Paying for College

To qualify for federal financial aid, get over to www.fafsa.ed.gov today and fill out the free application. The Education Department began accepting its applications for the 2007-2008 academic year on January 1.  While many students don’t begin to think about next fall for a few more months, why not get a jump and get your application in as early as possible. 

One crucial thing to remember, don’t rush your application.  How you fill out the form could have drastic implications for the amount of aid you receive.  There are a few changes this year to consider.  The biggest change concerns the way state-sponsored 529 college savings plans are treated. The Deficit Reduction Act of 2005, signed into law in February, clarifies that 529 plans are considered the parents’ asset for purposes of calculating financial aid - even though their dependent child is usually named as the beneficiary. Likewise, the law says prepaid college tuition plans and Coverdell education savings accounts are the parents’ assets. The distinction is crucial because student assets can torpedo your child’s eligibility for financial aid.

There is another small change for students whose parents own their own businesses.  Kalman Chany, author of “Paying for College Without Going Broke,” said families may also miss a change in the law that affects small business assets. Parents who own businesses no longer have to report the company’s net worth on the FAFSA if the business is family-owned and has fewer than 100 employees.

It is highly unlikely that the government or your financial aid office will correct errors that you make on the FAFSA, so be sure to take your time and fill it out properly.  Good luck and make the most out of what the government offers you.ÂÂ