If your child is heading to college next fall, now is the time to drill in to the details of how you (parents and/or child) are going to pay for it. There is a wide range of options to pay for college tuition, such as cash savings, 529 plan, grants, scholarships, work study and loans. Other than the 529 plan, each of these options require the student and parent complete the Free Application for Federal Student Aid (FAFSA).
The FAFSA used to be a big headache as parents scrambled to gather the information required to complete the application as close to early January as possible. The reason being financial aid is typically doled out on a first come first serve basis. The problem was always getting income amounts (FAFSA requires income from the parent and child's 1040). Since most people don't file tax returns in January, let alone have all of the information available to file, it was very difficult get the required information.
Good news! Beginning with the 2017-2018 school year, you will be able to file the FAFSA beginning October 1, 2016. Under the old rules, this would seem impossible, but last year new rules were put in place to use parent and child's income from the prior year tax return (2015 tax return is used for 2017-2018 school year FAFSA). And, to make matters even better, the electronic version of the FAFSA goes directly to the IRS and pulls (using the IRS Data Retrieval Tool, if you opt for it) the required income amounts into the FAFSA for you.
There is still some work for you to do to complete the FAFSA. You still need to gather asset information, which can be a pain looking for all of your account balances. However, if you are an SWA client, you can use Wealth Access, our new client net worth statement application. Most of your asset information will be available at the click of a button.
Please feel free to contact your SWA advisor or Kay Strand if you need further information regarding FAFSA or Wealth Access.