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Always worth a try to apply for financial aid

Updated: September 24, 2012 6:25AM



Q . My son is headed off to college this fall. I don’t think we’ll qualify for aid, so should we bother filing the FAFSA form?

A.

You’ll never know until you try whether you will qualify for financial aid. Unless you have saved all the money you’ll need, it’s worth a try. Some expensive schools might grant an aid package that makes them more affordable than even a local college or state school.

The FAFSA — the Free Application for Federal Student Aid — is the basis for almost every financial aid decision that is based on need. The information you file on the FAFSA form is used to determine the Expected Family Contribution, no matter which school you attend. Then each school will create an aid package based on the EFC.

Getting started

The process of filling out this form is more intrusive than even the IRS tax return. It asks not only about income of the parent and student, but also about the totality of their financial assets.

You can’t file the FAFSA until you’re ready to file your 2010 tax return, because you’ll need all that information about last year’s family income.

New this year: If you filed your tax return electronically, now you can retrieve your IRS data and have it automatically transferred to the proper lines on the FAFSA form when you fill it out online.

You can learn everything about the application — and actually apply securely online — at

www.FAFSA.ed.gov . They’ve changed their website to make it easier this year.

When you start completing the form online, you’ll get a PIN so you can save the information until the application is completed, and as a basis for applying in future years. Because, yes — you have to file this form every year in which you apply for aid.

Since student financial aid is often given out by schools on a “first come” basis, don’t procrastinate. You will be asked to designate the schools to which you are applying when you file the FAFSA — so the resultant EFC can be sent directly to the school to prepare its aid package.

Rearranging assets

Though it’s too late to do much to adjust assets for preparation of this year’s FAFSA, there are things you can do for next year.

Make sure the student — and any siblings under age 19 — have no assets in their own name. These weigh many times more heavily against the family in computing the EFC.

Similarly, a family might increase contributions to a retirement plan in the year before applying, in order to lower income levels and thus qualify for more aid. Since the assets counted for FAFSA exclude retirement plans and the cash value of life insurance, but do include cash savings and non-retirement stock investments, there are opportunities to adjust your financial picture.

Getting help

You can find similar, legal tips at www.FAFSA.com or www.PayLessForCollege.com . Each is a private, commercial website. They also offer services, much like a tax preparer — making sure you don’t make any mistakes, and getting all the benefits that the law will allow.

At FAFSA.com (not to be confused with the government website, www.FAFSA.ed.gov ), you can pay either $79.99 to have them review your FAFSA application before filing or $99.99 to talk to their experts over the telephone and have them actually file the form for you! They say that avoiding mistakes could more than pay for their fee.

Reecy Aresty of PayLessforCollege.com actually offers advice to families about rearranging assets — and about asking for even more aid after that aid letter arrives. His fee for filing the FAFSA is $195, which includes all updates and annual renewals. You can email him at Reecy@PayLessforCollege.com.

Federal student loans are far less expensive and volatile than private loans, or home equity loans. That’s why it’s so important to get as much federal financial aid as possible by filing the FAFSA form now. And that’s The Savage Truth.

Terry Savage is a registered investment adviser.



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