How to Fill Out Financial Aid Applications

If your child is a senior in high school, you may be breathing a sigh of relief now that the college applications are in the mail.

However, there is one more important piece of the process: the financial aid application. Even if your child is already in college you still have to face that task, because application for financial aid has to be made every year.

It's not too early to get started. Applications for financial aid can be submitted each January for the following school year. Aid is generally awarded on a first-come, first-served basis to eligible applicants.

The financial aid system is complicated, and would require several columns to explore in depth. Instead, I have listed five tips to help you navigate the system.

1. Understand the Process

In order to apply for federal financial aid (Stafford and Perkins loans and Pell grants), parents and student must submit a free application for federal student aid (FAFSA). An expected family contribution (EFC) will be calculated based on income, assets and liabilities.

Your financial need is the difference between the cost of attendance at a particular college and your EFC. For example, if the cost of attending Oberlin College is $28,000 a year and your EFC is $12,000, your financial need is $16,000. Oberlin will try to put together a financial-aid package consisting of loans, scholarships and work study to meet that need, although there is no guarantee the gap will be filled.


The best way to get information and submit a FAFSA is online at

Some private schools also require submission of a college scholarship service (CSS) profile. Information is available at

2. Crunch the Numbers

You can easily estimate your likely EFC. The College Board website has an EFC calculator ( that allows you to enter your information and receive an instant estimate.

The results may be surprising. A couple with a combined income of $80,000 and non-retirement mutual funds and savings accounts of $30,000 have an EFC of about $13,000. If their child attends a typical public university, they will probably receive no need-based financial aid because average cost of attendance is $10,500. However, if the child attends a private college (average cost of $22,000), the financial need is $9,000 ($22,000 minus $13,000). If the parents are lucky enough to have two in college at the same time (even if one of them is a parent), their EFC is cut in half and they are eligible for additional financial aid.

The best strategy is to fill out the FAFSA even if your estimated EFC is close to the cost of college. Retirement assets and home equity are not counted in the FAFSA calculation, and only about 5.6 percent of parents' non-retirement assets are included. Assets in the child's name, on the other hand, count heavily toward financial aid -- about 35 percent.

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