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