College is expensive. As reported by CNN, the average cost of attending an in-state public college for the 2012-13 academic year is $22,261. The average cost of attending a private college or university for one year is a staggering $43,289.
Those increases are, on average, more than twice the rate of inflation.
Realistically, that means that families like mine will depend on scholarships, grants, loans and other forms of financial aid to assist with paying for college. Most families — even those that save — aren’t able to pay all costs out of pocket.
When it comes to financial aid for college, most packages start with the dreaded Free Application for Federal Student Aid (FAFSA). Information provided on a FAFSA helps determine the kind of federal financial aid, including loans, grants and work-study, if any, a student might be eligible to receive. While the form is a federal form, it’s important to note that some states and colleges use the FAFSA to determine other kinds of financial aid which might be available.
To fill out the FAFSA, a student has to provide basic personal and financial information. But it doesn’t stop there. If a student is considered a dependent, you also have to report parent information on your FAFSA as well.
Who is considered a dependent student?
Whether a student is considered a dependent student is not determined by your federal income tax status, though it’s a reasonably safe bet that if a student is claimed as a dependent for federal income tax purposes, he or she is likely considered a dependent for purposes of FAFSA. The converse, however, is not always true.
A student is an independent student for FAFSA purposes if he or she is one of the following: At least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse, an emancipated minor or someone who is homeless or at risk of becoming homeless. You can find out more at studentaid.ed.gov.
Submitting your financial information
Students (and parents, if the student is considered a dependent student) must submit current financial information with a FAFSA. That information relies heavily on federal income tax records. When including that information, you’ll want to use your federal income tax information for the tax year prior to the academic year of application. That means, for example, you will use information from your 2012 federal income tax return to complete a 2013–14 FAFSA.
To help you transfer your tax data to your FAFSA, the Internal Revenue Service (IRS) has a free service, the IRS Data Retrieval Tool. To use the IRS Data Retrieval Tool, sign up to complete the FAFSA online. As you complete the information, you will have the option to transfer to the IRS website, where you’ll need to log in by providing your name and other information exactly as you provided it on your federal income tax return. When you are transferred back to the FAFSA application, the fields will be populated with your tax information and marked “Transferred from the IRS.”
If you’re not eligible to use the tool or if you’re completing the form by hand and need your tax info, you can get an official transcript from the IRS. You can get your transcript online or by calling the IRS toll-free at 1-800-908-9946.
In order to enter information from one or both parents’ return, the same process applies. After you’ve entered all of the information and submitted your return, you’ll receive a confirmation page, with a confirmation number.
You’ll eventually receive a Student Aid Report (SAR) with information about your eligibility for financial aid, along with the Expected Family Contribution (EFC). Despite its name, that amount isn’t what you will be expected to pay. It’s used by your school to calculate the amount of federal student aid you are eligible to receive. You’ll want to work with your prospective college for the rest of the process, including determining your potential financial aid package.
It kind of feels like you should get college credit just for sorting all of that out.