What is FAFSA

There are many many facets to financial aid for college. In fact financial aid is so complex that a multitude of books exist on the subject, so obviously my own brief writings here can only get so far. I will try however, and I'll start with what's really at the root of financial aid and that is FAFSA.

FAFSA is a funny word you'll hear counselors and college advisors throw around. It is an acronym for Free Application for Federal Student Aid. This is essentially the national clearinghouse for student aid. Whether or not you think you'll qualify for aid, nearly every single college in the land would like for you to file the FAFSA as well as an increasing number of scholarship administrators.

You'll file for the first time in the spring of your child's senior year. The information on the FAFSA is primarily derived from your tax return for the previous year. So if your child will be a 2013 high school graduate, your tax return for the year 2012 is what your family's aid decisions will be based on. As a result, I always tell families with whom I work that if ever there was a year to file your taxes early, it's their child's senior year. That's because priority deadlines for financial aid at most schools is well ahead of April 15th. In addition to your previous year's taxes, the FAFSA will take in to account some, but not all, of your assets as well as some your child's assets and income, if they have any.

Once you file the FAFSA, you'll get back a Student Aid Report (SAR). This is basically a summary of what you filed. You'll also get an Expected Family Contribution or EFC. The EFC is arguably the single most important part of the whole FAFSA process because that is the number you are expected to pay out of pocket for your child's education. The closer your EFC is to zero, the better.

After you get your SAR and EFC, your information is forwarded to the colleges you applied to. The colleges that accepted you will then compile a financial aid package. This includes any loans, grants, scholarships, college savings, and EFC. The sum of all those as packaged and offered by the school should equal the annual cost to attend there.

You may compare packages from different schools and use that as a part of the decision making process for which school to attend. There are many tips and tricks you can use to lower your EFC and increase the number and amount of scholarships and grants you can receive but those are too many and complex to discuss here. I hope to do so in the future though. This is just a brief overview of the FAFSA process. More information and the actual application are available at fafsa.ed.gov.