The FAFSA for 2021-2022
The cost of a college education has been growing some 6%-8% per year and with costs expected to continue on their trajectory, completing the FAFSA can be extremely important for many families. FAFSA stands for Free Application for Federal Student Aid and is necessary to complete to receive any federal student loans, grants, work-study programs, or in some cases, merit-based aid.
Important FAFSA Facts
- The application for the 2021-2022 school year opened on October 1
- Some programs distribute financial aid on a first-come first-serve basis, so it’s important to complete the FAFSA application as early as possible
- The FAFSA calculate the expected family contribution (EFC) by looking at family income, assets, and other household information
- It does NOT count any retirement assets, annuities, life insurance cash values, or equity in a primary residence
- The FAFSA will look at the prior-prior year tax return when calculating EFC. For the 2021-2022 school year, this means the 2019 completed tax return.
The FAFSA should be completed by everyone who plan’s on attending college. In a post from Napkin Finance, they write,
“a common misconception that some people falsely believe in is that they’re too rich for the FAFSA. This is not true at all. Even though you may not get a lot of aid, most people get varied amounts of money and government loans without interest. Also, some private colleges use the EFC to give students their university-specific aid amount.”
Items Needed to Get Started
- Social Security Number
- Most recent federal income tax returns, W-2s
- Bank statements and records of investments
- Records of untaxed income
- An FSA ID (One for the student and the parent)
Once all documents are accounted for, you can head to Federal Student Aid website to start the application process.
Completing the FAFSA
- Create and generate and FSA ID (if you don’t have one already)
- KEEP THIS IN A SAFE PLACE. This will be used in future years or to make any updates or changes to the application
- Complete the Student Demographics section
- List the schools where you want your FAFSA information sent
- Confirm dependency status
- Complete the Parent Demographics section
- Provide financial information
- Parent(s) and student e-sign the FAFSA form and submit
For a complete breakdown with more information on how to complete the FAFSA, see the blog post from the U.S. Department of Education.
As the cost of college rises, any financial aid becomes more and more important for families. Whether you’re a client of PDS Planning or simply looking for information on the FAFSA, we are here to help with any questions that come up. Since 1985, PDS Planning has worked with clients to eliminate that stress often associated with planning your financial future. With over 30 years of experience helping clients plan their investments, we’re experts at optimizing an investment plan to each individual’s highly specific needs. We’ll work to understand your vision for the short and long-term. And we will provide objective guidance on the proper path to help reach your goals.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only. Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice. PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice. If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives. All rights reserved.