FAFSA Application Worth the Effort

The Free Application for Federal Student Aid, better known as the FAFSA, has become the most important tool families can use to make college more affordable. Unfortunately, because of its complexity, the FAFSA has also caused untold numbers of families to wring their hands in frustration.

The FAFSA website says, “We offer more than $150 billion each year to help millions of students pay for higher education.” The aid program, which is administered by the U.S. Department of Education, rose out of the Higher Education Act of 1965. Financial aid comes in the form of grants, loans and work-study exchanges at a student’s college. The federal government processes approximately 22 million FAFSA submissions each year.

College financial aid offices look to the FAFSA to determine what the government calculates a student’s Expected Family Contribution, or EFC, should be to cover tuition and other costs of attendance. For each student they have accepted for admission, colleges subtract the student’s EFC from the overall cost of attending their particular institution. Financial aid awards are based on a family’s need to cover the difference between the EFC and the college’s price tag.

Colleges vary widely on the amount of aid they will offer to make up that difference, with wealthy, private universities, such as those in the Ivy League, typically covering all or most of it. Their stated mission is to enroll all students who are qualified, without regard to a family’s ability to pay.

The trick, then, is to complete the FAFSA in such a way as to make a student’s Expected Family Contribution as low as possible. But how?

Michael Niedenfuehr, founder of Minneapolis-based College Funding Options, has been helping families navigate the FAFSA for more than 15 years. He said that one can expect to devote up to 13 hours just to complete the online form. Filling out the FAFSA, he said, is like “doing multiple years of tax returns all at once.”

While low-income households will benefit the most from submitting the FAFSA, Niedenfuehr emphasized that even families with six-figure incomes can, potentially, realize significant cost savings by completing the form. He noted, for instance, that families with two children in college at the same time will see their Expected Family Contribution to college expenses drop for each student. As another example, children of divorced parents may, in the year before college, decide to live mainly with the parent who earns less money, a move that would reduce the family’s EFC.

All family financial situations are unique, so it’s impossible to know ahead of time whether filing the FAFSA will ultimately save on college costs. Timeliness and accuracy are very important where the FAFSA is concerned, as colleges tend to make financial aid awards on a first-come, first-served basis. Submitting a mistake-free form as early in the New Year as possible gives families the best chance of reducing what they will pay when their student begins classes in the fall.