As a Certified Financial Planner™ practitioner for the past 19 years, I have helped many clients send a multitude of young men and women off to college, but now I find myself in the surreal situation of getting ready to send my first child off to college. It feels strange, like I have entered the Twilight Zone.
It’s now mid-October and the high school guidance counselors are in high gear meeting with students and parents alike. Last month, our school’s counselor hosted a meeting to discuss the Free Application for Federal Student Aid (aka – FAFSA), enrollment deadlines for early acceptance vs general enrollment, sharing of ACT results, essay writing, brag sheets, reference letters and much more. My head was spinning thinking of all the things that my son, my wife and I need to accomplish in what seems like a very short amount of time. Going back in time when I applied to The Ohio State University in the mid-80’s, it seemed like all I did was fill out an application, send in a check and I was instantly accepted as an incoming freshman—how times have changed. Well, enough dwelling back upon the good ole days, our family has a big task ahead of us and as my father used to say to me, “Do you know how you eat an elephant? One bite at a time!” My first bite of the elephant was logging into FAFSA. The FAFSA website opened to those very prepared families on October 1st and FAFSA even had a mock-website established in mid-September for those families that just couldn’t wait until October 1st.
You would think that logging into FAFSA would be a rather simple task, but think again. Not only does a parent need login credentials, the student needs their own separate login, too. Legally, your child is required to create their own account, which means you will need to guide them through picking out a username and a strong password, and providing answers to 100 security questions (OK, only four questions but it felt like a lot more). The best piece of advice I received from the guidance counselor was to click the box to “show text” for the answers you are typing to the security questions. Our guidance counselor says she has run into this issue numerous time where the student has thought they typed their answer only to find out they made a typo and hence were locked out of their account. I know it seems obvious, but be sure to save your login credentials. I took a picture of our answers to the security questions and passwords and saved them securely on my cell phone to ensure I always have them handy. So, after you have both successfully obtained your login credentials, you can now begin the process of completing the FAFSA. To begin, be sure you have both parents’ and child’s financial information at hand. This includes prior year tax returns, brokerage statements for mom and dad, custodial account statements for child, and the current balance of any 529 College Savings Plans. FAFSA’s end game is to determine your Expected Family Contribution (EFC), which is a measure of your family’s financial strength, and is calculated according to a formula established by law. Financial aid officers use your EFC, coupled with the costs of attendance (COA), to determine how much aid you/your child qualify for each year. The number will vary from year to year which is why the FASFA needs to be completed each year your child is in college. The FASFA will specifically look at your family’s taxed and untaxed income, assets, and benefits (such as unemployment or Social Security), which are all considered in the EFC formula.
To calculate the EFC, you and your child will need to enter all this personal information into FAFSA, which may be an enlightening experience for your child if you make them privy to the information you are entering about your own finances. The instructions say that it should take one hour to complete the application and it took me 45 minutes. I will say that FAFSA has done a respectable job of linking the application up with the IRS to ease the transmission of tax data between the two entities. For my son, who was employed in 2016, the transmission of his data from the IRS to FAFSA was seamless. Bravo FAFSA! Now for those who don’t file their taxes until October 15th or must file a paper return due to unscrupulous hackers, the process is a little more complicated but not daunting. All you need to do is answer a few questions about your Adjusted Gross Income and you are done. At this point, you and your child are ready to hit the submit button and receive word of your EFC. Drum roll please……my son and I submitted our FAFSA information and 60 seconds later we received an email indicating what our EFC is for the 2018-2019 school year.
The FAFSA process was no walk in the park, but not as bad as I had envisioned. Our next bite of the elephant is the college application process and researching financial aid offers; my wife’s expertise on this part will definitely be needed. Tune in next time to see if I survive the college application/financial aid process. Happy College Hunting!
By John McHugh, CPA, CFP(R), CAP(R)