Given how expensive it is to attend college, here’s a mind-blowing statistic: High school graduates left $2.7 billion in free federal grant money on the table during the past academic year. According to an analysis from NerdWallet, the primary reason that families are missing out on this money is that they are not completing the most important step in the process: the Free Application for Federal Student Aid, or FAFSA.
FAFSA is the gateway to education money, and it is now available to file as of Oct. 1, three months earlier than in previous years. FAFSA is used to determine how much students and their families will receive in terms of college grants, scholarships and loans, which is why it is so important that families take the time to work through it.
For years, people have complained that the form is arduous, but according to the Department of Education, the application “takes most people 21 minutes to complete.” OK, maybe 21 minutes undershoots it — it’s probably closer to an hour, once you gather all the documents you need. But now that the IRS has created a way to send your tax information seamlessly to the Department of Education, the process has become a bit easier. (The IRS Data Retrieval Tool at edvisors.com/fafsa/forms/irs-data-retrieval-tool automatically fills in the online FAFSA form with the necessary tax information.)
I asked Kelly Peeler, founder and CEO of NextGenVest, a service that helps students navigate the financial aid and student loan processes, what we are overlooking in the college money treasure hunt.
“The biggest mistake by far is that families do not submit their FAFSA because they think they might not qualify for aid or they don’t want to share tax information or Social Security numbers.” Even those who complete the form are sitting on it too long. Peeler notes that there needs to be a sense of urgency “because families will have a higher likelihood of receiving more financial aid if they submit their correct forms earlier.”
While states, colleges and the federal government each have their own financial aid deadlines, some states have a limited pool of funds that may run dry if you wait until the last minute to apply. To maximize your potential aid, Peeler advises submitting the FAFSA as soon as possible, even though the 2017-2018 deadline for federal aid is June 30, 2018, which is also New York State’s deadline for applications.
Some will say they won’t qualify for financial aid, so why bother going through the drudgery of doing it? To this the Department of Education clearly states, “contrary to popular belief, there is no income cutoff when it comes to federal student aid.” More important, you never know how your situation might change. Some of the factors affecting aid include: a change in family income, the student’s year in school, the cost of attendance and multiple kids in college at the same time. So even if you did not get money last year, you could still be eligible for other types of aid, such as work-study and low-interest loans.
Finally, if you are worried that you have not yet determined which colleges are on the “wish list,” know that you can still file your FAFSA as long as you list at least one school. The Department of Education advises that you “add every school you’re considering, even if you haven’t applied or been accepted yet. If you’re on the fence about a particular school, add it anyway. Doing so will hold your place in line for financial aid in case you end up applying for that school. You can also add or remove schools to your FAFSA later. ”
Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes emailed comments and questions.