FINANCIAL AID - TAKES ON MANY FORMS

FINANCIAL AID TAKES ON MANY FORMS

By Howard Freeman

Many students and families associate financial aid with the FAFSA (Free Application for Student Financial Assistance). Though they may feel relieved once the FAFSA is initially completed, they should realize that this is only the beginning, not the end, of a lengthy financial aid process.

The most critical aspect of the financial aid process is to be in control. This means understanding the financial aid requirements and deadlines for each college. The first step is to create a calendar or spreadsheet with the name of the college and the critical application and financial aid priority filing dates. This is the start of the roadmap that will relieve stress and provide an ongoing status of how things stand. Be sure to include the key dates due and space for when they were completed.

To many, financial aid forms can be intimidating and overwhelming. Yes, the forms have become more user-friendly, yet there is no way of proving the accuracy of the source data or how it was entered on the form without further verification. Like a 1040 tax return, the FAFSA is free, and should be no problem for those able to fill in the blanks. What is more challenging, however, is not the mechanics of filling out the form, but knowing how this information is used and its impact on the financial aid awarded.

Financial Aid Process

The financial aid priority filing dates and required financial aid forms will vary by college. Most state schools only require the FAFSA. Here are many but not all of the financial aid forms that you are likely to encounter.

The FAFSA (Free Application for Federal Student Aid) is the primary need analysis form for federal, state and some colleges’ financial aid. The result of the FAFSA is the EFC (Expected Family Contribution), the calculated amount a family should be able to contribute to the student’s education. This and other information is sent to each college listed.

The FAFSA, which is available on paper or online, is normally submitted at the time of application, but not before January 1, when more financial aid funds are available. The FAFSA requires last year’s earnings (2007 earnings for September 2008 enrollment) and the student and parents’ assets. Since employer W-2 forms are not usually available by January 1, information for the FAFSA can be based on final payroll check stubs, prior year’s tax returns and best estimates that can be adjusted later when these forms are available. The FAFSA is also a work in process that can be updated for corrections, additional colleges, changes in employment or family status. Once the student is accepted to a college, the FAFSA data will be used as a basis for the financial aid award.

SAR (Student Aid Report) is produced each time the FAFSA is submitted. It is the edited version of the FAFSA. It also serves as a worksheet for changes, to report errors and provides some financial aid eligibility.

CSS/Financial Aid Profile, a service of the College Board, is used by many private colleges and scholarship programs for institutional private aid. This form, unlike the FAFSA, is available in the fall of each year. It asks more detailed questions and explanations such as past, present and projected incomes, home value, educational costs, institution specific questions and space for explanations. It calculates the EFC using a different methodology than the FAFSA to determine how the family should be able to contribute to educational costs.

NCP Profile (Noncustodial Parent) is an online form offered by the College Board. Some colleges use it to measure a family’s ability to pay for college when the birth or adoptive parents do not live in the same household. The NCP may be needed when the student indicates on his or her CSS/Financial Aid Profile application that the biological or adoptive parents are separated or divorced. If so, an e-mail will be sent to the noncustodial parent with secure log-in and submission procedures. The NCP profile can also support the fact that they cannot provide further contributions by justifying their actual additional expenses and family obligations.

Noncustodial Parent’s Statement is a form used by some colleges for students with separated, never married or divorced parents for awarding financial aid.

Business Farm Supplement: The CSS/Financial Aid Profile may also require parents with small businesses, farms or self-employed to provide profit, loss and balance-sheet information for determining the college’s financial aid or institutional award.

Institutional Forms: Many colleges have developed their own financial aid forms asking specific questions similar to the CSS/ Financial Aid Profile. Each form may be required in addition to the FAFSA and CSS/Financial Aid Profile.

Award Letter is a letter or financial aid package a college offers. Most award letters consist of scholarships, loans, grants and work study. It should report the Cost of Attendance (COA), less financial aid, family contribution and unmet need (amount left), if any.

The financial aid award should be clearly scrutinized and compared to other awards to determine the best deal and least out-of-pocket expenses.

MPN Master Promissory Note, MPN, is a required promissory note that is used for all direct student and parent loans for up to 10 academic years. First-time borrowers must also pass the online quiz that explains types of loans, responsibilities, repayment options, rights and resources.

Verification Worksheet: Many colleges select or are required to verify actual and other financial documents to their completed financial ID forms. This verifies the accuracy of the information and its impact on the actual financial aid award.

Appeal letters: Financial aid awards can be appealed. Many colleges require a letter of explanation or may use their own forms. It is critical to provide sufficient back-up data. Always be sure that the FAFSA is up to date and that any special circumstances (job loss, reduction in hours, etc) are reported to the financial aid office.

Finally, get professional help when necessary and follow these guidelines:

• Post critical dates and forms required by each college
• Post actual completion dates to calendar or spreadsheet
• Call colleges to follow-up about exceptions
• Remain focused and in control. It will work wonders for you.

Howard Freedman BS, MBA, is founder of Financial Aid Consulting and is a freelance writer. He can be contacted at (781) 341-0234, finaidman@comcast.net or at his website, financialaidresults.com

*Story from Fall 07 issue