By Nancy Farmer, President, Private College 529 Plan
August 2, 2016
If you have a child about to start senior year in high school, you are probably thinking, “They grow up so fast.”
Here’s another indication of life on fast-forward: It’s time to take concrete steps to get financial aid for college. That will help close any gap between what you’ve saved and the cost to attend college. Beginning October 1, families can file the Free Application for Federal Student Aid, known as FAFSA. It is the gateway to getting federal financial aid, and many colleges and universities use FAFSA data for developing their own financial aid packages.
The October 1 start date is new for 2016. Previously families could submit the FAFSA no earlier than January 1 for the following fall term. The Obama Administration opened the window earlier to give families more time to apply and colleges more time to consider aid.
The headline change in the process is that parents will be able to use data from their most recent federal tax return to complete the FAFSA, rather than estimate figures from the return they have not yet filed. Many parents waited until they filed their tax return in the spring before completing the FAFSA, thus delaying financial aid considerations.
Here are some points to keep in mind over the next two months as you prepare to file:
Don’t avoid it. Far too many families fail to file the FAFSA because they assume their incomes are too high to qualify for any need-based aid. But by not filing, they may not be considered for merit aid awarded by their school.
File early. Many schools make financial awards on a first-come basis, so don’t lose out because you waited too long. The earlier filing period should help with the crunch.
Move children’s assets to parents. Funds in the name of the student are weighted much heavier when determining the Expected Family Contribution (EFC). Parental assets are weighed at no more than 5.64 percent in the formula, while student assets count for 20 percent. Moving funds from children’s savings accounts to a 529 plan in a parent’s name will pay off.
Since most families request some form of financial aid to pay for college, it’s crucial not to miss this new opportunity.
About the author: Nancy Farmer is president of Private College 529 Plan, the only college savings plan sponsored by 284 private colleges and universities across the country. It was created by authorization of the U.S. Congress for colleges and their consortia to help families save for college and increase the affordability and accessibility of higher education. She also is a former state treasurer of Missouri, where she directed its college savings plan.