A Series of FAFSA-filing forehead slappers - Part 1

by John Pearson

October 2006

Earlier Isn't Always Better

Families are often advised by aid administrators and college planners to file their FAFSA (Free Application For Federal Student Aid) as early as possible. And that does make some sense…but not at the expense of aid dollars.

John Pearson

The EFC formula assesses income based on the prior year's income tax filing, and assets and liabilities as of the date of the signing of the form. Parents' eligible assets are generally "assessed" at a rate of about 5.6 percent using the federal formula.

So make sure you pay your big bills in January before signing your FAFSA. Many families have federal and state estimated tax payments, or property tax payments, or insurance premiums that are due then. Making those payments before FAFSA filing could provide hundreds or even thousands of financial aid dollars.

John Pearson is a CPA and certified college planning specialist. He can be reached at john@johnpearsoncpa.com.