Basics of the FAFSA

The free application for federal student aid, or FAFSA, is the first step towards finding financial aid. For those of you who want financial aid, you must complete this form prior to each year of college. You can find a paper copy at any local library, high school, local college or university, or online. If you would like to fill out the form online, you can visit the FAFSA website for information on how to do so. At first glance, the application may seem complex, but it really is not. If you have all the necessary information, completion is easy.

Believe it or not, the best time to be thinking about applying for financial aid is during your junior year in high school. The reason for this is that the FAFSA is going to ask about how much money you have, or have made, in the year prior to attending college. So, what does this mean? Well, you can ask yourself some questions. Is it essential that I work my senior year of high school? If either of my parents are self-employed, can he, or she, wait an extra year before giving him, or herself, a raise? Do my parents need to buy a new house or cash out any stocks or bonds right now, or can it wait? Of course, this means you will need to talk to your parents. But, if the result is that you'll be able to attend the school of your choice, its worth it!

One note with this, if you do absolutely need to work the year preceding college, try to keep your income below $2,500. Making more than that can seriously affect the amount of financial aid you'll receive. In fact, when calculating a students' financial need for financial aid, any income earned by the student over the amount of $2,500 is assessed at 50% when calculating a students need for financial aid.

How does this work? Well, let's look at a very basic outline of how financial need is calculated. Financial need equals the parents' contribution, plus the student's contribution. The parents' contribution equals the adjusted gross income, plus any untaxed income, plus any assets, minus federal and state taxes, minus an income protection allowance, minus the asset allowance. The student's contribution equals the adjusted gross income, plus any untaxed income, plus any assets, minus federal and state taxes, minus an income protection allowance, minus the asset allowance.

So, when you think of the word, assessed, think of the income protection allowance. For a parent, 65% of their income is considered a protected allowance, and only 35% of that parents income will be considered when determining a student's financial need. However, for the student, were looking at 50%. Keep in mind, this is a very basic calculation. There are other factors that are considered, such as the number of supported dependents, and the number of children in college.

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