The Massively Important Student Loan Form You Should File ASAP

For students starting college in the fall of 2015, figuring out loans and grants may feel like a long way off — you may not even know where you’re going yet — but there’s a form crucial to determining how much you pay for your degree that you need to get done as soon as possible: The FAFSA.

If you’re starting classes between July 1, 2015 and June 30, 2016, the federal deadline for the Free Application for Federal Student Aid is June 30, 2016, but if you want to have the best chance at as much aid as you can possibly qualify for, you want to turn it in now. Many states and colleges require it to assess your financial need. Furthermore, different states and colleges have their own deadlines, many of them much earlier than the federal deadline.

Nine states award aid on a first-come, first-served basis, three have deadlines in February and 11 are in March of this year. You can see a full list of deadlines, state by state, on the FAFSA website.

What’s the FAFSA?

Compared to much of the paperwork that’s required of incoming college students, this one’s pretty simple to complete. There’s really no reason not to do it, but Mark Kantrowitz, senior vice president and publisher of and author of “Filing the FAFSA,” said he’s heard every excuse for not doing it. None of them are good.

“If you can pay the full cost of education with pocket change, then you probably don’t need to fill out the FAFSA,” he said. That’s a very, very small portion of the population, and even if you’ve filled it out once and received no aid, that doesn’t mean you won’t qualify next year, or at a different school.

“The formula is complicated enough and changes every year so that you really can’t predict whether you’re going to qualify or not,” Kantrowitz said.

The government uses the form to calculate your Expected Family Contribution (EFC), using your family income and assets to determine what you could pay out of pocket. The gap between EFC and a school’s cost of attendance determines financial need, so it will be different at various institutions. Even if you’re just going to take out student loans to cover that gap, you’ll need to fill out the FAFSA.

Common FAFSA Mistakes

Failing to submit it early will exclude you from consideration for some state and school grants, but failing to submit it at all could cost you some serious free money. Kantrowitz analyzed FAFSA data from 2011-2012 (the most recent available) and found that 2 million students who didn’t file the FAFSA would have qualified for Federal Pell Grants, averaging about $4,700 each. That’s $9.5 billion in aid students could have received but didn’t. On state and institutional levels, they might have missed out on $2.9 billion. Considering we’ve got more than $1 trillion in outstanding student loan debt hanging around in the U.S., that’s a big deal.

So mistake No. 1 is not filling it out. Mistake No. 2 is waiting too long. You don’t need to wait to do your taxes to fill it out, because you can estimate your income from the last year and adjust it when you’ve filed with the IRS.

Mistake No. 3: Not applying every year. Sometimes, people just forget, but that can lead to a huge financial issue if you depended on aid or federal loans the previous year and can’t qualify because you forgot to fill out the FAFSA. Other times, people fill it out one year, don’t qualify for anything or just qualify for loans, so they don’t bother the next year.

Even if your family brings in a six-figure household income, you might qualify for aid or loans — when multiple students are in college, that seriously impacts the expected family contribution.

“The common scenario I see is they apply for their eldest child and don’t get anything the first year, and they say ‘Why bother?'” Kantrowitz said. Then they don’t fill it out when they have two kids in college, not realizing how much that changes their situation in the eyes of the FAFSA.

There are so many things you can do to make the FAFSA work to your advantage as much as possible, so take the time to research it. Kantrowitz writes a book on it each year, which you can download for free.

Debt can cost you so much in your lifetime, so it’s worth the time to try and minimize it. The FAFSA is pretty straightforward, but if you have questions or complicated family finances, there are plenty of people and organizations willing to answer them. If you’re going to college this fall, make filling out the FAFSA a priority this week.

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Christine DiGangi covers personal finance for Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News & Record. More by Christine DiGangi