FAFSA Should be Starting Point for Student Loans, College Finances

Every January for the last four years, John Tufnell and his parents have filled out the Free Application for Federal Student Aid, or FAFSA.

It’s a process that sometimes took days to finish. But it always paid off: Tufnell, 21, of Westland has gotten thousands of dollars in federal assistance to pay for his education at Oakland University.

“The first time it was a little difficult because we didn’t know what we were doing,” Tufnell said. “But once we got the experience, it wasn’t so bad.”

Students need to submit a FAFSA to apply for grants and other types of financial assistance from the U.S. Department of Education, which, through its Federal Student Aid office, is the largest provider of student financial aid in the country. More than $150 billion in aid is doled out annually.

But FAFSA does more than just open the door for federal assistance. Schools across the country use the information on the forms to determine how much aid they will award to students. And some state awards require students to fill out the FAFSA.

That’s why it’s important to apply early, experts say.

“Most schools will have a deadline or provide (institutional awards) on a first-come, first-served basis. And they won’t make any awards after a deadline,” Cindy Hermsen, director of financial aid at Oakland University, said. “Those that are getting in early are getting the best financial aid packages.”

The types of federal aid available include grants, loans and a work-study program that provides part-time jobs for students to help them pay for school. Grants are generally based on need.

Some people are put off by how much private financial information they have to disclose to apply, said Tamara Pruitt, executive director of financial aid for Wayne County Community College District. The 10-page form has questions about taxes, earnings, bank account balances and investments.

“They require a great deal of information to make sure those students are actually eligible to receive those funds,” Pruitt said.

She advises students to move carefully: Errors slow the process, and can add 2 to 3 weeks to the time it takes to process an application.

Hermsen said most people fill out the FAFSA online. Students who apply on paper can authorize the release of their data to up to four schools, but the web application lets students list up to 10 schools.

Another benefit of applying electronically is the IRS Data Retrieval Tool. People who already have filed their tax return are able to click a link so the IRS can transfer their return information directly into the FAFSA.

“The only thing you would (then) need to fill out is if you had some other form of income that you didn’t need to report as income on a tax return, like child support income, for example,” Hermsen said.

People who haven’t done their taxes by the time they fill out the FAFSA can estimate the amounts. However, they’ll eventually need to update the form using accurate information.

After applying online, students can check the status of their FAFSA right away. People who applied on paper can check online after it has been processed, which takes roughly seven to 10 days from the date mailed. After the FAFSA has been processed, students receive a Student Aid Report.

The financial aid staff at a student’s school will explain how much aid a student will receive, and how and when it will be paid out. Students who are unhappy with an aid package can appeal.

Contact Ann Zaniewski: 313-222-6594 or azaniewski@freepress.com. Follow her on Twitter: @AnnZaniewski.

Facts about FAFSA

The Free Application for Federal Student Aid, or FAFSA, is an application students need to fill out to receive federal assistance with college costs. Here’s a look at the basics:

Deadlines

Students can begin applying for aid for the 2015-16 school year on Jan. 1, 2015. Applications must be received by midnight Central Time on June 30, 2016, though corrections or changes can be made into September. The FAFSA application and other information are on fafsa.ed.gov.

Experts advise students to apply early, because some awards are on a first-come, first-served basis.

In Michigan, people who submit FAFSAs by March 1 get priority consideration for state aid. The state administers two programs that require FAFSA as proof of financial need.

The Michigan Competitive Scholarship can be used at 2- and 4-year public and private institutions. Students need to turn in their FAFSAs before March 1, 2015.

The Michigan Tuition Grant is available for use at Michigan independent non-profit colleges. It has a June 30, 2015, FAFSA deadline.

The two programs combined will pay out an estimated $54 million to more than 56,000 students in 2014-15.

What type of federal aid is available?

Grants, which in most cases don’t have to be paid back, are typically awarded based on need. The types of federal student grants include Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG) and Teacher Education Assistance for College and Higher Education (TEACH) Grants.The latter is for those looking to pursue a career in teaching. The grant reverts to a loan if students don’t meet certain service requirements after graduation.

Iraq and Afghanistan Service Grants are available for students whose parents or guardians were members of the military and died as a result of military service in Iraq or Afghanistan after Sept. 11, 2001.

A loan is money that a student borrows to cover college costs. Loans must be repaid, along with interest. The two federal student loan programs are the Federal Perkins Loan Program and the William D. Ford Federal Direct Loan Program. The interest rates vary depending on the type of the loan and the first disbursement date.

The Federal Work-Study Program lets students earn money during the school year while working in what are typically part-time, career-related jobs through a school. In most cases, the government provides schools with up to a maximum of 75% of a person’s wages, while schools pay a minimum 25%. Hours and types of jobs vary.

Apply, even if you think you might not be eligible for federal aid

Students need to fill out the FAFSA to receive federal assistance, but it’s also the gateway to state aid and the institutional awards given out by colleges and universities. So fill out the application even if you don’t think you’ll get federal aid.

People will need some or all of this information when filling out a FAFSA: Social Security number; driver’s license number; Alien Registration Number (for non-U.S. citizens); federal tax information or tax returns, including IRS W-2 information; IRS 1040, 1040A or 1040EZ forms; foreign tax returns; records of untaxed income; bank account balances; records of assets; and records of investments such as stocks and bonds. The parents of dependent students will need to provide their Social Security numbers, as well as tax and income information. A spouse of a married student would need to provide similar information.

The information on a FAFSA is used to calculate a student’s Expected Family Contribution, or EFC. Schools use EFCs to determine how much federal student aid a person is eligible to receive. All sorts of things factor into the EFC, including taxed and untaxed income, assets, whether a student is a dependent or has dependents, family size and whether other people in the same household are also attending college.

Borrow smartly

Cindy Hermsen, director of Financial Aid for Oakland University, says students should only borrow what they absolutely need. “We want them to live like a student when they are a student, so they don’t have to live like a student after they graduate,” she said.

Need help?

Don’t be shy about calling or visiting the financial aid office at a local college if you have questions about the FAFSA.

A national event called College Goal Sunday offers students and parents free, on-site professional help in filling out FAFSAs. In Michigan, College Goal events will be held at nearly 30 locations across the state — and not just on Sundays — from Feb. 7 through Feb. 22, 2015. A full list is available at www.micollegegoal.org.

Source: Cindy Hermsen, director of Financial Aid for Oakland University; State of Michigan Department of Treasury; and Federal Student Aid, the U.S. Department of Education