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    A Crash Course in College Cash

    What you need to know to navigate the financial aid process.

    Aaron Basko

    If you find yourself overwhelmed by the entire financial aid process, you're not alone. Most parents find it daunting. But don't lose heart. The process of applying for financial aid certainly can be complex, but it is not impossible to navigate. To help you get started, here are a few easy-to-follow "financial basics."

    Understanding the FAFSA

    The federal government's policies drive the financial aid process, so it makes sense that the aid timeline is loosely based on the tax calendar. The Free Application for Federal Student Aid (FAFSA) becomes available each year after January 1 and is used by all families seeking financial aid during the academic year that follows. The FAFSA is the most important component of the aid process. If you do nothing else, make sure you complete a FAFSA form in January of your student's senior year and submit it to the federal processing center as soon as possible. (The FAFSA form is available at most schools, public libraries and on the web at

    The processing center will apply a set of formulas to the information you provide, using it to determine your family's financial resources. The most important result is a number called the Expected Family Contribution (EFC), which quantifies how much the government expects your family to pay toward higher education. On the FAFSA you have the opportunity to designate which colleges will receive information about your eligibility for financial aid.

    As you consider the deadline for completing the FAFSA, keep in mind that many colleges have priority filing dates. This means they expect that your FAFSA information will be submitted to the federal processing center by their deadline. The most common priority date is March 1, but check the financial aid section of each college's website to find the date the college requests. If you have submitted your paperwork by the priority date, the college guarantees that you will be considered for all available financial aid. If you miss the priority date, you'll be considered for whatever is left.

    The FAFSA draws heavily from the information on your tax documents, so complete your taxes early if you can. If you can use completed tax information to complete the FAFSA by the priority dates, you'll save yourself work and be less likely to have to make corrections later. Since this isn't possible for everyone, the FAFSA allows families to estimate their information based on the previous year's taxes, and then make updates and corrections when their taxes are filed. In order to assure accuracy, the government has a verification process, in which it randomly selects families and requires them to provide additional tax information. If you are asked to verify your information by a given college, don't panic. Some colleges verify all incoming students, while others follow the government's pattern of random sampling.

    One hint on using the FAFSA: If at all possible, apply online. Besides speeding up the application process by days, if not weeks, the online application is designed to eliminate common mistakes and will actually prevent you from filling out certain portions incorrectly. Working with the online form will also allow you to save and easily change your work. As you can imagine, the federal processing center is not very forgiving of mistakes and will typically send paper forms back to you for correction, which delays the process.

    Money from the Government

    Aid from colleges is intertwined with federal financial aid programs for students. When you receive the results from your FAFSA paperwork, called the Student Aid Report (SAR), you will be notified if you qualify for the Pell Grant Program. Pell Grants are offered to a small group of students, typically those with family incomes below $40,000. The Pell program provides up to $4,050 per year that does not have to be repaid. The Pell Grant recipients with the lowest Estimated Family Contributions may also qualify for Federal Supplemental Education Opportunity Grants (FSEOG), which can range between $100 and $4,000 in addition to the Pell amount. The Perkins Loan is another government-funded program for high-need students. Administered by individual colleges and universities, this loan program provides students with very low-cost loans.


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