Top 5 FAFSA Mistakes

It's that time of year when students are starting to think about applying for financial aid and submitting their FAFSA. Here are the top 5 mistakes that you need to avoid:

Not Submitting the FAFSA at All

Inaction doesn’t just hurt you here―it can sink you. The federal government is not going to call you and ask, "Hey, do you want financial aid this year?" You've got to do the legwork to reap the benefits.

Even if you believe that your financial need is not significant enough, file anyway. Previous academic accomplishments can be surprisingly rewarding, and maintaining a certain GPA often leads to grant money. Every little bit helps!

Submitting the FAFSA Late

When seeking federal financial aid, knowing deadlines is critical. The filing period for the new FAFSA opens on January 1 each year. Each school has its own financial aid deadline (e.g., the University of Maryland has a due date of February 15, while Pepperdine requires FAFSA completion by May 1). This cannot be emphasized enough! Just as submitting early boosts your potential aid amount, applying late diminishes your chance of receiving federal money at all.

Choosing a School Based on Tuition Costs Only

Remember, tuition is just part of the financial equation when it comes to paying for college. College costs can vary. Our minds automatically think, "Well, school A costs X amount and school B costs Y amount. School B's price is way lower, so it's the best financial choice."

That's not necessarily accurate. School B may have a lower base price when you do the math and add up tuition and expenses. Surprisingly, though, School A may offer more aid (possibly gift aid) because the cost is harder to cover. So don't rule anything out on just that basis.

What students need to do is look at individual school prices, consider the free aid they will get (scholarships, grants) AND factor in how much loan debt will exist upon graduation. This is how much the prospective education will cost you in all. To help you, Student Financial Aid Services offers a personalized College Cost & Planning Report®. Your College Cost & Planning Report® will help you evaluate which colleges best fit your career goals and bank account.

Not Understanding Student Loans

In order to calculate the cost of college, you MUST have a firm grasp of the finer points of loans. Different loans have different interest rates, and you should find out what they are. The Perkins Loan has a fixed interest rate of 5%, while the Stafford Loan rate can change from year to year. Every loan is different and some have variable interest rates.

You need to be aware of when these loans come due. Most student loans provide a 6-month grace period. So, for example, repayment on a Stafford Loan begins 6 months after graduation or a prolonged leave of absence. The Perkins Loan, meanwhile, allows a 9-month grace period. This is helpful if employment proves elusive after graduation, as borrowers have more time to start paying loans back. However, please keep in mind that Perkins Loans are need-based and are very limited in the number available.

Believing That Your Financial Aid Award Is Unchanging

Are you under the impression that receiving X amount this year means that you will get the same amount next year? That’s not necessarily the case.

Students and their families must realize that financial aid is a moving target. First-year freshmen, for instance, may be eligible for various aid types that upperclassmen do not receive―and no one is a freshman forever.

Additionally, remember that FAFSA aid is based on income and Expected Family Contribution (EFC). If there should be a sudden change (job loss, reduced hours), a student’s financial aid award is likely to be affected.

Avoiding these top 5 FAFSA mistakes will benefit you greatly. Not only does it lead to college funding, but sidestepping these errors will help increase your understanding of the financial aid process. If you are looking for more formal help, you might consider professional FAFSA preparers. They are experts in filing for federal financial aid and can be invaluable as you take this important and exciting step. Student Financial Aid Services is best in class when it comes to professional preparation services.