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FAFSA Primer: How to Navigate Through the College Aid Maze

03/11/2015 12:42 pm ET | Updated May 11, 2015

Figuring out college financial aid can be complex. Today, applying for assistance starts online -- with the Free Application for Federal Student Aid (FAFSA), a 130-question form that determines who qualifies for a piece of $150 billion in federal grants, loans and work-study funds. Whether you're a parent with a child currently in diapers or a student planning to graduate from high school fairly soon, it is worthwhile to study the FAFSA well in advance.

Here are a few questions to consider when investigation the FAFSA:

Who needs the FAFSA?

Any current or prospective student who needs help paying for higher education. Today, roughly 85 percent of all first-time, full-time undergraduates at four-year colleges receive aid, according to statistics from the U.S. Department of Education. For the 2014-15 academic year, the College Board reported that annual tuition, room and board averaged $18,943 at in-state public universities, $32,762 for out-of-state students and $42,419 at private, nonprofit schools. For parents or students unable to meet these costs in full, filling out FAFSA is a critical first step.

Who fills out the FAFSA form?

All financial aid documents are in the student's name, but they should work with their parents to complete all forms. Dependent students are generally under 24, unmarried and not working full-time, and they will need parents' financial data to complete the filing. Students with special family circumstances (including absent parents) may still qualify for federal and state aid under certain conditions, but should check directly with financial aid representatives at target schools for specific options.

What are the deadlines?

For federal aid, FAFSA filing opens Jan. 1 each year, with a filing deadline of June 30 for funding that covers the current academic year. But it's almost more important to keep state deadlines in mind since some are significantly earlier. In short, start the aid process as soon as you can. Make sure you know your state's financial aid deadlines, stay in contact with current or target school financial aid departments and keep a list of questions you'll need answered along the way.

What key data is needed to fill out the FAFSA?

Students first set up a personal information number (PIN) that gives them multi-year access to the financial aid system. They will then enter their own Social Security, contact and address information. Parents will need to supply:

  • Most recent federal income tax returns, W-2s, and other records of money earned; tax information can be added using the IRS's data retrieval tool on the FAFSA online form
  • Applicable bank statements and investment records
  • Records of untaxed income such as workers' compensation or disability benefits
  • Alien Registration Number if not a U.S. citizen

What happens after the FAFSA is filed?

Stay in touch with the financial aid office to make sure all information is in order. However, if your child is in the midst of the college application process, it's a good opportunity to learn as much as possible about target schools' financial aid practices in case he or she is accepted. Most college websites have a section devoted specifically to financial aid and their requirements. If you do an on-campus visit, see if an in-person meeting might help answer questions.

Are there any other forms to fill out?

It depends on the school and the types of aid that are available. Some colleges and universities may also suggest that in addition to the FAFSA, students fill out the College Board's CSS/Financial Aid PROFILE® form, a service that helps students file for non-federal financial aid, including scholarships. The fee to submit is currently $25, and colleges generally set the deadline.

Where can you go for help?

For assistance in completing the FAFSA form, consider contacting a financial aid administrator at the prospective university or college on your list of schools. Some schools offer workshops in filling out the form, so do your homework and research local options. Organizations like College Goal Sunday offer such services in 39 states. Also, plan a college savings strategy as early as possible with the help of financial or tax advisors. Finally, your child can work on useful academic and financial strategies to get to the right school.

Are there other debt-free resources to consider?

Employers, professional organizations (related to the student's field of study), fraternal societies and private foundations are potential resources for no-strings scholarships and grant money. If your child works a summer job at a major company (fast food, retail and beyond), ask if the employer offers scholarships or education benefits to part-time workers. Finally, keep an eye on the news for the latest changes to financial aid and student loan rules.

Bottom line: More than three quarters of U.S. college students receive some form of financial aid today, according to the U.S. Department of Education. Understanding FAFSA is the first step to affording college expenses, whether college is months or years down the road.

Jason Alderman directs Visa's financial education programs. To follow Practical Money Skills on Twitter, visit twitter.com/PracticalMoney.

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