Are You Asking These FAFSA Questions?
Since the Free Application for Federal Student Aid (FAFSA) became available on October 1st, we've fielded several questions from families about different components of the application. The most popular questions are listed below, with answers. If you're in need of a full FAFSA overview, you can watch our Understanding the FAFSA webinar anytime. It reviews each page of the application, and provides helpful tips on answering each question.
How do separated and divorced families complete the FAFSA?
Any student with divorced or separated parents will need to determine his or her custodial parent, defined as the parent with whom the student has lived the most over the previous 12 months. If the student has lived with both parents equally, the student should select the parent who has provided the most financial support. If that support comes out even, the student should simply select one parent as the custodial parent. Only the custodial parent (and the custodial parent's current spouse, if there is one) will complete the FAFSA. The other parent, defined as the noncustodial parent, will not be included on the FAFSA at all. Keep in mind that the CSS ProfileTM, another application in the financial aid process, often does require information from the noncustodial parent.
What's an asset?
You've probably heard that you'll need to report your assets on the FAFSA. Assets include the value of any cash, savings or checking accounts, and any investments, such as real estate besides the primary home, trust funds, UGMA & UTMA accounts, college savings accounts, money market and mutual funds, CDs, stocks and stock options, and bonds. You should not report on the FAFSA your primary home, the value of your retirement accounts, or life insurance.
Is unemployment reported on the FAFSA? And can I receive both unemployment and financial aid?
Normally, your unemployment compensation will be included in your Adjusted Gross Income on your federal income tax return, so you'll end up reporting it just as you would report your salary on the FAFSA in the taxable income section. However, anyone earning less than $150,000 was permitted to exclude unemployment benefits of up to $10,200 from their 2020 taxable income. This decision was made by the federal government on March 11, 2021, so if you received unemployment income in 2020 and filed your taxes before March 11th last year, your taxable income will be higher than it should be. The IRS will make the correction for you on your taxes, but you should contact your college financial aid office to correct your FAFSA data to exclude those unemployment benefits from your taxable income.
More generally, individuals with unemployment compensation often have differing levels of income from year to year, due to working one year and not working the next. It's advisable to contact the financial aid office at each college if your income level changes significantly, as it may affect your eligibility for financial aid. But you can certainly receive financial aid if you also received unemployment.
Do I need to report my business on the FAFSA?
You will be asked to report on the FAFSA the income earned by your business in the tax year 2015. You will also need to report your business's current value unless your business classifies as a family business. A family business must be owned more than 50% by members of your family and have less than 100 employees. Keep in mind that the CSS Profile requires you to report business value for all businesses, family or otherwise.
Will filling out the FAFSA gives us loans?
By completing the FAFSA, a student is applying for all federal and state financial aid. Every student eligible for federal and state financial aid will receive a Federal Direct Student Loan, a loan provided by the federal government that doesn't need to be repaid until after the student leaves school. The loan has an annual limit, which is $5,500 for entering freshmen. Students and parents interested in additional loans will have to apply through a private loan lender.
Should I still complete the FASFA even if I don't think we will receive financial aid?
If you need assistance financing college, then you should apply for financial aid. There are many considerations that go into financial aid offerings, and factors such as the specific colleges where the student has been accepted and the student's academic credentials may come into play in the financial aid process. As well, in order to be eligible for a Federal Direct Student Loan, a student must file the FAFSA. All students who file the FAFSA, regardless of financial status, can borrow a Federal Direct Student Loan. And some state merit-based programs (such as the John and Abigail Adams Scholarship) and college scholarships require that students file a FAFSA.
When is the FAFSA due?
There is not one universal due date for the FASFA. The FAFSA due date varies at each college. Students should check the financial aid deadline for each college and submit all required applications before the deadline in order to maximize their financial aid. Students can visit each school's website to find out the financial aid requirements and deadlines. Information should be posted on the admissions or financial aid page.
Do you have additional questions about the FAFSA? We have college planning experts ready to provide you answers and guidance as you complete this very important application. Call us at (800) 449-MEFA (6332) or email us at firstname.lastname@example.org. We also post FAFSA tips on social media, so like us and follow us on Facebook, Twitter, and LinkedIn to stay informed.