Follow the conversation between a Father and Son discussing the 'Free Application for Student Aid' or FAFSA in this episode of the Personal Finance 101 Chats series.
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Buck: Hey Dad, u busy?
Dad: I can chat a few mins. How are you? Congrats on being accepted at Big U!
Buck: Thanks... I guess.
Dad: Don't sound too excited son! jk... What's up?
Buck: Well... I went and got the form from my counselor's office at school.
Dad: What form?
Buck: The one YOU told me to get. What's it called again?
Dad: Oh, the FAFSA... Free Application for Student Aid.
Buck: Yes, that's it... FAFSA.
Dad: Good, what about it?
Buck: IT'S AWFUL!
Dad: What do you mean, AWFUL? Did u get it done?
Buck: DONE?!! Are you kidding?!! Really Dad... it's like... 8 pages!!
Dad: Really, Buck? Relax. I know you don't have to write on EVERY page. Besides, it's worth it because the FAFSA is what the Federal Gov. uses to calculate how much you'll receive in loans or grants. You HAVE to complete it to be eligible for college funding.
Buck: What would I rather have... a loan or a grant...?
Dad: Well, you may need both loans and grants to finish college. You'll have to make payments on loans after you finish school; a grant is money you don't have to pay back.
Buck: Cool! How do I get a grant?
Dad: Start by filling out the FAFSA.
Buck: really? How about just getting a loan, then?
Dad: Sorry, same answer. There are subsidized and unsubsidized loans. The Government needs the FAFSA to determine your eligibility.
Buck: What do subsidized and un-subsidized mean?
Dad: If you qualify, the government will "subsidize" or pay the interest on your loan while you're in school. There are several types of loans available, but you need to get the FAFSA done to see what is available to you.
Buck: I started it, but it's SOOOOO hard.
Dad: No it isn't... what do you need help with?
Buck: Well I filled out the first page, but then it asks "What income tax return did you file in 2010"? I worked at the coffee shop all year and I know mom helped me with taxes...
Dad: OK, look at the top, left-hand corner of your tax return... I'm sure you filed a 1040ez.
Buck: OK, Yup, I did.
Dad: Anything else?
Buck: Ya, in the purplish/bluish part... you know the parent information section?
Buck: Idk what IRA or net worth mean.
Dad: Buck, your mom and I will fill that section out. You noticed it is the PARENT information section.
Buck: Oh yeah, you're right... cool.
Dad: FYI: An IRA is an Individual Retirement Account-- a way to save money for retirement. Net worth is our assets minus our liabilities.
Dad: Assets are items that have value and liabilities are what we owe, or debt.
Buck: You mean like a car?
Dad: Well a car can be both an asset and liability, depending on whether we owe money on the car.
Buck: Oh, ok.
Buck: But why does the government want all these numbers on the FAFSA??
Dad: The information is used to determine our EFC.
Buck: EFC? What is THAT?
Dad: The Estimated Family Contribution... it's how much the government feels our family should pay for your education. Your financial aid, loans or grants will be based on our finances.
Buck: OK, so what about all these other questions.
Dad: ANSWER them!
Buck: Well you don't have to be mad.
Dad: I'm not mad, son... you just need to get this done soon.
Buck: Well I just don't understand them... all these questions about un-taxed income, adjusted gross income and so on. Ugh...
Dad: Buck, slow down. Most of the student section of the FAFSA includes simple, yes or no questions along with some that require specific dollar amounts.
Buck: Can you help me later?
Dad: Yes, I can, but did you look at the "notes" at the front and back of the FAFSA packet?
Dad: There are numbered notes for helping fill out the sections of the FAFSA... they explain what to do.
Buck: OK, I'll read it.
Buck: Dad, one more thing...
Buck: Once I fill it out... and you and mom fill out your part... what do I do?
Dad: We'll turn it in before the deadline.
Dad: Yes, you'll have to turn it in before the deadline and our state may have set a deadline for the application too. You'll have to look at the front of the FAFSA.
Buck: Then HOW do we turn it in?
Dad: There are two ways to do it: you can mail it or apply online.
Buck: Which way do you recommend?
Buck: Do you know how to do it?
Dad: Yes. You have to set up a Personal Identification Number, but the website is www.fafsa.gov and directions are on the front of the FAFSA form.
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