Sometimes the FAFSA (Free Application for Federal Student Aid) can appear intimidating. However, watch this 3 minute video and you will feel the tension fly away.
1. Waiting Too Long
While many families will look to "deadlines" to schedule their financial application submissions, please note that it is important to file as early as possible. For example, while the FAFSA is available to submit after January 1st of each new year, many families wait, as their taxes are not yet complete. Many federal loans and grants are given on a first-come/first-served basis, so it is important to file as soon as you can. You can use last year's data to generate estimates, just make sure you make amendments to your application once your filing is complete. You can use the IRS Data Retrieval Tool to help.
2. Putting Money in Your Child's Name
Yes, save for college, but do so strategically. Keep in mind that assets in your child's name are expected to be contributed to their education at a much higher rate than those in your name (approx 20% vs. 7%). In other words, while setting aside money is important, make sure you keep it in an account that will not be used punitively towards your family's EFC (Expected Family Contribution). Items like 529 Plans and Coverdell ESAs are treated the same as a parental asset.
3. Cashing Out for College
Remember that your aid will be determined based on your most recent tax returns. While you may be tempted to maximize income prior to your child's enrollment, a large income or a sale of assets for a net gain will all raise your income. If at all possible, hold off for now and see if you can defer any bonuses for other another time.
4. Thinking You Won't Qualify
Filing a FAFSA is free. If you don't apply, you will not be eligible for any number of awards and you never know what will happen. For many colleges the FAFSA is a requirement for any aid, including potential merit scholarships.