Top Tips to Completing Your FAFSA

CEO Betsy Morgan sat down with WFSB’s Eric Parker to talk about the new FAFSA

As predicted, the new FAFSA launched right before the end of the year -- December 30th to be exact. The Education Department is calling it a "soft launch," meaning that they will continue to tweak, make corrections, and fix issues that arrive for at least the month of January, if not beyond. 

Families are reporting being unable to access the site or being kicked out after doing so. We suspect that multiple issues are at play: the site is overwhelmed by traffic, and when issues arise, they are taking it down to address them.

But forms are beginning to be filed, so that is good news.

Here are our suggestions:

* Make sure that you have an FSA-ID account for the student and parent(s) before you start the FAFSA. 

* Gather all the required documents that you will need to file. These include bank statements, tax returns, 529 documentation, social security numbers, etc., for the student and the parent(s). Have them with you so that you can get through the FAFSA as quickly as possible. 

* If any schools require the CSS PROFILE (list here), it may be easier to complete the CSS first and have a printed copy of that for reference, as it is a much deeper dive than the FAFSA.

* Try filing later in the evening or early in the morning when website traffic is less. 

* Be mindful of each school's deadline to file. Check their website to confirm. However, if you run into trouble and are worried about meeting those deadlines, contact the colleges themselves and let them know. Financial aid officers are well aware of what is going on and share your frustration! 

The Education Department has stated that they will not begin processing FAFSAs until the end of the month at the earliest. This means that you may not get a confirmation email, and your student's applicant portals will still list the FAFSA as missing. Keep checking at the end of the month to ensure that it does go through. In addition, you will not be able to file any corrections to the form (including adding additional colleges) until the first form processes, so make sure that you have all of your schools listed the first time around! 

Any questions, let us know!

Federal Student Loan Rates Decrease

Good news for borrowers! Federal student loan rates have dropped for the upcoming year.

For student loans dispersed between July 1, 2020 and June 30, 2021, the interest rate on Federal Direct Loans (subsidized and unsubsidized) for undergraduates dropped to 2.75% down from 4.53% for the prior year. The interest rate on federal direct loans for graduate school students dropped to 4.3% down from 6.08% the year prior and the interest rate on the Parent PLUS loan fell to 5.3% down from 7.08%.

Students Still Want the Real College Experience

There is so much uncertainty in the time of COVID-19 and news outlets are proclaiming the end of college as we know it. But the reality is that most families are still committed to the traditional college experience for their students. They understand the benefits of on-campus learning: the connections you make, the confidence you gain, the learning that takes place outside of the classroom.

So don’t panic! Things will return to normalcy. There may very well be some corrections (less money spent on lazy rivers and climbing walls would be OK with me), but corrections can be a good thing.

Online college is OK. But real college still matters!

BREAKING: Use Your 529 to Pay Off Student Debt

In December, new provisions were signed into law that will affect all families with 529 college savings accounts. Until now, withdrawals from 529 savings plans for the purpose of paying off student debt were subject to income tax on the earnings portion and a 10% penalty on the entire withdrawal. Now, up to $10,000 can be withdrawn tax-free towards payment of qualified education loans. 

They Expect Us to Pay What?

Often times there is a disconnect between the Expected Family Contribution (EFC) that is calculated based on the Free Application for Student Aid (FAFSA) and the amount of money a family feels they can afford each year for college costs.  The lengthy formula used to calculate financial aid under the federal mythology uses some stingy assumptions.  According to a recent New York Times article, the formula assumes that a family of four can survive on $30,000 per year regardless of where they live.  These out-of-date assumptions can paint a much different picture of a family’s finances. Further, few colleges meet 100% of your financial need.  In this case, you may be responsible for paying your EFC in addition to the unfunded portion of your financial need.

 Although there is little you can do to change the formula, you can arm yourself with information. Don’t wait until the last minute to calculate your EFC.  There are many ways to estimate, including using the FAFSA4caster or net price calculators available on the colleges’ websites.  Regardless of whether or not you agree with the number, at least you can begin to prepare.  Remember that some colleges also require a CSS/Profile (or college-specific form) in addition to the FAFSA.  At these colleges, the EFC from the FAFSA4caster won’t necessarily give you an accurate estimate.  Colleges using the CSS/Profile examine your financial information in a lot more detail, which can make your EFC much different.  Using a net price calculator at the college-specific websites may be a better option to estimate your college costs.  

 With a better idea of your financial obligation, as defined by the colleges and federal government, you will be in a better position to plan accordingly.  Maybe add some colleges where your student is more likely to get a merit scholarship, or that has a lower price point.  After all, better to be elated by a nice merit scholarship than reeling from a bunch of unaffordable options.

Federal Loan Interest Rates Are Decreasing

Recent high school graduates have reason to celebrate.  Along with the milestone of attaining high school diplomas, students have the good fortune of lower interest rates on their Federal Direct Student Loans.  This is the first student loan interest rate decrease in three years.  For the 2019-2020 academic year, the interest rate on undergraduate subsidized and unsubsidized loans will decrease from 5.05% to 4.529%.  The rate on the Parent PLUS loan will also decrease from 7.6% to 7.079%. Borrowers currently in college will be able to take advantage of the lower rates on loans issued on or after July 1, 2019.  Let the celebration begin.

Waitlisted! Now What?

Being relegated to the waitlist can be hard. Here are a few tips to keep in mind.

Waiting isn’t easy and it certainly can be nerve-racking when it comes to your college results. At this point in the process we always have a few students that aren’t accepted or denied, but are waitlisted at one of their top choice colleges.  If you happen to be in this situation, we offer the following tips:

• In most situations, you will need to put a deposit down at another college.  The universal deposit date is May 1st.  At that time colleges will know how many students are enrolling in the fall which will determine whether or not they need to rely on the waitlist to fill the freshmen class.  Don’t lose your spot at another college because you are waiting for your name to come off the waitlist.  If you happen to get offered a spot off the waitlist, that will likely happen after May 1st.  So, go ahead and put your deposit down at another college.  

• Keep in mind that your deposit is non-refundable so if you are accepted from the waitlist you will lose your deposit at the college you initially selected.

• When you were first informed of your waitlist status, you had the opportunity to remain on or withdraw from the waitlist.  If you have already moved on and are no longer interested in attending, please take your name off the waitlist.

• It is smart to put together a letter or email to your admissions representative to provide them with any updates academically or extracurricularly. This may nudge them to offer you a spot if they need to use the waitlist to fill the freshmen class.

• Finally, by the time colleges are pulling students from the waitlist, the financial aid budget has been exhausted.  So, if you are looking for need-based or non-need-based aid, you will not likely receive much, if any, financial award coming off the waitlist.

One Viable Option for College Loans Now Eliminated

Perkins Loans are no longer available.

A Federal Perkins Loan was once a nice addition to a financial aid award because of its relatively low-interest rate and a no interest feature whereby a student paid no interest on the loan while they were attending college full-time. However, this loan is no longer available. As of June 2018 colleges and universities can no longer make disbursements under the Federal Perkins Loan Program.

There's an App for That!

Introducing the new myStudentAid mobile app! This new app, which can be found in the Apple App Store and the Google Play Store, allows users to complete and submit their FAFSA, edit and manage their financial student aid ID, and view their federal student aid history. However, the application is not equipped with the IRS Data Retrieval Tool which pulls over the information from your taxes directly into the FAFSA. With that said, we are standing on the sidelines until the functionality has been tested and the IRS Data Retrieval Tool has been added. But, we certainly think this is a step in the right direction.