I always enjoy a good infographic and I think the one below is very fitting for the subject matter we cover on CheapScholar.org. Colleges costs have been increasing exponentially over the years. However, the amount of financial aid offered by many institutions has also been increasing at the same time. The additional amount provided through scholarships and awards probably doesn’t fully cover the increase in tuition but it does help to close that gap. Education tax credits have been helping to bridge that gap as well… Anyway, enjoy the following infographic!

In today’s article I hope to provide some simple tips and guidance to families that are concerned about the financial aspect of their student’s college education.

A college education is a large investment of time and resources. When you begin the college search process, it is important that you find a college that is the right fit for your student. Two important factors that play into that “right fit” equation are academics and finances.

You can find a great college that has all the academic strengths you are looking for but if it cost $60,000 a year and all you can afford is $20,000, it is probably not going to be a good fit. The inverse is also true. You find a college that is only going to be $10,000 a year but their curriculum reminds you of your high school courses.

In an effort to help your checkbook come to terms with your academic goals, I have compiled the following list of tips…

Net Price Calculators For All: You may not realize but beginning on October 29th, all colleges and universities are required to have Net Price Calculators on their websites. These tools help students see what the actual cost for them to attend that school will be and helps them to get past the sticker price. Here is an example of a really slick looking net price calculator.

File your FAFSA: My hope is that you have heard this time and time again. But just in case you have not, please make sure you file your FAFSA. It is not that hard and it is the first step to helping to reduce your college costs.

Compare Financial Aid Packages: Financial Award packages from colleges can be very confusing. It is always important that you take the time to compare your packages and be sure you understand what every component represents. CheapScholar has a great guide to help you decipher the financial aid package.

Know The Difference Between Federal And Private Education Loans: It is always important for you to exhaust your federal loans before you start looking at private loans. In most instances, federal loans will be a better option. However, private loans do help to make ends meet when all other options are not available.

Look At ALL The Costs: Tuition, room and board are not the only expenses you will incur when you head off to college. There are a number of other fees that you will encounter along the way.

Know Your Payment Options: Colleges and Universities try to make paying for college as easy as possible. It may not always be painless but knowing your different options will go a long way when that first semester bill hits your mailbox.

I hope you found this information helpful. If you know of any other college bound students/families, please don’t hesitate to utilize the “share tab” below to pass this information along to them.

The following is a guest article provided by J. Randy Green, Director of Financial Aid at Wittenberg University

As part of ongoing efforts to improve the higher education financial aid delivery system, the IRS and Department of Education are working together within the FAFSA application process.  That work will cause frustrations for some families this year.

The idea is wonderfully simple: the Department needs to know family financial information to determine eligibility for financial aid; the IRS has information on family income.  It is natural for the two to share that information.

The tricky part: the IRS is very careful with tax filer information and does not want to share this information with anyone.  (This is a good thing!)

The elegant solution: when completing a FAFSA, a student can access, without leaving the FAFSA site, the IRS’ Data Retrieval Tool (DRT).  This tool allows the student to pick up his or her own financial information and drop it into the proper slots on the FAFSA.  Technically, the IRS is not sending the information to anyone; they are simply allowing tax filers to access their own information electronically.

Another tricky part: although the DRT is available starting February 1, the tax return needs to have been already processed by the IRS in order for it to be available through the DRT.  As many people do not file their taxes until March or April, and as many colleges require that FAFSA data be provided by February or March, many students will not be able to use the DRT during their initial FAFSA filing.  This means that many families will still use self-reported or estimated financial information when they file the FAFSA.

And the kicker: families that do not use the DRT will be much more likely to be selected for verification, which is like a mini-audit of their FAFSA, and they will have to provide IRS data to schools to document their income.  A bit more detail here: for many years, the verification process has required families to prove that their FAFSAs were completed properly.  Usually, this involved sending the school a copy of the federal income tax return.

Here’s where the frustration may kick in: starting with the 2012-2013 school year, financial aid offices may no longer use copies of tax returns to verify information – they must get the family’s information from the IRS.

This means that the family must request a tax transcript from the IRS or go back to the FAFSA site and use the DRT.  Since the delay in getting a tax transcript from the IRS may be as long as ten days, whereas the DRT provides information in a day or two, it seems safe to say the DRT will be getting a lot of use.

A final twist: if a student’s parents file their return as “married, filing separately” they cannot use the Data Retrieval Tool and, if selected for verification, will have no option but to request transcripts from the IRS.

The following is a guest article submitted by Mary Fallon from Student Aid Services.

Accuracy Counts

Federal aid applications are rejected by the federal government for errors from miscalculating adjusted gross income to not signing the form. Calculation mistakes can reduce an aid award even if an aid application isn’t rejected. For example, taxable income isn’t adjusted gross income. If parents have tapped into retirement funds, it should be added to either untaxed income or adjusted gross income, not both, or the Expected Family Contribution (EFC) will increase, and aid eligibility will decrease.

First-Come, First-Served

Those who file as close to January 1 as possible are in the best position to get all the aid they are eligible to receive. Using income estimates is allowed – even encouraged – and a student won’t lose their place in the virtual line by later updating the application with final income amounts.

Beat Deadlines

Most colleges and states have their own deadlines. The earliest deadline for the 2012-13 FAFSA is in four weeks – Feb 1, 2012. The longer a student waits, the more students get ahead of them.

Not All Assets Count

A primary residence, retirement plans, small family-owned businesses, and the cash value of life insurance don’t count as assets on the FAFSA. Some of the most common and costly mistakes are made by incorrectly reporting assets.

Dependency Surprises

Just because a student financially supports themselves, doesn’t mean they are independent under FAFSA rules. Many students are considered dependent until age 24 requiring parents’ income on their FAFSA. However, for children of divorced parents only the income of the parent with whom the child lived with the most during the past 12 months is counted.

Job Loss Relief

If a member of a household has had their job eliminated, a student may be eligible for more aid. Look for the ‘dislocated worker’ question and see if the family meets one of the four criteria. Dislocated workers’ assets are counted differently than others – typically helping reduce an EFC, which increases aid eligibility.

Double Check

Transposing numbers and mistyping are very common mistakes. Double check everything. There are hundreds of ways to make a mistake on a FAFSA. Having a professional check the answers can help ensure a student gets the most aid possible. Answer the FAFSA truthfully, accurately and completely.

Professional Help

While most high school counselors don’t have time or in-depth FAFSA knowledge to assist students, some communities host FAFSA-preparation events each winter. College financial aid officials may provide guidance to their students. Help from fee-based FAFSA preparation services is allowed, too. Some experts, such as Student Financial Aid Services, provide free or discounted services to low-income students and provide assistance in multiple languages.

Early Estimates in Minutes

Waiting for the spring arrival of aid award letters to learn a student’s aid eligibility and a college’s affordability is agony. Why wait? Check colleges’ Net Price Calculators (NPC) for an estimate of a full-time, first-time student’s aid eligibility and net price.  Advanced NPCs also estimate out-of-pocket cost and the total cost of a degree. The most reliable NPCs ask 30 to 40 questions, which takes about 10 minutes to answer. That’s insight into aid eligibility in the time it takes to make a sandwich. But remember, answering NPC questions, will not get a student their aid, preparing a FAFSA is required.

The FAFSA (Free Application For Federal Student Aid) is the gateway to all things good when it comes to making college affordable. The downside is that the FAFSA is feared by many, especially those that have never completed the process. This uncomfortable unknown factor is what keeps people from giving it a try and finding out what treasures it will unlock to enable them to obtain their educational goals. On a side note… check out this humorous article comparing the FAFSA to a colonoscopy.

In order to combat the ambiguity associated with the FAFSA, you can find great resources in books, on the web (like CheapScholar.org) and through various other sources. However, nothing compares with direct one-on-one advice/counseling and that is where College Goal Sunday helps to fill a void and provide assistance with completing the FAFSA.

College Goal Sunday is a program that was founded in 2001 in Indiana with support from the Lilly foundation and now has a presence across the nation in 44 states. The main mission for this program is to help college bound students and their families to meet up with various financial aid professionals from their respective states and complete the all-so-important FAFSA. Given the name of the program, you can probably guess right away which day of the week these helpful sessions are offered (Sunday!).

If you would like to learn more about College Goal Sunday you can visit their website here. If you are a student or family member in need of help with the FAFSA, this is great resource for some personal one-on-one assistance.

You can click here to find out when and where the next College Goal Sunday event is taking place in your area!

If you are going to College Goal Sunday to receive help with your FAFSA, please plan on bringing the following items to help speed up the process and ensure proper completion of your FAFSA application. (If you don’t go to College Goal Sunday, you still want to track down these items before you complete your FAFSA):

• Social Security Number (can be found on Social Security card)
• Driver’s license (if any)
• W-2 Forms for the previous year and other records of money earned
• Your (and your spouse’s, if you are married) most recent Federal Income Tax Return:
  • IRS Form 1040,
  • 1040A,
  • 1040EZ,
  • 1040Telefile,
  • foreign tax return, or
  • tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federated States of Micronesia.
• Parent’s Federal Income Tax Return for the previous year (if you are a dependent student as defined by federal criteria)
• Untaxed income records for the previous year:
  • Social Security,
  • Temporary Assistance to Needy Families,
  • welfare, or
  • veterans benefits.
• Current bank statements
• Current business and investment mortgage information, business and farm records, stock, bond, and other investment records
• Documentation that you are a U.S. permanent resident or other eligible non-citizen.

Parents and students have to wait until January 1st before they can officially submit their FAFSA for the upcoming academic year (2012-2013). Very few actually submit the FAFSA on January 1st but I am guessing that there are always over achievers amongst us that make the process part of their New Year’s Eve tradition. A financial aid director friend of mine once shared his opinion on how the festivities probably take place for those that are on top of their FAFSA game: “Oh look the ball has dropped in Times Square. We should probably smooch because that is what everybody does. Ok, now lets go submit our FAFSA form!”.

You may not be like the families mentioned above, but for those that want to get a jump start on what to expect when filing the FAFSA, I am pleased to clue you in to the fact that a draft of the paper FAFSA for 2012-2013 is now available. You can access the PDF version here.

My hope is that none of you actually utilize the paper FAFSA to submit your information to the Department of Education. The paper version mentioned above is more for information purposes and provides some insight on what will be asked of you. I always recommend that you make use of the latest and greatest technology available at www.FAFSA.ED.gov to electronically submit your FAFSA. The Department of Education utilizes skip-logic technology to make sure you don’t answer redundant questions and they also provide a feature that allows you to import your tax information directly from the IRS (seems a little scary at first but definitely saves on time and limits mistakes).

I hope you find this information helpful. Remember, the FAFSA is the key to all things good when it comes to accessing financial aid to help pay for college. Make sure you designate time this coming year to get your FAFSA application completed. Your checkbook will thank you!

If you need additional help and/or guidance through the financial aid process,  please feel free to check out CheapScholar’s College Resource Page for more great information.