December 7, 2010
Mythbusters, FAFSA Version
Definition: possibly the most-dreaded acronym in the world of higher education, it stands for Free Application for Federal Student Aid. On the list of “Dreaded Acronyms,” it’s right up there with “MCAT,” “GRE,” and “LSAT,” except that usually you only have to take one of those exams once. The FAFSA must be renewed annually if you want to be considered for financial aid every year.
Although in the past, the FAFSA lived up to its beastly reputation, in recent years the online version has been the victim of an undeserved bad reputation. It has been drastically improved over the past few years, and starting on January 30th, 2011, the hardest section (the tax information section) is getting easier with IRS Data Retrieval. (This will allow you to import the tax info directly from the IRS’s database into the FAFSA!)
So before you start writhing in the icy grip of FAFSA-fear, educate yourself. In talking to parents, students, and educators all over Utah, I have heard some worries that are totally unnecessary, and some misconceptions that could cost you a lot of time and a big headache. Here are a few common FAFSA myths, dispelled.
Myth: Either I or my parents make too much money, which means we won’t get anything from filing the FAFSA. Truth: File it anyway! At the very least, you can probably qualify for an unsubsidized Stafford loan. Also, many scholarships are now requiring FAFSA completion as part of their application process.
Myth: If my parents don’t claim me on their taxes, I am not a dependent student. Truth: The FAFSA uses a separate set of criteria to determine whether or not you are a dependent student. If you fall into any one of these categories, you are an independent student.
- You were born before January 1, 1988
- You’re married
- You’re working on a graduate degree (e.g., MA, MBA, MD, JD, PhD, EdD, graduate certificate)
- You’re on active duty in the U.S. Armed Forces
- You’re a veteran of the U.S. Armed Forces
- You have dependents of your own (either children for whom you provide more than 50% of their support, or other dependents)
- Your parents are both deceased since you turned 13 years old
- You have been in foster care since turning age 13
- You have been a dependent or ward of the court since turning age 13
- You are currently or were an emancipated minor
- You are currently or were in legal guardianship
- You are homeless or are at risk of being homeless
If none of those criteria describe you, you’re considered a dependent student regardless of who claims you on federal and state taxes, and you must include your parents’ tax information on your FAFSA.
Myth: Money in a 529 college savings plan can be detrimental to me, so I shouldn’t list it on the FAFSA. Truth: You should always be honest about your assets when filing the FAFSA. In discussing 529 accounts for dependent students, the Utah Educational Savings Plan states in its Program Description, “The exact portion of the account included in the EFC calculation depends on whether the student’s family has a one- or two-parent income and the age of the older parent. Currently, the maximum portion of the account value to be included in the calculation is approximately 5.64 percent.” (UESP Program Description February 1, 2010).
Myth: My parents are divorced, so I can use the tax information of the parent who makes less money in order to qualify for more aid. Truth: In cases of divorce, FAFSA considers your “parent” for the purposes of this form to be the parent who provided you with more than 50% of your support for the past 12 months. This is typically whichever parent you live with. If that parent has remarried, you also need to provide tax information for your stepparent. While it may be very tempting to look for loopholes, exploiting your situation can come back to bite you in a lot of negative ways. I know it’s a tired old phrase, but honesty is the best policy.
Myth: The EFC (Expected Family Contribution) that the FAFSA calculates for me is the amount of cash that my family has to come up with by the tuition deadline, or else I won’t be able to attend college. Truth: The EFC is indeed an estimate of what your family should be contributing, but it’s not the amount of cash that you have to get by the tuition deadline. Think of it like this; “in-kind donations” count towards your family’s EFC. If your parents are letting you live at home during college, paying for your groceries, car, gas, insurance, public transportation, books, fees, buying you a laptop to use for school, or anything else that falls under the Cost of Attendance for your school–that ALL counts towards the EFC!