Dear Babs,

I think I need to stop watching the news; all this terrible talk about the economy is really getting to me. I’m heading off to college next year, and I’m afraid I won’t be able to afford it. Should I delay school a year to work and save money? Should I give up my expensive dream school for a cheaper one? Help!

Signed,
Financially Frustrated

Dear Frustrated,

It’s definitely a scary time in our economy, but that should not stop you from pursuing a college education. Your education is an investment, and it’s one that will pay off down the road. Still, there are some ways that you can relieve the burden.

I know it’s far off, but if you are thinking about graduate school one day, then perhaps one option is to choose a less expensive school for undergrad. While prestigious schools are often associated with high price tags, keep in mind that there are excellent public schools that are bargains in comparison.

If you’re a good student, scholarships are always an option. Don’t give up hope if you don’t get one for freshman year; many schools are known to give scholarships to high-achieving students as they progress through their four years.

Don’t rely on the government to offer a whole lot of assistance at this point, but do take what you can get. Send in your FAFSA early so that you have the best chance of getting funding. Also, be a frequent and friendly visitor to your Financial Aid office on campus so that you are never in the dark with what your financial situation or tuition bill is like.

There are many online resources, like CampusCompare, that offer financial aid calculators and other resources to help you through this stressful time. You are definitely not alone in this, so don’t be afraid to ask questions!

Financially yours,
Babs

FAFSA Financial Aid Key Terms You Need to Know 

Cost of Attendance: What it costs to attend a specific college, including tuition & fees, room & board, books, transportation, personal expenses, and all other necessary expenses associated with going to that college.

Dependent Student: A student who is dependent on a parent or family member for financial aid purposes. If you are a dependent student, you are required to file the FAFSA using both student and parent financial information.

EFC: Expected Family Contribution. How much your family is expected to contribute to college costs. It is subtracted from the Cost of Attendance at the college(s) you plan to attend, to determine your eligibility for federal student aid.

FAFSA: The Free Application for Federal Student Aid. The form you need to fill out to get most types of student financial aid, including grants and loans.

Federal Methodology (FM) or Federal Formula: The calculation, used by the federal government, to determine a student’s Expected Family Contribution (EFC). In other words, the standardized methodology for figuring out how much you can contribute to your education to determine how much financial aid you will receive in the form of grants or loans.

Independent Student: What you are considered for financial aid purposes if you are financially independent. If you are an independent student, then you can file the FAFSA without submitting any information about your parents financial situation (although spousal information is required if you are married).

PIN: If you are applying for your FAFSA online, the PIN number acts as your electronic signature.

SAC: Student Asset Contribution. The portion of the EFC that is comprised of your personal assets (cash, checking, savings, investments, trust fund, etc.). 

SAR: Student Aid Report. What the Department of Education sends you after you file your FAFSA form. The SAR lists the information you reported on your FAFSA. At the upper right of the front page of the SAR, you’ll see your Expected Family Contribution.

FAFSA is a 5 letter F-word that doesn’t sound like much. But if you are going to college and applying to financial aid, it’s a term you are about to get to know…intimately.

FAFSA stands for The Free Application for Federal Student Aid and if you want money for college you definitely will come across this form. In fact, the FAFSA is considered the king of all financial aid forms because it is the gateway to most types of financial aid—be it federal grants or loans.

So let’s help you get acquainted a little better.

The deadline for filling out the FAFSA form for this year is June 30, 2008. You can file the form online at or on paper. Applying online is recommended because the process is both faster and easier. Once it’s filed and processed, you will receive a Student Aid Report (SAR) by email or by post. This report will tell you how much your family is expected to contribute to college costs. Schools use that info to prepare your financial aid package.

 That means money for college. So it’s definitely worth it to take the time to fill out the FAFSA application. It should take about an hour or so to do the application online if you have all your necessary documents. (See below for what you need).

FAFSA Tips and Tidbits

• To organize your info, print and complete a FAFSA on the Web Worksheet before you begin entering your information online.
• Make sure you use the most up-to-date version of the form.
• Don’t Skip Anything unless the instructions specifically tell you that you can. If you do not own a business, for example, put down “0″ for any values related to a business. It’s a machine that processes the form.
• Proofread your form and make sure everything has been answered correctly.
• Make sure that you have provided the necessary signatures. If you are applying online, you will be given a pin number, which acts as your electronic signature.
•  Make sure you also fill out the college’s supplemental financial aid forms to the FAFSA.
• Make sure you know the deadlines for your separate supplemental financial aid forms.  Unfortunately, the deadlines for the supplementals and the FAFSA are usually different.
• You have to submit a new FAFSA application each year. Your finances may change from year to year so make sure you get the most financial assistance that you can!

Documents you need for filling out the FAFSA:

your Social Security Number, your driver’s license (if applicable), your 2007 W-2 Forms and other records of money earned, your (and your spouse’s, if you are married) 2007 Federal Income Tax Return, your parents’  Federal Income Tax return (if you are a dependent student), your 2007 untaxed income records (Social Security, Temporary Assistance for Needy Families, Welfare, Veterans benefits records), your current bank statements, your current business and investment mortgage information, business and farm records, stock, bond and other investment records and your alien registration or permanent resident card (if you are not a U.S. citizen).

Check out the key FAFSA terms if you want to know more.