get all documents together to make the process easier. U.S. citizens typically will need their Social Security number, driver’s license number and tax and income records. Use this FAFSA checklist to determine exactly what you’ll need. Families should use their “prior-prior year” tax information to complete the FAFSA instead of the prior year’s tax information. In other words, use 2021 tax information to complete the 2023-24 form. This allows you to file the FAFSA before filing your previous year’s taxes. IN THE PROCESS AM I AN INDEPENDENT OR DEPENDENT STUDENT? You’re considered an independent student if you answer “yes” to any of the dependency status questions on the student aid website. On the 2023-24 form, for example, if you were born before January 1, 2000, you are considered an independent student. You’re also considered independent if you are married, a veteran, homeless, enrolled in a graduate program, or you provide a certain amount of support to dependents or children. 7 8
Take care to choose the correct dependency status because it can impact how much aid you receive.
• 21 •
MY PARENTS ARE SEPARATED OR DIVORCED. WHICH PARENT IS RESPONSIBLE FOR FILLING OUT THE FAFSA?
The parent you’ve lived with more over the past 12 months is responsible for filling out your FAFSA form, says Shawna Wells-Booth, the director of financial aid at Beacon College in Leesburg, Florida. “If you did not live with one parent more than the other, give answers about the parent who provided more financial support during the past 12 months or during the most recent year that you actually received support from a parent,” Wells-Booth says. “If this parent is remarried as of today, answer the questions about that parent and your stepparent.” You need to include information from both of your parents on the FAFSA if they are divorced or separated but still live together. I CAN’T GET MY PARENT’S FINANCIAL INFORMATION. CAN I STILL APPLY FOR AID? If you’re considered a dependent, you’ll need your parents’ financial information to access most financial aid. If your parents decline to help, you can still file the FAFSA and could get unsubsidized student loans. On the FAFSA, answer “no” when you’re asked if you can provide information about your parents. You also should answer “no” when asked about special circumstances if you don’t meet those standards. Special circumstances include if your parents are in prison or if you don’t know where your parents are. Then you can submit the FAFSA without their information. It will be up to your college to determine if you can get an unsubsidized student loan. You’ll need to contact the school’s financial aid office as soon as possible to discuss getting approved for a loan. IS THERE A WAY TO KNOW HOW MUCH AID I WILL RECEIVE? You can use the Federal Student Aid Estimator tool to estimate the type and amount of aid you may be eligible to receive. Once you submit the FAFSA, you will get your Federal Student Aid report. It contains all the answers you provided on the FAFSA and the amount your family is expected to pay, known as your expected family contribution. If you don’t have an EFC, your FAFSA likely contains an error that you need to correct. Colleges use the information in your report to determine the aid you qualify for. 11 10
I’M ALREADY ATTENDING COLLEGE. DO I NEED TO COMPLETE ANOTHER FAFSA THIS YEAR?
Yes. If you want to keep getting federal loans and grants, you’ll have to apply for financial aid every year. Because it won’t be your first time filling out the FAFSA, you already know what to expect. And if your parents’ income hasn’t changed since last year, you’ll likely receive a comparable amount of student aid.
• 22 •
MY PARENTS HAVEN’T FILED THEIR TAXES. WHAT INFORMATION SHOULD I USE? Don’t wait for them to file taxes before you submit the FAFSA. Filers must report prior-prior-year taxes. For example, on the 2023-24 FAFSA form, you need to report 2021 tax information. You can import tax information into the FAFSA form by using the IRS data retrieval tool. When you sign in to your application, you’ll see a “Link to IRS” button if you’re eligible to use the tool. If you aren’t eligible, you’ll need to have that tax information on hand. 13
I’M NOT SURE WHERE I WANT TO GO TO COLLEGE. WHERE SHOULD I SEND THE FAFSA RESULTS TO?
Uncertainty about where you plan to apply shouldn’t stop you from submitting the FAFSA. If you submit the form online, you can include FAFSA codes for up to 10 schools where you plan to apply. If you file a paper form, you can include up to four schools. If you need to add more schools, you can always update your FAFSA at fafsa.gov. Search for school codes on your online application. Paper filers can look up the codes on the Federal Student Aid website. AFTER SUBMITTING YOUR APPLICATION WHEN WILL I RECEIVE MY FAFSA RESULTS? Your results, known as your Student Aid Report, will arrive by email or mail between three days and three weeks after you submit the form, depending on your application method. The report provides basic information about financial aid eligibility, including your answers to questions on the FAFSA. It also specifies your expected family contribution, which is the amount your family must pay toward your education. Colleges use your EFC to determine your financial aid package. Once you get your Student Aid Report, make sure all the information is accurate. If you find inaccuracies, update your FAFSA. 15
• 23 •
CAN I MAKE CHANGES TO THE FAFSA AFTER I SUBMIT IT? Yes. Sign in to fafsa.ed.gov to update information if you find any errors, if your family’s financial situation changes or if you want to send your Student Aid Report to more schools. On the “My FAFSA” page, click on “Make FAFSA Corrections,” enter your FSA ID, change the information and resubmit your application. Making changes can impact your aid.
You can make changes up until the FAFSA deadline – June 30 after the school year you need aid.
HOW DO I ACCEPT OR DECLINE A FINANCIAL AID OFFER? Once you choose a college to attend and receive an aid offer, you must indicate what aid you want to use for the upcoming school year. Accept aid in this order: grant and scholarship money, work- study, subsidized federal student loans and then unsubsidized federal student loans. If you have payment gaps you can’t fill with savings or income, consider a private student loan. Private loans are not available through the FAFSA process. You’ll need to research the possibility of getting private loans from banks, credit unions or online lenders. Compare interest rates, repayment options and protections, such as forbearance, before choosing a private loan. 17
Anna Helhoski is a senior writer at NerdWallet
The article Your FAFSA Questions Answered originally appeared on NerdWallet.
• 24 •
8 EASY STEPS FOR PARENTS COMPLETING THE FAFSA FORM U.S. Department of Education Resource Article Parents completing the Free Application for Federal Student Aid (FAFSA) form for the first time can follow eight simple steps to help their children obtain federal student aid. These steps include creating your FSA ID (account username and password) ahead of time, filling out the demographics section, and listing financial information correctly. After all, students who are considered dependent must provide parental information on the FAFSA form and have a parent sign the form. While we recommend that the student start his or her own FAFSA form, we know that isn’t how it always happens. Follow these instructions if you are starting the FAFSA form on behalf of your child to avoid running into issues completing the form. CREATE AN ACCOUNT USERNAME AND PASSWORD (FSA ID) An FSA ID is an account username and password you use on StudentAid.gov. If your child is a dependent student, two unique FSA IDs are necessary to complete the FAFSA form online: 1
• Parent’s FSA ID • Student’s FSA ID
We recommend that you and your child register for FSA IDs early so you don’t experience delays later in the process.
IMPORTANT: Your child must create his or her own FSA ID. You cannot create an FSA ID for your child. Also, when you register, you’ll be asked to provide an email address and mobile phone number. This is optional but highly recommended. These two items must be unique to each account. In other words, your email address and mobile phone number cannot be associated with more than one FSA ID.
• 25 •
Create an FSA ID
Your FSA ID serves as your legal electronic signature throughout the federal student aid process. Do not share your FSA ID with anyone even your child. Your child also should not share his or her FSA ID with you. Keep your FSA ID secure. You’ll need it to renew your child’s FAFSA form each year and to access federal student aid information online. • The FAFSA form is the student’s application and not yours. When the FAFSA form says “you” or “your,” it’s referring to the student (unless otherwise noted). START THE FAFSA FORM AT STUDENTAID.GOV • Go to StudentAid.gov. Select “Apply for Aid” and then “Complete the FAFSA Form” along the top of the page. Next, select “Start Here” under “New to the FAFSA Process?” • Once you’re on the log in page, you will see three options. If you are starting the FAFSA form on behalf of your child, choose the middle option, “I am a parent filling out a FAFSA form for a student.” 2
Choose whether you are the student or the parent on the first page of the FAFSA form.
• Enter your child’s name, Social Security number, and date of birth. Then, select “Continue.” • Choose which FAFSA form you’d like to complete. • 2022–23 FAFSA form if your child will be attending college between July 1, 2022, and June 30, 2023. • 2023–24 FAFSA form if your child will be attending college between July 1, 2023, and June 30, 2024.
• 26 •
- Both: If your child will be attending college during both time periods and hasn’t completed the 2022–23 FAFSA form yet. Complete that form first, wait until it processes (one to three days), and then go back in and complete the 2023–24 FAFSA form afterwards. - Were you given the option to submit a FAFSA Renewal? If your child is present, you should choose this option. If you do, a lot of the demographic information required will prepopulate. Your child must be present because he or she will need to enter the student’s FSA ID to continue. If your child is not present, you should select “Start a New FAFSA Form.” • Create a save key. A save key is a temporary password that allows you and your child to “pass” the FAFSA form back and forth. It also allows you to save your child’s FAFSA form and return to it later. Once you create a save key, share it with your child. He or she will need it to complete some steps later. Avoid simultaneous log ins. You and your child should not fill out the FAFSA form online at the same time. Your progress can be lost if your child selects “Save” at a different point in the application. FILL OUT THE “STUDENT DEMOGRAPHICS” SECTION After the introduction page, you will proceed to enter basic demographic information about your child, such as name, date of birth, etc. If you chose the FAFSA renewal option in step two, a lot of his or her personal information will prepopulate to save you time. Make sure you enter your child’s personal information exactly as it appears on his or her Social Security card to avoid errors. (That’s right, no nicknames.) LIST THE SCHOOLS THAT WILL RECEIVE YOUR FAFSA INFORMATION In the “School Selection” section, you’ll add all the schools that you want to receive your child’s FAFSA information. It is important that you add every school your child is considering, even if he or she hasn’t applied or been accepted yet. It doesn’t hurt to add more schools; colleges can’t see the other ones. In fact, you don’t even have to remove schools if your child later decides not to apply 4 or attend. If your child doesn’t end up applying or getting accepted to a school, the school can disregard the FAFSA form. You can remove schools at any time to make room for new ones. You can add up to 10 schools at a time. If your child is applying to more than 10 schools, consider these options. 3
• 27 •
ANSWER THE DEPENDENCY STATUS QUESTIONS In this section, you’ll respond to a series of specific questions to determine whether it’s necessary for your child to provide your (parent) information on the FAFSA form. • The U.S. Congress sets these dependency guidelines. They are different from those used by the IRS. • Even if your child doesn’t live with you, supports himself or herself, and files taxes separately from you, we may still refer to them as a dependent student for federal student aid purposes. • If your child is a dependent student, he or she will need to report information about you. If your child is an independent student, you can skip the questions about providing parent information (unless otherwise noted by the school). FILL OUT THE “PARENT DEMOGRAPHICS” SECTION The “Parent Demographics” section is where you’ll provide your own demographic information. Are you divorced? Remarried? Below is a guide to help determine which parent’s information is necessary to include on your child’s FAFSA form. For specific guidance, review our “Reporting Parent Information” page. 6 5
Determine who the parent is when filling out the FAFSA form with this simple infographic.
• 28 •
PROVIDE YOUR FINANCIAL INFORMATION This step is incredibly simple if you use the IRS Data Retrieval Tool (DRT). The IRS DRT allows you to import your IRS tax information into the FAFSA form within a few clicks. Using this tool may also reduce the amount of paperwork you need to give your child’s school. So, if you’re eligible, use it! To access the tool, indicate that you’ve “already completed” taxes on the parent finances page. If you’re eligible, you’ll see an option to “Link to IRS.” 7
The IRS DRT helps pull in financial data to the FAFSA form automatically.
Next, you’ll likely need to provide your child’s financial information.
• If your child filed taxes, the easiest way to complete this section is to use the IRS DRT. However, it is important that your child is present because he or she needs to provide his or her FSA ID to use this tool. If your child is not present, save and exit the application and instruct your child to log in with his or her FSA ID, retrieve the FAFSA form using the save key, and then, use the IRS DRT to complete the FAFSA form and sign it.
• 29 •
• If your child did not file taxes, you can enter his or her financial information manually (if you have access to the required information). If you don’t have access to the information, save and exit the application, and instruct your child to log in with his or her FSA ID, retrieve the FAFSA form using the save key, complete the FAFSA form, and sign it. If you need to save and exit your child’s FAFSA form so he or she can complete the remaining information, you’ll need to log back in and sign your child’s FAFSA form before your child can submit it. SIGN YOUR CHILD’S FAFSA FORM Both you and your child need to sign the FAFSA form. The quickest and easiest way to sign your child’s FAFSA form is online with your FSA ID. 8
If your child is not present, here’s what you do:
• Sign your child’s FAFSA form with your FSA ID first. • Save and exit the application. • Instruct your child to log in using his or her FSA ID, and sign the FAFSA form.
Sign and Submit Tips:
• If you or your child forgot your FSA ID, you can retrieve it. • Make sure you and your child don’t mix up your FSA IDs. This mistake is one of the most common errors we see, and why it’s extremely important for each person to create his or her own FSA ID and to not share it with anyone. • Make sure the parent who is using his or her FSA ID to sign the FAFSA form chooses the right parent number. If you don’t remember whether you are Parent 1 or Parent 2, you can go back to the parent demographics section to check.
Don’t forget to have each parent sign and submit the FAFSA form.
• 30 •
• If you get an error saying that your FSA ID information doesn’t match the information provided on the FAFSA form, here’s what you should do. Note: This is often the result of mixing up the student and parent FSA ID. • We recommend signing the FAFSA form with an FSA ID because it’s the fastest way to get your child’s FAFSA form processed. However, if you and/or your child are unable to sign the FAFSA form electronically with an FSA ID, you can mail in a signature page. From the sign and submit page, select “Other options to sign and submit” and then choose “Print A Signature Page.” Just keep in mind that your child’s FAFSA form will take longer to process if you go this route. • If you have multiple children who need to complete the FAFSA form, you can use the same FSA ID to sign FAFSA forms for all of your children. You can also transfer your information into your other children’s applications by choosing the option provided on the FAFSA confirmation. However, you can only do this when you are in the parent role.
If you have multiple children in college, you can also transfer your information into your other children’s applications by choosing the option provided on the FAFSA confirmation.
Congrats, you completed the FAFSA form! Your child is one step closer to getting money for college. Now that the hard part is over, learn what your child should do next after submitting the FAFSA form.
• 31 •
AFTER THE FAFSA
• 32 •
5 THINGS TO DO AFTER FILING YOUR FAFSA FORM U.S. Department of Education Resource Article
The financial aid process doesn’t end once you submit your Free Application for Federal Student Aid (FAFSA) form. There are still five things you should do to prepare to pay for school: 1. review your FAFSA confirmation, 2. consider your expected family contribution, 3. apply for scholarships, 4. make sure your schools have everything they need, and 5. correct your FAFSA form if needed. Increase your chances of getting more aid for school by taking a few steps after you file your FAFSA form. REVIEW YOUR FAFSA CONFIRMATION After you complete the FAFSA form online and select “SUBMIT,” you’ll see a confirmation page like the one below. This is not your financial aid offer . You’ll get that separately from the school(s) you apply to and get into. 1
The FAFSA form confirmation page can provide aid estimates and other helpful tips to prepare you to pay for college.
• 33 •
However, the confirmation offers estimates for the federal aid you might obtain from your school based on the information you provided on your FAFSA form. To calculate the actual amount of aid you’re eligible for, each school you apply to will send an offer that takes into account other factors, such as the cost of attendance. The estimates don’t account for private scholarships, or state and institutional financial assistance you may also be eligible for. How school(s) calculate your aid.
You can get an idea of how much aid you might get from a specific school at CollegeScorecard.ed.gov.
Your school determines your aid by using the cost of attendance and your family income.
• 34 •
CONSIDER YOUR EXPECTED FAMILY CONTRIBUTION (EFC) The information you report on your FAFSA form is used to calculate your EFC. It’s very important to note that the EFC is not the amount of money your family will have to pay for college. Instead, the EFC is an index number used by financial aid offices to calculate your financial need. The formula they use is: 2
Cost of attendance – EFC = Your financial “need”
Each school will do its best to meet your financial need. Some schools may meet 100 percent of your financial need, and other schools may only meet 10 percent – it just depends on the school and the financial aid they have available that year. You should complete the FAFSA form annually because there are many factors that can change from year to year.
Do you know what to expect after submitting your FAFSA form? Check this list.
• 35 •
The EFC formula considers income, dependency status, family size, and the number of family members who will attend college.
APPLY FOR AS MANY SCHOLARSHIPS AS POSSIBLE Since many schools won’t be able to meet your full financial need, you’ll need a way to pay the difference between the financial aid your school offers and what the school costs. Scholarships are a great way to fill the gap. Don’t wait until you receive your financial aid offer to start applying for scholarships. There are thousands out there, but many have early deadlines. Set a goal for yourself; maybe you aim to apply to one scholarship per week. Make scholarship applications your focus while you wait for your financial aid offer. The applications may take some time, but the possible payout makes it all worth it. 3
There are several places you can look for school scholarship money.
MAKE SURE YOUR SCHOOLS HAVE EVERYTHING THEY NEED After your FAFSA form has been processed successfully, it’s a good idea to make sure the schools you listed on your FAFSA form have received everything they need. Find out if your school requires additional applications or documentation and submit any required documentation by the appropriate deadlines. 4
• 36 •
The 2023–24 FAFSA form is made available on Oct. 1, 2022. Even if you submit it early, that doesn’t mean you’ll get an aid offer right away. Each school has a different schedule for awarding and paying out financial aid. Contact your school to find out what it is. Remember that your school disburses your aid, not the “FAFSA people” (the U.S. Department of Education’s office of Federal Student Aid). Contact your school’s financial aid office for details about when they send out aid offers. MAKE FAFSA CORRECTIONS IF NEEDED After your FAFSA form has been processed (which takes about three days), you can go back and submit a correction to certain fields. This includes correcting a typo or adding another school to receive your FAFSA information. Log in with your account username and password (FSA ID) at fafsa.gov, and then select “Returning User.” You can add up to 10 schools at a time. If you’re applying to more than 10 schools, follow these steps. If you want to report significant changes in your family or financial situation, contact your school’s financial aid office. 5
Your confirmation will give you next steps after completing the FAFSA form.
NOTE: Parents of dependent students can’t initiate a FAFSA correction. Students have to begin the correction process by logging in with their FSA ID at fafsa.gov , selecting “Returning Use/Log In” and creating a save key they can share with their parent.
• 37 •
13 THINGS TO KNOW WHEN EVALUATING YOUR FINANCIAL AID OFFERS U.S. Department of Education Resource Article You’ve submitted your Free Application for Federal Student Aid (FAFSA) form and applied to schools. How do you know what to look for when they send you financial aid offers? Understanding how to interpret what you’re committing to could save you future surprises, not to mention thousands of dollars in payments. Here’s what you need to know. KEEP TWO KEY QUESTIONS IN MIND AS YOU READ EACH FINANCIAL AID OFFER The purpose of financial aid offers, which are often called “award letters,” is to bridge the gap between your Expected Family Contribution (EFC) and the cost of the school. As you compare your offers, keep these big-picture questions in mind: • What types of aid is the school offering you? • How much of your financial need is met through the aid the school is offering you? MAKE SURE YOU UNDERSTAND HOW LONG EACH KIND OF AID IS OFFERED Federal student aid (such as federal loans) is offered on a yearly basis, so you’ll 2 receive a new aid offer each year. Meanwhile, schools may offer aid (such as scholarships) for one year or for multiple years. As you review your package, make sure you’re clear about which parts can be offered in the years to come and which are available this year only. 1
TAKE NOTES FOR A DISCUSSION WITH THE SCHOOL’S FINANCIAL AID OFFICE, IF YOU NEED IT
Make a list of questions you want to ask each prospective school. Make sure you get them answered by the school’s financial aid office before you decide where you’ll enroll and how you’ll pay for it.
• 38 •
UNDERSTAND THE TOTAL COSTS INVOLVED IN ATTENDING EACH SCHOOL In your award letter, a school will provide a calculation of the total costs for attending during the school year. This calculation is called the cost of attendance (COA). If you’re attending at least half-time, your COA is the estimate of:
• supplies • transportation back and forth to school • loan fees • child-care or dependent care
• other miscellaneous expenses, such as eligible study-abroad programs, disability costs, or a personal computer
• tuition • fees • on-campus room and board (housing and food) or off-campus living expenses • books
Health insurance is commonly included in the COA, but you may be able to waive that cost. You will need to do some research. • Are you already covered by your parents’ insurance, and will the school accept that coverage for you while you’re attending? • Does the school require its school-based insurance?
Expected costs include tuition, school fees, and room and board. Unexpected costs include equipment, books, school supplies, transportation, and other personal expenses.
• 39 •Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52
Powered by FlippingBook