High school seniors and their parents can slide on some New Year's resolutions, but one they should keep if they intend to go to college and apply for financial aid is to complete the FAFSA form (Free Application for Federal Student Aid) through the U.S. Department of Education (DOE).
For the upcoming academic year, FAFSA forms must be filed between Jan. 1 and June 30. And, since the amount of aid available is limited, the sooner you file, the better.
The FAFSA form is also used to apply for state and college-sponsored aid. On the FAFSA website you can find your state's application deadline. Filing deadlines also vary for colleges and universities, so it's important to confirm the date with the school's financial aid administrator.
State and college deadlines are often much earlier than the federal date, and funding is often first come, first served.
How to apply
The application form is free on the U.S. Department of Education website (fafsa.ed.gov). Note, that if you do a search for "FAFSA" you may find many sites that can help process the form. Be aware that these sites often charge a fee for this service. And while the form may appear complicated, there are free services that can help guide you through the process. These services are typically promoted through the high school counseling office and college admissions office.
The DOE provides free brochures so students can learn about the process before applying:
- Download "Federal Aid First," which explains the benefits of federal versus private loans, at federalstudentaid.ed.gov.
- Order "Funding Education Beyond High School: The Guide to Federal Student Aid" at fsapubs.org or by calling the DOE at 800-294-7084.
For some low-income students there are Pell Grants, which do not have to be repaid.
Why apply for federal loans
"Federal loans are subject to income-based payback, fixed interest rates, and take nine months to default on, making them a much safer loan for students to take," explained Lauren Asher, president of The Institute for College Access and Success, in Forbes magazine.
While many private loans may no longer have late fees, there may be a big catch in the fine print including a clause which could allow issuers to declare the loan in default after one missed payment. Defaulting on a loan could damage the borrower's credit rating and, in some cases, their employment prospects.
Rising student loan debt
In a recent survey, the College Board reported the cost to attend an in-state public college for the 2013-2014 academic year averaged nearly $23,000. For a private college the cost nearly doubled: $44,750.
With college costs continuing to rise, more and more students are turning to loans to help fund their education. That's why students should be thorough in evaluating their loan options.
Now estimated at $1.2 trillion, the cumulative amount of student loan debt is viewed as a national crisis holding back the financial prospects of recent graduates who are entering the job market. With careful planning, your student can increase their chance of graduating with as little debt as possible.