What Parents Need to Know About FAFSA and Federal Aid

Navigating the financial aid process can be overwhelming, but as a parent, you play a crucial role in helping your child secure funding for college. Understanding the Free Application for Federal Student Aid (FAFSA) process and other financial aid options will set your family up for success. Here’s a breakdown of what you need to know.

Step 1: Creating a FAFSA Account and Gathering Documents

Before starting the FAFSA, both the student and their contributors (parents or spouse) must create their own accounts.

You’ll need to provide:

• Full name, date of birth, Social Security Number (SSN) (if applicable), and a personal email address
• Your child’s SSN (or A-number, if they are an eligible non-citizen)
• If married, your spouse’s name, birth date, SSN, and email address

It’s also essential to have the following financial documents ready:

• Federal income tax returns, W-2s, and other records of income
• Bank statements and investment records
• Records of child support received
• Business or farm ownership records

Step 2: Completing the FAFSA Form

Once you have the necessary documents, it’s time to complete the FAFSA. Parents must ensure that their child’s information is entered exactly as it appears in their FAFSA account.

• Student Dependency Status: The FAFSA will determine whether your child is an independent or dependent student.
  • If independent, parental information is not required.
  • If dependent, parents must provide financial details.
• Providing Tax Information: Parents will need to give consent for the IRS to transfer tax information directly into the FAFSA.
• Parent Demographics Section:
  • Marital status must be entered as it is on the day the FAFSA is completed (even if different from tax filing status).
  • Marital status will determine if additional contributors (like a step-parent) need to be included.
  • If married and taxes were filed jointly, only one parent’s information is required.
• Parent Financials Section:
  • The FAFSA will auto-fill tax information from the IRS, but parents must provide additional details, including:
    • Federal benefits received by family members
    • Family size and number of college students
    • Earned Income Credit received
    • Taxable grants, scholarships, or AmeriCorps benefits reported to the IRS
    • Foreign Earned Income Exclusion
    • Child support received
    • Total amount in checking and savings accounts
    • Net worth of investments, real estate (excluding primary residence), businesses, and investment farms
• Final Steps:
  • The FAFSA must be signed electronically by the parent.
  • The student then completes their portion of the application and signs electronically.

Step 3: Considering a Parent PLUS Loan

If additional funding is needed, parents can apply for a Parent PLUS Loan to help cover educational expenses.

• This loan is optional, but if approved, parents must sign a Master Promissory Note, which is a legal agreement to repay the loan.
• If denied, the dependent student becomes eligible for additional federal student loans to cover costs.

Final Thoughts

Filing the FAFSA can seem complicated, but breaking it down into steps makes the process manageable. Start early, gather the necessary documents, and ensure all information is entered correctly. If you have any questions, reach out to your child’s school’s financial aid office for guidance!