FAFSA 101

Chances are, you've started thinking about college or technical college--where you're going to attend and how you'll pay for it. You have to decide where you're going, but we can help you figure out how you're going to pay for it. In this episode, we'll give an overview of one of the primary phases of paying for post-secondary education.

To be eligible for any state or federal student loans and grants, or financial aid from the school you're attending you'll have to fill out the FAFSA. FAFSA stands for Free Application for Federal Student Aid. Based on your financial information, this is how the federal government, your state, and your college determine how much money you're eligible for in loans and grants. Loans must be paid back at the end of college, or if you stop attending, while grants don't have to be paid back at all--as long as you meet the eligibility requirements for that grant.

The FAFSA is easy to fill out and doesn't take long; you'll just need a few things before you get started. We'll show you a list in a few minutes. You can use the paper form and mail it, but it's much faster and easier to use the online version at studentaid.gov.

As we begin to explain more about the process, you'll probably need your parents to provide information about their income and financial situation. In fact, they may choose to complete a portion of it on their own.

It's important to know the application deadlines. Each state and school have their own deadlines. The federal deadline is at the end of June. It's important when you look at the Federal Student Aid web site that you determine the dates for your own state and for the schools for which you're applying. Make sure you complete your FAFSA before the earliest deadline.

Before you begin completing the FAFSA online, you'll want to have the necessary information ready.

One way to prepare is to use the FAFSA on the Web Worksheet. The worksheet provides checklists and boxes to fill in the required information, which you can then use to fill in the FAFSA online. According to the FAFSA site, the information and documents you'll need to complete the FAFSA include the following:

• Your Social Security number
• Your parents' Social Security numbers if you are a dependent student
• Your driver's license number if you have one
• Your Alien Registration number if you are not a U.S. citizen
• Federal tax information or tax returns including the IRS W-2 information
• Records of your untaxed income, if any; and,
• Information on cash; savings and checking account balances; investments, and other assets.

Next, we'll give a brief, high-level overview of what to expect when you begin completing the FAFSA online.

The FAFSA website highly recommends that you create an account before starting your FAFSA form. This allows you to create your FAFSA ID and the username and password that you will use to complete and digitally sign your FAFSA form. Your parents will also need to create a FAFSA ID in order to electronically sign your FAFSA application.

The FAFSA collects information about student demographics, school selection, dependency status, parent demographics and financial information.

Demographic questions determine student eligibility. Some questions include:

• Are you a US citizen?
• What is your high school completion status?
• Is this your first year of college?
• What college degree or certificate will you be working on?
• And, how much schooling have either of your parents had?

In School Selection, you'll use a drop-down to select up to 10 colleges you're applying to and add them to your list. Alternatively, if you know the codes from your colleges, you can enter them. You'll select your housing plans for each of your potential schools. Whether you're planning to live on campus at one school, but off-campus at another--and maybe even with parents or guardians at a third school--you'll have the chance to make all these selections on your school selection summary page.

The FAFSA includes questions to determine dependency, too.

FOR EXAMPLE:

• What is your marital status?
• Do you have children or other dependents?
• How many college students are in your household?

If you're uncertain about any of these, ask your parent, guardian or school counselor.

You'll probably want to get your parents' or guardian's help for the parent-demographic section. That section asks for information like their Social Security numbers, dates of birth, and household size.

You'll want a parent's help with the financial section, too. Remember, you'll need recent tax forms, bank account statements and any investment information you or your parents have. You can even complete the FAFSA using information imported electronically from the IRS. FAFSA applicants provide income information from the “prior-prior” year.

The tax questions are straightforward and come mostly from your W-2 and 1040 forms. Remember, if you've set up a password, you can pause and look at your forms and come back to the FAFSA as often as necessary. The FAFSA requires you to enter your tax information--again, you might be able to import this right from the IRS.

The FAFSA has questions about your financial assets. Keep in mind any checking or savings accounts or savings bonds you have when answering the questions about your net worth. Your parents or family will report assets, too, such as bank account balances, the value of their investments--not include retirement investments--and the net worth of any businesses they own.

At the end of the FAFSA, you'll have the opportunity to review your information. When you're ready, you'll use your FASFA ID to electronically sign your application.

Completing the FAFSA is a major step in your educational journey. If you gather the documents you need before you start, and do a thorough job on the FAFSA, you'll be off to great start.

For more information, check out studentaid.gov.