deciphering the mysteries of the fafsa tom melecki, phd director, financial aid policy the...

Decipheringthe

Mysteries of the FAFSATom Melecki, PhD

Director, Financial Aid Policy

The University of Texas at Austin

Today . . .• Why the FAFSA?

• Why is it so complicated?

• Common FAFSA errors

• What’s next for FAFSA?

Why the

FAFSA?

• FAFSA replaces ACT/CSS199

2

• ACT competes with CSS 1974

• College Board forms CSS

1954

Why the FAFSA?FreeApplication for

Federal Student Aid

(FAFSA)

Why is it so

complicated?

Driven by Federal

Methodology negotiated in DC

Academic Year 2011-12

FAFSAs submitted 22 million

FAFSA-based aid $209 billion

American families lead

complex financial lives

A little dity, ‘bout Jack and

Diane --Two American

kids growin’ up in the heart

land . . .

Jack DianeParents

2014 AGI $60,000 $60,000

Oldest parent 48 60

Household size 3 5

Number in college 1 3

Cash/checking/savings $25,000 $1,000

Other investments $350,000 $25,000

Student

2014 AGI $1,200 $0

Cash/checking/savings $7,500 $500

EFC $7,491 $3,525

Common FAFSAerrors

6. Missing parent information

• Mostly when parents are divorced/• separated• Custodial parent• Stepparent• “Other” parent

Solutions . . .

Custodial parent

• Parent the student lived with more during past 12 months, but

• If student did not live with one parent more than other• Parent who last

provided more financial support

Solutions . . .

Stepparent

• If divorced/separated/widowed parent is remarried• New spouse is• stepparent• Answer all parental• questions about• both parent• and stepparent

Solutions . . .

“Other” parent

• Legal parents• living together• Biological/adoptive

• Same-sex legal• parents married• and living together

• Unless they adopted, not grandparents, aunts, uncles, foster parents, legal guardians, widowed stepparents

5. Misreported assets

• Overstate net worth• Cash, checking,

savings• Investments• Business/farm

• Report parents’ retirement assets

Solution . . .

Report investment net worth• Net worth = current value minus debt

• Investments are• not family home• Except part with• own entrance,• bath, and kitchen• if rented to • non-family

Solution . . .

Don’t report certain assets• Life insurance

• Retirement• 401(k) plans• Annuities• Keogh plans• Non-education IRAs• Pension plans

• Funds under• Uniform Gift to Minors

Act (UGMA) or Uniform Transfer to Minors Act (UTMA)

4. Inaccurate income

• Incorrect• AGI• Federal income tax

• Forgot to report

• Untaxed income

Solution . . .

AGI and federal income tax

• 1040 form• Lines 37 and 56

• 1040A form• Lines 21 and 37

• 1040EZ form• Lines 4 and 10

• Watch out for misplaced decimal points!

Solutions . . .

Untaxed income

• Instructions for FAFSA• Item 94

• Half of untaxed income• answers can be pulled• straight from lines on• federal income tax• return

3. FAFSA filed too late

• After priority deadline for

• State

• Institution

Solution . . .

Do some quick research!

• Most state priority deadlines on right side of first page of FAFSA

• Institutional deadlines on financial aid office websites

2. Wrong identity

• Name:• Misspelled, incomplete, unofficial

• Social security number:• Incomplete, digits transposed

Solution . . .

Use social security card

• Complete FAFSA using social security card’s:

• Exact name• Social security

number

1. FAFSA never filed• We’re not eligible,• anyway:• Income too high• Home too• valuable• Too much saved• for retirement

• Takes too long

• Too much work• to complete

Solution . . .

Always submit a FAFSA!

• 2 million students could have qualified for Pell Grant had they submitted

FAFSAs

• 1.3 million would have qualified for maximum Pell Grant

• FAFSA-on-line takes only about 30 minutes

Keep good financial records!• Prior year’s• W-2 forms• Federal income• tax returns• Untaxed income• records

• Current• Bank statements/investment records• Social Security Card• Driver's license• Alien registration/permanent resident card

Complete it carefully

• Read all FAFSA• Questions• Instructions

• Double-check every answer

• Do it again

• Do it again some more!

Whenever in doubt

• Go to fafsa.ed.gov • Step-by-step instructions• Use FAFSA4caster• View instructional• videos

• Call for help• Government at• 877-207-3050• Financial aid office

What’snext for FAFSA?

FAFSA Reforms?

FAFSA

Parent Income =

Family Size =

2-Question FAFSA Prior-Prior Year FAFSA