The Free Application for Federal Student Aid, commonly referred to as the FAFSA, is a form that must be completed by students who want to apply for financial aid for college. Using the FAFSA form you can apply for a variety of types of financial aid, including student loans, grants and work-study from federal and state government agencies as well as from schools and private organizations. The form asks for information about income and taxes for the student and possibly the student’s parents. It requires a tax return from a past year to be submitted to document income. If a tax return was not filed, alternative documentation can be submitted.
Applying for Financial Aid
Rising tuition costs have caused many students to turn to financial aid to help pay for tuition, fees and living expenses. If you’ve calculated your college financial needs and are looking for assistance, filing a FAFSA form can help you on the path toward learning what financial aid options are available to you. Without filling out this form, you won't be able to apply for a variety of kinds of financial aid, including merit-based aid.
Dependent or Independent Student?
The Department of Education expects both students and their parents and guardians to contribute to their educational costs before financial aid kicks in. This is where the concept of a dependent or independent student comes in. The FAFSA asks a series of questions, such as a student’s age and whether they are married or have children, to determine if a student’s aid is based on their own financial situation or on their parent’s or guardian’s situation. Dependent students will need to have their parents fill out a FAFSA when they apply for aid.
Filing a FAFSA
Over the years, the online FAFSA filing process has been continually simplified. Most students who gather the required information in advance are able to complete the process online in just a few minutes. Before filling out the FAFSA, students are advised to apply for a Federal Student Aid FSA ID. This ID is a username/password combination that allows you to electronically sign online documents related to student aid. You will be required to provide your name and Social Security number to obtain an FSA ID. Parents who are applying for financial aid on behalf of their dependent children need to obtain their own FSA ID.
Documents Required for FAFSA Filing
As proof of income, the FAFSA requires a federal tax return that includes W-2 information to be submitted. This includes IRS 1040, 1040A and 1040EZ returns as well as returns filed from U.S. possessions such as Puerto Rico and Guam. Documentation about untaxed income, such as investment interest and child support, is also required to be submitted. Finally, you will be asked to provide information about savings, investments, business assets and real estate holdings other than your primary residence. If you don’t have all the documents you need, you can still begin the FAFSA process and finish it later.
FAFSA Question 32
You may hear reference to question 32 on the FAFSA form. This is the first question in a group of financial questions that all applicants are required to complete. It asks whether you filed a tax return for the previous year. The questions that follow are related to your return, such as whether you filed as single or married, how much you earned, how much you paid in taxes and how many exemptions you claimed.
New FAFSA Rules
In the past, FAFSA tax return requirements included submitting information from the previous year’s tax return or a tax return estimate. This posed a hardship for students and parents who didn’t have their return or estimate until well into the time period allowed to apply for student aid. In 2016, a change was announced that allowed a return from an earlier year to be used for filing. For the 2017-18 FAFSA, 2015 tax information is requested. For the 2018-2019 FAFSA, 2017 tax information is needed. If a student or family’s income changes significantly since filing that return, they should contact their school’s financial aid office and request to have their FAFSA adjusted. Another change announced in 2016 was an earlier FAFSA filing date in October of the previous year instead of January of the year when aid is needed.
Using IRS Data Retrieval Tool
The FAFSA website makes it easy to submit tax return information using the IRS Data Retrieval Tool. If you are eligible to use this tool, you’ll see a button on the FAFSA online form labeled “Link to IRS.” Clicking on the button will redirect you to an IRS site where you can log in with your FSA ID. It’s important to enter all of the requested information exactly as you entered it on your tax return before you initiate the transfer of your federal tax information for your FAFSA form. For security reasons, the information won’t be displayed on the FAFSA website, so you won’t be able to change it once it’s been transferred. Instead of tax information, you will see the words “Transferred from the IRS” on the FAFSA from following the transfer.
Entering Tax Data Manually
Students and parents who decide they don’t want to use the IRS Data Retrieval Tool have the option of manually entering their income information on the FAFSA form, but this is discouraged since errors could occur. Also, information entered manually isn’t hidden like the information transferred from the IRS. If you do decide to enter your financial information manually, make sure to only log on to your FAFSA account from a secure connection and always log off and close the browser window when you’re done with a FAFSA session.
No Tax Return Available
A student or parent may not be required to file an IRS tax return if their income is below a certain level. The FAFSA provides an option to indicate that no tax return is available because it was not required to be filed. Alternative income verification will be required, such as a final pay stub, a W-2 or a 1099 form. If you’re a dependent student and your parents reside outside the U.S. and do not file U.S. tax returns, you can indicate that on your FAFSA.
File FAFSA with Mobile App
Beginning with the 2019-20 FAFSA, students and parents can complete and file a FAFSA using the myStudentAid mobile app for iOS and Android devices. The user experience is tailored according to the role of the applicant (student, parent or preparer). Like the online FAFSA, the app provides guidance for each question and links to other student aid resources like the Federal Student Aid website. Access to the IRS Data Retrieval Tool is available from the myStudentAid app, allowing the entire FAFSA process to be completed from a mobile device.
Once you’ve supplied all the information requested on the FAFSA and provided your digital signature, the FAFSA is processed and then sent to the colleges you indicated when filing. Each school will look at your financial information, decide how much financial aid you’re eligible for and contact you directly. The Department of Education recommends waiting until you have received offers from all of the schools on your list and decide which to accept based on costs compared to the amount of aid offered. After you accept financial aid from the school of your choice, it will be handled through the school. Be aware that you may be required to report income from certain types of financial aid, such as work-study, on your next tax return.