FAFSA: Ready, Set, Go!
Filing the FAFSA this year? Here's what you'll need to make the process go smoothly. And it bears repeating: you probably don't need to file the FAFSA on Oct. 1.
FSA ID: Both the student and the parent need an FSA ID. Good news: these are now approved immediately, unlike in the past when you had to get your FSA ID ahead of time. Nonetheless, you can save yourself a future step by creating your FSA ID now, here.
Which parent needs an FSA ID?
If the student's parents are married, only one needs it and it doesn't matter which one.
If the parents are divorced, only the custodial parent for FAFSA purposes needs one. The custodial parent is the one who provides the most financial support. This doesn't necessarily mean the one who makes the most money; see this post for details.
Your and your student's 2024 tax return. The FAFSA will prompt you to use the IRS Data Retrieval Tool to automatically transfer data from your tax return to your FAFSA. However, there are a few line items you might need to enter manually:
Any retirement account rollover that's on your tax return
Education tax credits claimed
Taxable scholarships received or work-study income (this is more often on the student's tax return than the parent's)
You can read more about what is and is not income on the FAFSA here.
Totals of your assets for parents and students. Your assets are reported at their value on the date you file the FAFSA, so you'll need to look them up before you file. The FAFSA asks you to separate your assets into three categories:
Cash, savings and checking accounts
Investments including real estate
Business and investment farms
It's helpful to make a list ahead of time of what accounts you have in each bucket. For example, do you have a high-yield savings account separate from your regular bank accounts? What about your 529?
If you have an investment property, business or farm, you'll want to calculate its net value: subtract all liabilities-- including both long term liabilities like a mortgage and current liabilities such as payroll, property taxes or other expenses you'll incur in the next 12 months-- from its current value.
You are not required to upload statements or other documentation of the value of these assets. However, you are required to be truthful in reporting them. For investment properties or businesses, I recommend saving a note of how you calculated the value in the event that your FAFSA is flagged for verification.
You can read more about what assets count and strategies you might implement prior to filing here.
If you are filing the CSS Profile, you'll need some additional information:
Retirement account balances
Value of any trust, whether a revocable living trust or a trust for which you are the beneficiary
Expected value of any outside scholarship the student is receiving
Any tuition benefits the student receives from their own or their parents' employers
Assets you held in the name of your children such as UTMA accounts
529 account balances for all of your children
Market value, outstanding debt, purchase date and price of your primary residence
Student loan or alimony payments
Monthly housing payment (principal and interest only for homeowners)
Any means-tested benefits received such as SNAP, WIC, food stamps, EBT, TANF, SSI, Medicaid or free & reduced lunch
W-2s
You'll also need to provide additional income information:
Retirement and HSA account contributions (these may be on your W-2, your tax return or both)
Social Security benefits not reported on your tax return, except those received by the student
Alimony received, whether or not it's on your tax return
Housing, food or other living allowances
Other untaxed income including workers compensation, untaxed disability benefits or income from other family members
Some comes from your W-2, but you'll also be asked for specific lines from your tax return. In addition, the CSS Profile asks you to project future years' income.
Once again, most people do not need to file the FAFSA or the CSS Profile on Oct. 1. You only need to file it immediately if you are eligible for any aid that is allocated on a first-come, first-served basis. This is primarily state grants, although some colleges, especially those offering rolling admissions, prioritize earlier financial aid applications. Check with your state and the colleges you're applying to in order to verify if this pertains to you.
And finally, make sure you file at the official Department of Education website, here. The first F in FAFSA stands for Free-- it's free to file. Unfortunately there are loads of scam websites that purport to be the FAFSA but are in fact paid sites that will file your FAFSA for a fee. Also worth noting: the first letter of Profile is P and you pay for each college you submit it to.
