college money

With the first month of 2016 nearly in the books, one of the top things on your to-do list — if you’re a college student, a soon-to-be college student or the parent of one — should be filling out the FAFSA.

The Free Application for Federal Student Aid determines how much federal aid a family is eligible to receive in grants and loans.

According to the U.S. Department of Education, millions of students who would be eligible for aid fail to apply each year.

In an effort to make the process easier and help families learn sooner rather than later how much aid they can expect, the FAFSA application for the 2017-18 school year will be available this October, three months earlier than usual. Families can use the prior year’s tax information, which will be available electronically.

That means many families will be filling out the FAFSA twice this year — once now for the 2016-17 school year and again in the fall for 2017-18.

Will all that funding at stake, it’s important to do it right.

"More than anything else, the single biggest mistake I see is that people don’t think about it years in advance," says Tim Decker, president of ISI Financial Group in Lancaster. "Proactive planning can increase your eligibility."

How your assets are held, who holds them and where they are invested all help to determine your expected family contribution once you complete the FAFSA, Decker says. Managing your assets wisely in the years leading up to college can help you secure the most financial aid.

Once you sit down to file the FAFSA, however, "your assets are where your assets are," Decker says. But there are still things you can do to ensure you get the most aid possible.

Here are some common mistakes that often trip people up, according to the Department of Education and the National Association of Student Financial Aid Administrators:

1. FAILING TO APPLY

The FAFSA not only determines federal aid, but it is also used by state governments and many colleges to determine state and institutional aid. You could be missing out on thousands of dollars by not filing. And remember, Decker says, you must file the FAFSA every year you are seeking aid.

2. USING THE WRONG WEBSITE

Make sure you complete the application at fafsa.gov. If you are asked for payment to submit the FAFSA, you are on the wrong website.

3. WAITING FOR YOUR TAX RETURN

"The early bird gets the worm," Decker says. You may not have all the paperwork necessary to file your taxes, but with some aid awarded on a first-come, first-served basis you don’t want to wait to complete the FAFSA. Use the previous year’s taxes to estimate your financial information then update it once you file your taxes this year.

4. INPUTTING INCORRECT PERSONAL INFORMATION

Among the most common mistakes are using a nickname instead of the name as it appears on official government documents and entering an incorrect Social Security number. And remember parents, the application is for the student. If you are filling out the form for them, make sure you are entering the student’s information and not your own unless specifically requested.

5. INPUTTING INCORRECT FINANCIAL INFORMATION

The best way to avoid this is to use the IRS Data Retrieval Tool, which automatically transfers necessary tax information to your form. The tool is available in early February, and you can typically use it two weeks after you file. If you estimate figures to file your FAFSA early, use the IRS tool to input the updated information once you file your taxes.

Common mistakes with financial information include listing adjusted gross income as total income and entering the wrong amount for federal income tax. Also, Decker notes, people often mistakenly report their personal residence as an asset.

6. NOT READING CAREFULLY

Don’t rush through questions about household size, income tax paid and legal guardianship. Read the instructions for how those answers are to be determined.

7. LEAVING A FIELD BLANK

Put “0” or “not applicable” in fields where an answer does not apply. Blank fields may be viewed as incomplete.

8. FAILING TO INCLUDE PARENT INFORMATION

Even if you fully support yourself, you may be considered a dependent for financial aid purposes, since dependency guidelines for federal aid are different than those for the IRS.

And don’t forget, if your custodial parent is remarried, you’ll need your stepparent’s financial information, too.

9. NOT LISTING THE COLLEGE

Don’t forget to list the Federal School Code for the college you plan to attend, along with any other schools to which you have applied. If a new school becomes the front-runner after you’ve applied, be sure to update your FAFSA.

And, Decker says, don't assume all private schools are out of your financial reach.

"Although the initial starting price might be more, a lot of them have a lot more scholarships and financial aid money," he says. "It’s not unusual that net out-of-pocket costs can be less at a private college."

10. NOT SIGNING THE FAFSA

Don’t be so relieved that you’ve finally completed the FAFSA that you forget to sign it. This year, you’ll be asked to create an FSA ID, which will be used to sign the form in place of the PIN used in previous years.

Register for your FSA ID as soon as possible, since the information you provide must be verified with the Social Security Administration before you can use it.

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