Applying for college is a trying experience. Once the application process is complete, the real challenge begins: how will my child’s education be paid? Saving for college should begin at birth with a 529 plan, but, with college costs rising faster than the inflation rate, most parents need some financial assistance.

Families often look to government-subsidized loans, grants, and scholarships. FAFSA, the Free Application for Federal Student Aid, enables qualified students to receive federal financial assistance for college. Federal student loans may prove a better option than private loans: First, federal student loans have a low fixed interest rate. Second, they can provide for income-based repayment plans. Third, they can be canceled in some instances based on the type of employment the student gets –– for instance, working in a public service job for more than 10 years. Finally, federal loans may be deferred or postponed for contingencies such as a return to school.

Options: The federal government has many financial need-based college loan programs like the Perkins Loan, the Subsidized Stafford Loan, the Unsubsidized Stafford Loan, and the PLUS Loan for Parents. The greater the financial need, the greater the opportunity to qualify for a need-based loan program. Consolidation loans enable either the student or parent to combine several federal student loans into one monthly payment. Federal consolidation cannot be combined with private loans, and, if combined, will prevent the government from assisting in paying for the loan interest.

Application: Parents with high school seniors should begin assembling information for the FAFSA as early as September. However, the FAFSA is not accepted earlier than January 1 for high school seniors attending college in September. To complete the FAFSA, you will need your Social Security card, driver’s license, your latest 1040 filed, your most recent checking and savings account statements, and your outside investment account statements. Submit the FAFSA even if your current tax return has not yet been filed; once you file, go back into the FAFSA application and provide the correct tax information.

For the quickest feedback (about three to five business days), file online at www.FAFSA.gov. You cannot apply for any financial aid without completing the FAFSA. The first step is to apply for a personal identification number (PIN) at www.pin.ed.gov. Both the student and the parents must apply for separate PINs. You can complete the 110 questions in the FAFSA online in more than one sitting.

Immediately after submitting the application, you will be e-mailed the estimated expected family contribution or EFC. This formula does not take into account consumer debt, but it does take into account your savings. To increase your maximum allowance, you can pay down some consumer debt with savings prior to the application.

You will also receive a Student Aid Report (SAR) that outlines your EFC. You may revise your FAFSA application at any time after the form is processed. If you elect to make changes after receiving the SAR, save the changed information and resubmit the form for processing.

Deadlines: Each state has a separate filing process and deadline for state financial aid. The dates are clearly outlined on the FAFSA.

Each college also has a different financial aid deadline. Contact the college financial aid administrator, the school website, or your child’s high school guidance counselor to confirm the correct filing date. Keep in mind the federal EFC methodology is only an index: each college may factor in other assets not included in the federal calculation such as qualified retirement plans, IRAs, insurance contracts, annuities and other assets.

If your children are young, consider the prospect that deficit-wracked governments may be less generous in financing college degrees in the future. A 529 plan today may be the best thing you ever give to your children. Sheehy Associates can help establish 529 college saving plans and arrange your assets so that you receive the maximum financial assistance. For help with financial planning and retirement, please call our office at 609-586-9100.

Bill Sheehy is owner of Sheehy Associates Inc. which specializes in Retirement Planning for individuals and corporate 401(k) plans. He is a Certified Financial Planner, a Certified Employee Benefits Specialist, a Certified Fund Specialist and a Chartered Retirement Plan Specialist. He can be reached at bill.sheehy@lpl.com or by calling 609-586-9100.

Sheehy Associates. 3812-B Quakerbridge Road, Suite 208, Hamilton. 609-586-9100. bill.sheehy@lpl.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC

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