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Financial Aid Process

Paying for higher education is definitely not a living on Easy Street. Therefore, you have numerous options to consider: grants, work study, loans, and scholarships. Grants and scholarships are commonly considered “free money” options because they do not require repayment. Work study programs allow you to work for the funds you need for school. Most schools have a financial aid department that will walk you through the various applications and options available to you.

To qualify for grants, work study, and loans, you must first fill out a FAFSA (free application for federal student aid).

Filling out the FAFSA

The FAFSA’s basic function is to figure out your “Expected Family Contribution,” or EFC, which is calculated using information that you provide on the form about your income and assets.

A simplified explanation of how your aid is calculated might look like this:

  • Cost of Attendance
  • Expected Family Contribution
  • Amount of Aid Given

To get a FAFSA you can fill out the form completely online at http://www.fafsa.ed.gov/ , download a pdf version of the form at www.FederalStudentAid.ed.gov/ or call 1-800-4-FED-AID to request a paper form.

Completing the form and submitting it online is the fastest way to get it processed, plus you can sign in and get updates on the financial aid process. Otherwise, you can mail in the form.

It is a good idea to get everything you need to fill out the FAFSA first. Here is a list to get you started:

  • Social security card
  • Driver’s license (if you have one)
  • Permanent Resident Receipt Card (if you are not a U.S. citizen)
  • Records of money earned in the previous year including W2s and 1099s. for example, if you are applying for aid in 2009, you will need your 2008 records
  • Previous yea’s tax return. If you have not done your taxes, you still must calculate your adjusted gross income and taxes by following the IRS instructions
  • Records of any non-taxable income, such as social security benefits, temporary assistance for needy families, and veteran’s benefits
  • Records of any child support that you must pay
  • Records of any Federal Work-Study earnings
  • Records of grants, scholarships and fellowship aid
  • Stock, bond, and other investment records
  • Business records
  • Current statements from your bank
  • Any documentation of unusual financial circumstances, such as job loss, high medical bills, death or divorce

When you are filling out your FAFSA, there are some important things that you should remember to make
sure that you receive all the aid that you are eligible for, these are:

  • For money questions, if you have nothing to report do not leave the answer blank, use a zero.
  • The Earned Income Credit is considered “untaxed income”. Retirement plan contributions and military food and housing allowances are other types of untaxed income.
  • Answer yes to all types of aid; this does not obligate you to anything and answering no does not qualify you for more of another type of aid.
DISCLAIMER: Please note that the information provided herein is intended as a general summary of education-related tax benefits and financial aid only. To determine your eligibility for any of these benefits or programs, please consult with a tax advisor, the IRS, the HR department of your company, or your state higher education agency.