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FAFSA Q&A with Joe Harmon

Spanish teacher Erin Harmon’s husband works as a financial planner at his company Harmon Wealth Management. The Vision got his insight on the FAFSA.

Q: What is the FAFSA and why is it important?

A: The FAFSA is the Free Application for Federal Student Aid that is used by nearly every accredited college to determine a student’s eligibility for need-based financial aid. If a family hopes to get financial aid to reduce the out of pocket cost of college, then they shouldn’t skip this form.

Q: Who should fill out the FAFSA form, parents or student?

A: Both the parent(s) and student will need to complete their respective sections of the form.

Q: What information should I have nearby to answer the questions?

A: Parents and students will need to use their 2017 Tax Return to complete the income sections of the FAFSA. However, the IRS Data Retrieval Tool allows families to transfer the required information to the FAFSA automatically. Parents and students will also need to report assets at current market value as of the day the FAFSA is completed, so access to account statements is important.

Q: How long does it take to fill out?

A: It depends. The form itself is easy to complete and far less complicated than the College Board’s CSS Profile. The most time consuming part is simply collecting the required data to complete the FAFSA. The less a family has to report the easier it will be to complete.

Q: How do colleges use the FAFSA?

A: In order to qualify for financial aid each student must be able to demonstrate a financial need for it. The greater a student’s financial need, the more aid he or she is likely to receive. So, to calculate a student’s financial need you simply subtract the Expected Family Contribution (known as EFC) from the total sticker price of the college. EFC is the minimum amount a family is expected to pay towards the cost of attendance. It’s easiest to think of EFC as “your share of the bill.” The FAFSA and College Board’s CSS Profile are two aid forms colleges use to collect information on the family. Once completed, the family’s data is then put through one of three different formulas to determine their unique EFC. The information used to calculate EFC includes family size, age of the oldest parent, number of children in college and the assets and income of both the student and parent(s).

Q: Do parents have to share their private financial information with the student?

A: No, there are two separate IDs for parent and student.

Q: Where is a good place to go if you have questions about filling out the FAFSA?

A: Local colleges are a great resource (GVSU, GRCC, Aquinas) and sometimes they’ll even help you complete the forms. FAFSA.gov is another resource.

Q: Is there anything that’s important for people to know about the FAFSA that I haven’t asked?

A: When it comes to paying for college, where a student chooses to attend goes hand-in-hand with affordability. There are different rules in different situations at different colleges. For example, some schools offer merit aid and others do not. Likewise, a student may qualify for need-based aid at one school but not another. This is due to the fact that there are three different formulas a college can use to determine a student’s eligibility for need-based aid. So, a family’s situation may be treated more favorably at one college over another. This could mean more in grants and scholarships, but everything depends on the school being considered and each family’s unique situation. Therefore, it’s extremely important for parents to be highly involved in the college planning process. My advice to parents is to identify where their child is likely to get into college, get aid and afford to go before their student even starts completing college applications. This allows parents to pinpoint which schools are in the family’s affordability ballpark and which ones are not. Contrary to popular belief, a college degree is much more likely to guarantee debt than a well-paying job.

Disclosures: This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for the reader. These materials are not intended as any form of substitute for individualized investment or financial planning advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own.

Still have questions? Find out more at https://www.harmonwealth.com/

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