By Jodi Golden,
Director, CollegeChoice 529 Savings Plans
January 25, 2013
What’s one of the most important steps you can take in preparing for college? Filling out the Free Application for Federal Student Aid (FAFSA). The FAFSA is your first step in applying for over $150 billion in federal financial aid dollars. The FAFSA is an important document that requires personal and financial information. Be prepared to list everything from social security numbers of your students and parents to information on cash, bank accounts or investments the family may hold.
For those families who have thought ahead and been saving in a 529 college savings plan, there’s good news! In determining eligibility for federal financial aid, the value of 529 accounts is reported as a parental asset. The federal financial-aid formula expects parents to contribute no more than 5.6% of that value toward college costs. If the same amount were in a student’s regular savings account, the formula would count 20% of those savings towards the expected family contribution, therefore potentially decreasing your financial aid. And some states won’t look at 529 assets at all when determining state financial aid formulas. Either way, it’s a win-win for the parent and student.
It is not uncommon for there to be numerous questions while filling out the FAFSA. Below are a set of tips and tricks:
* Complete the FAFSA as soon as possible, as some aid is distributed on a first-come first -serve basis.
* Have all of the required personal and financial information gathered before you begin the process.
* Fill out a Practice FAFSA worksheet
* Don’t leave any entry blank.
* Pay your taxes early.
* Correct mistakes.
* Ask for help – visit www.studentaid.gov/fafsa
If you follow these tips and tricks, you will soon find that completing the FAFSA doesn’t have to be a messy business!
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