How to get the most college financial aid using FAFSA

As far as government forms go, the Free Application for Federal Student Aid, or FAFSA, is the Rosetta Stone for college financial aid. But it’s also a bit of a sphinx. 

The FAFSA will give your family an idea on how much financial aid you’ll qualify for, but it doesn’t tell you everything. You can start filing it as of Oct. 1. The sooner you send it in, the better.

Despite its power as a tool in the financial aid process, a surprising number of families don’t file the FAFSA. As a result, some $3 billion in state and institutional grants and $9.5 million in federal Pell Grants are left on the table every year.

The key to understanding the FAFSA, though, is knowing what it can and can’t do. It doesn’t directly grant you financial aid. It only gives you an idea of what you may qualify for based on information you provide on the form.

Unlike the sphinx, the “expected family contribution (EFC)” -- the less-than-magic number generated by the FAFSA based on family income and assets -- isn’t set in stone.

You still may be able to qualify for more aid, but you’ll have to deal with individual colleges to garner it.

As a cumbersome and often-misunderstood step in the college financial aid process, the FAFSA experience produces a lot of frustration and false expectations. I know because our family has negotiated its obstacle course over the past two years.

“There are two big things parents need to know about the FAFSA,” said Abigail Seldin, the founder of the College Abacus net price calculator and a Rhodes Scholar who’s vice president of innovation for ECMC Group.

 “The FAFSA produces an expected family contribution number, but it’s a nonbinding aid calculation,” Seldin said. “Then colleges do their own financial aid assessments.”

What the FAFSA doesn’t -- and can’t -- tell you is the all-important “net price” of what a college is going to cost your family. This is the bottom line after all grants, tuition discounts, scholarships and work-study income is subtracted your bill.

Once you get this net price number, you’ll know if you have enough savings and income to cover college costs -- or choose to go into debt.

Seldin said you can get ballpark figures of net prices from each college, which must provide net price calculators on their websites, or go to College Abacus, which pulls data from the colleges and government in one portal.

“College Abacus reports the exact same results from college net price calculators -- just in one, centralized place -- and includes key contextual data from the College Scorecard,” Seldin added.

Let’s say you wanted to know the net price of colleges on your wish list. You can start with the aid calculators on their sites, search College Scorecard or go through an extensive aid vetting on College Abacus.

College Abacus asks you some detailed questions that you’ll also find in the FAFSA. Although you need to disclose lots of financial details, every data point is important in determining aid.

How many siblings will be in college at one time? What’s your income from all sources? Are the parents living together? What kinds of tax deductions did the parents take? Do they have business or rental income?

If you have other siblings in college, that will boost your chances for aid. If you qualify for free lunch in high school, you’ll likely get a Pell Grant. Total income and assets also may put you in line for grants and scholarships. There are dozens of ways to qualify for aid, but you won’t know how much will come your way if you don’t run the aid calculators and file the FAFSA.

Even if you think you won’t qualify for aid based on your family’s net worth, the process isn’t over.

Merit aid, which is based on academic performance and test scores, can translate into grants and scholarships. Seldin said students with high SAT/ACT scores, class rank, GPA and challenging Advanced Placement courses on their applications can qualify for merit aid.

What neither the FAFSA nor any online calculator will tell you is how desirable a student is to a particular college, which also could determine their aid offers. “You need to find the right school that’s a good fit that wants your kid,” said Seldin. “Every school is different.”

This multilevel search involves other factors that may open the door to aid. Does your child have a special skill or talent? Some colleges may be looking for good oboe or lacrosse players, while others may be desperate for female bioengineers.

Beyond filing the FAFSA, keep in mind that finding the right college is not a matter of a single financial formula. It’s a combination of entry points that will open the vault to a high-quality, debt-free degree.

  • John Wasik

    John Wasik is the author of The Debt-Free Degree and 15 other books. He writes and speaks regularly on personal finance issues throughout North America.