FAFSA Fun for the Weekend

If this time of year and income taxes wasn’t enough fun and excitement for you, it is also that time of year when students planning for college in the fall (but more likely their parents) get to fill out the Free Application for Federal Student Aid, also known as the FAFSA.  It has been my wonderful privilege of filling out this form the past two years since this is my oldest child’s sophomore year.  And now, I will get to fill it out again this year for her and her sister.  Yes, I will have 2 college students in the fall.

Since I enjoy filling out this kind of paperwork almost as much as going to the dentist, I have put it off for most of the month.  But since the ideal time to have it completed is before March 1st, guess what I will be doing this coming weekend.  I will be having loads of fun filling out the FAFSA.  Hopefully, it won’t be all that different filling out the information for two students as opposed to one.

College Financial Aid

The purpose of the FAFSA is to serve as a central depository of information that assesses the financial condition of a student and student’s family through questions on assets, liabilities, and income in order to come up with the amount that the student or family might be expected to contribute toward a secondary education.  This information is then used by colleges to help determine eligibility for various federal, state, or institutional programs.  These could include grants or scholarships, loans to students, loans to parents, or work programs.

Now I am certainly not an expert on paying for college, but I have learned a little about the various programs over the last couple years.

• Grants–These are often based upon demonstrated financial need and do not need to be paid back.  The most well known would be the Federal Pell Grant program which has a maximum award of $5,500 per year.  There are other grants available if you meet certain criteria, such as losing a parent in Iraq or Afghanistan, so be sure to check those out.
• Federal Work-Study Programs–These programs will typically enable a student to work at some on campus type job such as in the cafeteria or library and be paid on an hourly basis with the funds being used to pay for college expenses.
• Federal Loan Programs–These go by different names such as Stafford and Perkins loans.  Each of the different loan programs have different requirements.  Some interest rates are better than others and there are various rules regarding deferment of payment and whether or not interest adds to principal or not.  It can get quite confusing to keep it all straight.  I don’t really have a great grasp on it all and have to look up the information.

Personal Bottom Line

For me personally, I have had enough debt and other expenses throughout the years that I am borrowing to help pay for my children’s education, but I am not sacrificing any retirement savings.  The interest rates are favorable so I am better off to pay the other debts first.  Of course, I will need to eventually pay back all of the college debt as well.  That will be part of my debt-free requirement in order to enter retirement.

We have managed to save some of the college cost since my kids have gotten some merit scholarships and some discounts for academic reasons.  They surely could be getting through with less expense, but it also could have cost a lot more.  I am probably in the middle of the road overall.  I am paying back the loans already and have included them in my net worth calculations.  I could certainly insist that my girls work two and three jobs during the school year to keep costs down, but I would rather have them get decent grades and get done in 4 years.  They can work during the summers and will work plenty over the years for sure.

Advice (If I Had it to Do Over)

So what would I advise if I had it to do over again?  I would probably not get in as much debt in the first place and try to minimize costs associated with having the kids in the first place.  Then I would have saved more which would have been easier had I not been in debt.  In other words, stay out of debt and save/invest as much as possible while the kids are growing up so that the costs of college can be paid from current savings.

Needless to say, it is impossible for me to go back and change anything, and it may be true for you as well.  But I am going to make the best of the situation in which I find myself and make the necessary adjustments to improve my financial situation in the future.  And that is why I am writing this blog.  Not because I am perfect or make the best decisions, but because I am learning.

I hope you enjoy this coming weekend.  I have a date with the FAFSA.