College Planning Monthly Update: November 2023
Updated: Nov 15
When Should I File the FAFSA?
As you may already be aware, the Free Application for Federal Student Aid (FAFSA) is not yet open and won't be until sometime in December or possibly January 1st. I've already gone over some of the major changes in September's newsletter.
FAFSA simplification has been a topic of discussion for several years, with the aim of making the process of applying for federal student aid easier for families. The intention is commendable: simplify the form, reduce barriers to apply, and make college funding more accessible.
So far, I would characterize FAFSA simplification as FAFSA Complication.
However, "simple" is relative. While these changes are aimed at simplification:
Some families might still find the process complex, especially if they're unfamiliar with financial forms or if they have unique financial situations.
There's always a learning curve with new systems or processes, so there might be confusion initially as applicants and financial aid offices adapt to the changes.
The underlying principles of the FAFSA, assessing a family's financial situation to determine aid eligibility, remain complex, and while the form can be simplified, some intricacies are inherent to the process.
Each month, we provide you with tips on the best ways to pay for college regardless of your financial situation in our College Planning Monthly Update.
This is the first year that parent contributions to their 401(k), 403(b), and 457 retirement plans will not be counted as discretionary and will no longer be counted against you when you apply for financial aid! If a retirement plan contribution is on your W2, it will NOT count against you.
However, IRAs, Simplified Employee Pensions, SIMPLE IRAs, Keogh, or any other retirement plan contributions that appear on your 1040 Schedule 1 WILL count against you.
A suggestion from our financial advisors would be to go ahead and fund those W2 retirement plans to the max. It will reduce your taxable income and increase eligibility for financial aid. This may be the most positive change ever made to the financial aid formulas because it may enable you to INCREASE your retirement account contributions while, at the same time, reducing your future out-of-pocket college costs! Contact me at 330-345-5000 so that I can run the analysis for your particular circumstances.
The financial aid system has more trapdoors and landmines than ever before. Do everything you can to avoid mistakes by preparing now for the financial aid process.
If you would like to go through our College Planning Process with our Financial Coach, Lindsey Curry, please reach out to her today!