A. Yes. You have to fill up a new FAFSA application each year, because each year the financial aid amount varies based on a family's past year's income and the assets changes, as well as changing demands for financial aids in general.
Q. Is an FAFSA application needed for each year?
A. Yes. You have to fill up a new FAFSA application each year, because each year the financial aid amount varies based on a family's past year's income and the assets changes, as well as changing demands for financial aids in general.
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Q. Can I start FAFSA application before January 1st?
A. No. The need-based college financial aid application is based on a family's annual income, there are many occasions a family might have a significant amount of bonus or dividend income by year end. Therefore you have to wait to file it after January 1st, any application submitted before January 1st will be automatically rejected. Q. I am considering opening a 529 account for my child, but I heard it will hurt my child's chance of getting financial aid later, is it true? A. Yes it is true, but there are a few factors you need to consider. First, the impact is not that big A 529 plan is owned by the parents, the child is just the beneficiary. For parents' assets, only 6% will be considered for affordability calculation. Its impact is a lot less than any college fund account that is owned by the child directly. Second, most of financial aid is not free You might be worried that with more assets, your child's chance to get financial aid is lowered. However, please keep in mind most of financial aid is in the form of loan, not free. Third, asset is a less important factor Even with less assets, your child's chance of getting financial aid is not higher, because income's impact is far greater than assets. So for a high income family, even it has a high expense and with little assets, the chance of getting financial aid is still small. Finally, don't expect the college will fully support your child's education needs Based on some survey results, less than one third of public colleges and less than 20% of private colleges will match 100% of a student's financial needs. In the end, it is still you, the parents' responsibility to get your child through the college life. The bottom line If your state offers tax benefits for contributing to 529, definitely contribute to it. If not, you should shop around and find another state that offers a good 529 plan and invest in it. Q. Should I wait till my tax is done then start applying for my child's college financial aid? A. No, start your child's college financial aid application as soon as you enter the new year! The reason is simple:
You can't afford waiting till your tax is done then applying for college financial aid. After you getting the PIN from pin.ed.gov, you can use FAFSA.ed.gov to do financial aid, just check "will file" tax in the FAFSA application. You can use last year's tax numbers to estimate this year's taxable income, and update it after you are actually done with this year's tax. |
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