Post on 18-Jan-2016
Decipheringthe
Mysteries of the FAFSATom Melecki, PhD
Director, Financial Aid Policy
The University of Texas at Austin
Today . . .• Why the FAFSA?
• Why is it so complicated?
• Common FAFSA errors
• What’s next for FAFSA?
Why the
FAFSA?
• FAFSA replaces ACT/CSS199
2
• ACT competes with CSS 1974
• College Board forms CSS
1954
Why the FAFSA?FreeApplication for
Federal Student Aid
(FAFSA)
Why is it so
complicated?
Driven by Federal
Methodology negotiated in DC
Academic Year 2011-12
FAFSAs submitted 22 million
FAFSA-based aid $209 billion
American families lead
complex financial lives
A little dity, ‘bout Jack and
Diane --Two American
kids growin’ up in the heart
land . . .
Jack DianeParents
2014 AGI $60,000 $60,000
Oldest parent 48 60
Household size 3 5
Number in college 1 3
Cash/checking/savings $25,000 $1,000
Other investments $350,000 $25,000
Student
2014 AGI $1,200 $0
Cash/checking/savings $7,500 $500
EFC $7,491 $3,525
Common FAFSAerrors
6. Missing parent information
• Mostly when parents are divorced/• separated• Custodial parent• Stepparent• “Other” parent
Solutions . . .
Custodial parent
• Parent the student lived with more during past 12 months, but
• If student did not live with one parent more than other• Parent who last
provided more financial support
Solutions . . .
Stepparent
• If divorced/separated/widowed parent is remarried• New spouse is• stepparent• Answer all parental• questions about• both parent• and stepparent
Solutions . . .
“Other” parent
• Legal parents• living together• Biological/adoptive
• Same-sex legal• parents married• and living together
• Unless they adopted, not grandparents, aunts, uncles, foster parents, legal guardians, widowed stepparents
5. Misreported assets
• Overstate net worth• Cash, checking,
savings• Investments• Business/farm
• Report parents’ retirement assets
Solution . . .
Report investment net worth• Net worth = current value minus debt
• Investments are• not family home• Except part with• own entrance,• bath, and kitchen• if rented to • non-family
Solution . . .
Don’t report certain assets• Life insurance
• Retirement• 401(k) plans• Annuities• Keogh plans• Non-education IRAs• Pension plans
• Funds under• Uniform Gift to Minors
Act (UGMA) or Uniform Transfer to Minors Act (UTMA)
4. Inaccurate income
• Incorrect• AGI• Federal income tax
• Forgot to report
• Untaxed income
Solution . . .
AGI and federal income tax
• 1040 form• Lines 37 and 56
• 1040A form• Lines 21 and 37
• 1040EZ form• Lines 4 and 10
• Watch out for misplaced decimal points!
Solutions . . .
Untaxed income
• Instructions for FAFSA• Item 94
• Half of untaxed income• answers can be pulled• straight from lines on• federal income tax• return
3. FAFSA filed too late
• After priority deadline for
• State
• Institution
Solution . . .
Do some quick research!
• Most state priority deadlines on right side of first page of FAFSA
• Institutional deadlines on financial aid office websites
2. Wrong identity
• Name:• Misspelled, incomplete, unofficial
• Social security number:• Incomplete, digits transposed
Solution . . .
Use social security card
• Complete FAFSA using social security card’s:
• Exact name• Social security
number
1. FAFSA never filed• We’re not eligible,• anyway:• Income too high• Home too• valuable• Too much saved• for retirement
• Takes too long
• Too much work• to complete
Solution . . .
Always submit a FAFSA!
• 2 million students could have qualified for Pell Grant had they submitted
FAFSAs
• 1.3 million would have qualified for maximum Pell Grant
• FAFSA-on-line takes only about 30 minutes
Keep good financial records!• Prior year’s• W-2 forms• Federal income• tax returns• Untaxed income• records
• Current• Bank statements/investment records• Social Security Card• Driver's license• Alien registration/permanent resident card
Complete it carefully
• Read all FAFSA• Questions• Instructions
• Double-check every answer
• Do it again
• Do it again some more!
Whenever in doubt
• Go to fafsa.ed.gov • Step-by-step instructions• Use FAFSA4caster• View instructional• videos
• Call for help• Government at• 877-207-3050• Financial aid office
What’snext for FAFSA?
FAFSA Reforms?
FAFSA
Parent Income =
Family Size =
2-Question FAFSA Prior-Prior Year FAFSA