Don’t Skip the FAFSA if You Have a College Student!

Maura Schauss |

By Ann D. Blakey, CFP®

This is the time of year that most parents and guardians with college-aged students struggle with the infamous FAFSA form (Free Application for Federal Student Aid) and the CSS profile (College Scholarship Service).

Despite efforts to streamline the process - and a big update being promised for 2022 - the forms remain a challenge for many families to complete. Parents and guardians often wonder if it is worth the effort.  

Here are a few Do’s and Don’ts to consider as you approach your college financial aid forms.

DO Complete the FAFSA every year

Whether or not you think your family will qualify for financial aid, complete the FAFSA every year.  You may be pleasantly surprised. Moreover, the FAFSA is your gateway to Federal student loans and can assist your student in qualifying for merit aid.

DO Complete the CSS profile IF your student’s college asks for it

Only a subset of private colleges uses the CSS, but don’t skip if it your student’s college is one of them.

DO Use the IRS tool to link your 2020 taxes to the FAFSA form

Linking your 2020 taxes to the FAFSA form will save you a lot of time rather than entering data manually.

DO Include the value of your 529 plans as Parent Investment asset

Include the value of your 529 plans as a Parent Asset and NOT as a Student Asset. The form does not specifically ask for 529 plan value, but they are required.

DON’T Assume the FAFSA and the CSS will ask for the exact same information

Review what each form requires.  For example, the FAFSA does not include the value of your home, while the CSS does.

DON’T Include Life Insurance or Retirement Plan Accounts

Don’t include the value of any life insurance or retirement plans/accounts you may own on the FAFSA – this includes all 401k accounts, IRAs, pensions, and qualified annuities. 

The FAFSA form does NOT make this clear, and this is very important to get correct so that you do not over-state your assets. 

Again, the CSS profile treats retirement assets differently, so be sure to follow their separate directions.

DON’T Miss Your Deadline! 

While the official Federal FAFSA deadline is June 30, 2022, many states and colleges have earlier deadlines. 

Deadlines for the CSS are even more variable, so be sure to check out each college’s own dates and file well in advance.

We Can Help If You Need An Educational Savings Strategy Review

If you need to review - or develop - an approach to your college savings plan, we are here to help. Call our office today at 703.584.2700, email clientservices@washingtonwealthadv.com or Book Time with us Online.

 

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