Apply early to receive the best aid package.
Your student probably worked hard for her coveted college acceptance letter. Now, it's your turn to run the gauntlet -- the financial aid gauntlet -- if you want help pay for college. Most parents and guardians will need to provide income tax return data when completing the required aid applications. Although some forms don't require a federal tax return, your student's college financial aid office may.
FAFSA and PROFILE Aid Applications
Student aid for public colleges and universities is administered through the FAFSA application. The federal government runs the FAFSA -- the Free Application for Federal Student Aid -- and this is where students can apply for Pell Grants, as well as other federally administered programs. If you want to receive public college aid, you must fill it out. Using the FAFSA is much easier if you have completed your tax return; otherwise, you will have to use estimates which can negatively affect your aid package. The College Board's version of the FAFSA is called the PROFILE, which is the application most private colleges and universities use. It also assumes that users completed a federal tax return.
College Requirements
Although the FAFSA and PROFILE applications are the primary tools that financial aid offices use to determine aid packages, there are other required forms as well. Most colleges will require separate documentation to back up the aid application, and tax returns are at the top of the list. If you have special circumstances, such as a job loss or death in the family that affects the aid application, you can write a letter that supports the need for additional aid. This documentation will support aid that the college itself may provide.
First Come, First Served
Filing your tax returns as quickly as possible ensures that you'll be considered for the maximum financial aid package, because you'll be able to turn around your college aid application that much faster. Don't be fooled as aid money does run out. Most colleges have aid deadlines in early Spring -- some as early as February 1 -- and applicants are encouraged to use their paystubs and other year end statements to file aid applications early before most companies issue tax statements. You should allow plenty of time to complete the aid applications, and have your documents handy when you do.
After You Apply
Each college will have its own financial aid reporting requirements, so don't end your research with completing a tax return and filing the FAFSA and PROFILE applications. Upon review of your completed application, you'll receive an "expected family contribution" that states how much you're expected to pay. You can appeal an award decision if necessary.
Also, keep in mind that although you may not need to complete a federal return, you may be losing out if you don't -- especially if you don't file because of income-related reasons. Lower income families are often eligible for tax credits and refunds that make filing worthwhile. And since you will most likely have to wait anyway for your student's college application, it's a path worth investigating.
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