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Take the first step to win the financial aid game

Oct 02, 2019

That sounds odd, doesn’t it, “to win the financial aid game.”  You don’t have to stretch very far to see that the financial aid process has characteristics of a game: there is a rulebook, a referee (the U.S. Department of Education), a defined time period and rewards at the end for the winners.  Unfortunately, as we’ve recently learned, there are cheaters too.

In order to win the financial aid game, families need to understand the terminology and rules, so they can play out the process correctly in order to be eligible for federal, and most state-based, college aid including grants, college work-study and federal student loans,

We’re talking about more than $150 billion of federal aid distributed to more than 13 million students. With roughly 85% of all students getting some college financial aid, there are plenty of winners, but it pays to know the rules in advance to play the financial aid game.

Who should play?

Everyone.  Although high-income families are unlikely to qualify for subsidized student loans or Pell and other need-based grants, ALL students, without regard to income or assets, are eligible other federal programs including some of the student loan options that work for students of all income levels.

Let’s start with the basics.

What is FSA?

FSA is Federal Student Aid, an office of the U.S. Department of Education. The federal financial aid process starts when a student (not the parent) gets an FSA ID, which can be obtained here.

What is FAFSA®?

FAFSA® is the Free Application for Federal Student Aid —  the form that the government requires the student to fill out in advance of each year the student needs financial aid.  High school seniors need to fill it out as part of the college application process or they cannot be considered for any federal (and lots of state) grants or federal student loans.   Students can get the FAFSA® form here.

Parents are involved in the FAFSA® filing process for dependent students because income (not assets) is a primary determinant of eligibility for a large chunk of financial aid that is awarded each year, so called need-based financial aid.  Income reported on the parent’s tax return, for dependent students, is a key variable in the formula.  To be considered for financial aid for academic year 2020-21, students will need to know income as reported on the parents’ tax return from 2018.   This is known as “prior-prior year” tax return in the arcane language of the financial aid world.  For Academic Year 2021-22, the 2019 tax return information will be required.

Two important facts:

  1. There is no charge to file the FAFSA®.
  2. Students must file a FAFSA® before the submission deadline if they want financial aid for the next academic year.  Right now, high school seniors and college freshmen, sophomores and juniors are collecting information to be eligible for financial aid in Academic Year 2020-21.

What is the CSS PROFILE™?

The College Scholarship Service PROFILE or CSS PROFILE™ is an application for non-federal financial aid.   The College Board administers this process on behalf of the colleges and universities who require that form to distribute their institutional financial aid, using a formula that generally asks for more information about your family’s financial status than FAFSA®. It is required by about 300  colleges, universities, professional schools, and scholarship programs.

The College Board charges a fee to file the Profile, which can be found here.

Why is this important?

If students do not file a FAFSA® for any upcoming academic year, they are shut out of the financial aid process for that next academic year.  Students are still in the running for local scholarships, aid from employers and other non-federal aid, but they are not eligible for federal grants, loans or work-study.