October 1st is here and the FAFSA form for the 2018-2019 school year is available. They’ve made the process so much better now that you can use a year earlier return and now that they fixed to IRS Data Retrieval tool that was hacked last year, all is good. I just need to collect my current account values and fill in the form.

This will probably guarantee that you will LOOK as rich as possible and receive the least amount of need based aid possible.

What families don’t realize about Federal Aid is that there are three financial windows that need to be managed to get the most need based aid. They are:

1.    Your income windows for FAFSA.

2.    Your asset windows.

3.    Your income windows for tax credits.

Each is important to manage at different times. The FAFSA income window starts halfway through the student’s sophomore year in high school through the mid-point of their third to last year in college. (Many students take more than 4 years to graduate.) The asset window is a very short one. It is the one day each year that you submit your FAFSA form. The last window, the tax credit window, occurs each year your student is in college.

Managing these 3 windows in unison is important so changes for one don’t ruin the others. Before making any changes, please consult your financial professional (financial planner and accountant). Proper handling of these windows could save your family thousands, even tens of thousands over the college years.

Maybe you are reading this and you are about to fill in the FAFSA. You realize your income window for this year is set so what can still be done?

LOTS. But an evaluation of your situation by someone focused on financial aid is needed to determine the next steps BEFORE you submit your FAFSA. Asset positioning can be changed before submitting the FAFSA but care is needed to make sure the other windows aren’t “shattered”. Some questions I ask involve recent family situation changes like job loss, divorce and even death of a parent. A family going through tough loss could be in a position for more aid. Where are assets/who owns the assets and what is the unrecognized tax liability in each investment? Changes could be made to prepare for the years 3 through graduation could save large sums. All is difficult to assess without a review.

Do you think that’s all? Let’s throw in the CSS Profile financial aid form that about 300 colleges and universities use to determine their own need based money. This form uses most of the same information as FAFSA plus more. Most times, home equity is counted. 529 plans created from a minor’s account remains a minor’s asset so it doesn’t help reduce your asset “value”. Divorced? They probably will want your ex’s financial information…

Contact Making College Worth It for a free checkup.

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