How to negotiate this gateway to college aid

Call me a bureaucracy geek. I’m fascinated by government processes. But when they don’t work, I want to know why.

My family recently struggled to update our Free Application for Federal Student Aid form (FAFSA) for our daughter, who’s in her second year of undergraduate school. It has taken several months to get the FAFSA form filed as we tried to figure out why the government kept bouncing it back to us.

This form is the Rosetta stone for most financial aid. For those already in college, you still have to file it every year. Colleges need this information to set and adjust their financial aid awards. If your family income level rises, the school has the option to lower your assistance package.

For anyone receiving -- or trying to qualify for -- college financial aid, the FAFSA is essential. This year you can file it beginning Oct. 1. The sooner you do so, the better because it’s the portal for receiving state, federal and college-level assistance.

For some reason, we couldn’t get our FAFSA data to punch its way into the government’s system. Was it us or a nasty software bug? My wife spent hours with the online form and the mailed, yellow paper forms that kept coming back with error messages from the FAFSA processing center in Kentucky. I hobbled through it the year before.

What were we doing wrong? Supremely frustrated by the red tape nightmare and after spending hours on the phone, my wife handed our FAFSA snafu over to my daughter, soon to return to her challenging studies at a prestigious private college.

The problem didn’t lie with the government, though. It turned out that she had given my wife (and the FAFSA folks) an incorrect Social Security number, which short-circuited their system. Our bad!

Like most computer systems, when numbers don’t match names and addresses on file, things don’t compute and forms don’t get filed. Once my daughter gave the FAFSA folks the right number, the happy little document was on its journey through the government’s system and onto the college financial aid department.

What did we learn? You have to be sure of your numbers. The FAFSA system is set up to check names against numbers not only in its system but in the IRS database. By the way, FAFSA will also let you download your tax return directly from the IRS, which will save you some time.

What makes the FAFSA application process so cumbersome, though, is that you have to go through several layers. Before you can even do the basic form, you need what’s called an “FSA ID,” which is part of the cybersecurity gatekeeping. It’s an electronic “legal signature” that will get you in and out of the system.

The FAFSA process will eventually produce an all-important number -- the “Expected Family Contribution” (EFC) -- so you’ll need a raft of documents that detail your assets and income sources. That includes checking and savings accounts, your child’s income and savings and any income statements such as W-2s. You’ll also need information such as child support, interest income and any assets outside of retirement accounts. Those such as 401(k)s aren’t included in the FAFSA formula.

Note: Some private colleges may require that you fill out an even-more extensive aid form called the CSS/Financial Aid Profile.  

About the EFC: It’s a pretty good initial indicator of how much aid you can expect to receive and your family’s out-of-pocket contribution. You can cover your portion through savings such as 529 college savings plans (ideally) or loans. Grandparents and other family members can also help.

The government also wants to know about parents and the dependency status of the children. It can make a big difference in terms of financial aid if a single parent with custody is footing the bills. In that case, you may qualify for more aid. Having several children in college at the same time also may net more assistance.

Ultimately, the government should give you that EFC number and send all of this information to the colleges you’ve selected. This is the first leg of the financial aid process.

Although not everyone agrees that the EFC is fair, it’s not written in stone. 

You can challenge the EFC by providing evidence that you need more aid. For that, you’ll have to make your case in writing with individual colleges through a “professional review” with their financial aid offices. Are you anticipating large medical expenses or caring for an elderly relative? Expecting to be laid off soon? You should note anything that impairs your ability to pay for college. 

One resource I like is provided by Edvisors, an online college information site. It offers a free e-book on increasing aid eligibility, and it has a FAFSA tutorial, which I would recommend you take before logging on to the FAFSA site.

You can find plenty of other advice on how to fill out the FAFSA to garner the most aid. Just don’t click on the first sites that pop up in an online search. They’ll lead you to services that charge for assistance. Most of what you need you can get through the official Department of Education site or other free resources.

While there’s no magic formula on netting aid, if you stick to the numbers, at least you can get a fair shot at obtaining grants, scholarships, tuition discounts and work-study -- but avoid loans. It may take some patience and diligence, but we found the end result to be rewarding and even fair.

And of course, essential personal ID such as Social Security numbers should be correct for students and parents. Take it from me: If you double-check them, you’ll save a lot of time.   

  • 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.