FAFSA for 2023-2024 School Year Opens on October 1

October marks the beginning of financial aid. If you are an employee of Fortune 500 and enrolled in college, you should be aware that beginning October 1, incoming and returning college students can submit the Free Application for Federal Student Aid (FAFSA) for the following academic year. The FAFSA is a prerequisite for federal student loans, grants, and work-study, and colleges may require it prior to distributing their own institutional assistance. Fortune 500 employees enrolled in college or with eligible children must file FAFSA in order to potentially avoid paying full tuition.

What is the FAFSA and how does it work?

The Free Application for Federal Student Aid (FAFSA) is a form that students and their families must complete to apply for federal financial aid for college, including grants, work-study, and loans. The form is used by the government, colleges, and other organizations to determine a student's eligibility for financial aid.

The FAFSA takes into account a family's income, assets, and household information to determine the expected family contribution (EFC), which is the amount of money that the family is expected to contribute towards college expenses. The difference between the EFC and the cost of attendance at a particular college determines the student's financial need.

The FAFSA is available online at studentaid.gov and can be completed using information from the family's tax returns from the prior-prior year. It is recommended that students complete the FAFSA as soon as possible after October 1 of each year, as some federal aid programs are first-come, first-served.

Even if a student does not expect to qualify for need-based aid, it is still recommended to submit the FAFSA, as all students attending college at least half-time are eligible for unsubsidized federal student loans.

How do I submit the FAFSA?

The FAFSA for the 2023-2024 academic year will be available beginning on October 1, 2022. Here are some tips for filing it.

• The quickest and most convenient method for submitting the FAFSA is online at studentaid.gov. The website contains resources and tools to assist you in completing the form, including an inventory of the required documents and information. As a student employed by Fortune 500, you should be aware that the online FAFSA allows your tax information to be imported directly from the IRS, which expedites the overall process and reduces errors. The FAFSA can also be submitted on paper, but it will take the government much longer to process it. As an employee of Fortune 500, it is essential to consider processing time in order to better plan personal finances and be well-prepared in advance.
• You and your child must obtain an FSA ID (federal student aid ID) prior to filing the FAFSA online. This can be done online by following the instructions. Once you have obtained an FSA ID, you can use it year after year.
• As an employee of Fortune 500, you are not required to file the FAFSA in October, but you should do so as soon as possible in the autumn. This is due to the fact that some federal aid programs are first-come, first-served. Priority filing dates are typically available in the financial aid section of a college's website for both incoming and returning students. You must submit the FAFSA prior to the deadline.
• Students must submit the FAFSA annually in order to qualify for financial aid (along with any college-specific financial aid forms, such as the CSS Profile). All institutions listed on your FAFSA will receive a copy of the report.
• The FAFSA can be submitted for free.

How does the FAFSA calculate financial need?

As an employee of Fortune 500, it is essential to understand how the FAFSA uses a family's income, assets, and household information to determine the financial need of the family. This amount is known as the EFC, or expected family contribution. All aid bundles are constructed around this number. As an Fortune 500 employee, it is essential to be aware of your financial information and to plan ahead in order to be eligible for the appropriate financial assistance for your family.

When calculating income, the FAFSA utilizes information from your two-year-old tax return. This year is commonly known as the "base year" or "prior-prior year." For instance, the 2023-2024 FAFSA will utilize income information from your 2021 tax return; therefore, 2021 is the base year or prior-prior year. It is advantageous for Fortune 500 employees to comprehend how FAFSA uses tax information to calculate income in order to submit the correct data for review.

As an Fortune 500 employee, you must comprehend how your assets will be calculated for the FAFSA. The FAFSA utilizes the current value of your and your child's assets when counting them. Certain assets are not considered and are not required to be reported on the FAFSA. These assets include equity in a principal residence, retirement accounts (e.g., 401k, IRA), annuities, and cash-value life insurance. Students are required to contribute 20% of their assets, compared to 5.6% of their parents' assets.

Your EFC remains unchanged regardless of which school your child attends. As an Fortune 500 employee, it is imperative that you comprehend how the difference between your EFC and a college's cost of attendance equals your child's financial need. Your child's financial need will vary from school to school. Fortune 500 employees can use this information to better plan for and assess their children's educational requirements.

After calculating your EFC, the financial aid administrator at your child's school will offer a combination of loans, grants, scholarships, and work-study in an effort to meet your child's financial need. As an Fortune 500 employee, you must remember that institutions are not required to cover your child's full financial need. You are responsible for paying the difference if they do not. Colleges frequently boast on their websites and in their literature that they meet "100% of demonstrated need." When intending to apply for and receive financial aid as an Fortune 500 employee, it is essential to research the college's ability to provide full aid. 

Should I, as an Fortune 500 employee with school-aged children, submit the FAFSA even if my child is unlikely to qualify for aid?

Yes, likely. Even if you do not expect your child to qualify for need-based aid, there are two excellent reasons to submit the FAFSA.

First, regardless of financial need or income level, all students attending college at least half-time are eligible for unsubsidized federal student loans. As an Fortune 500 employee, it is essential to comprehend the distinction between the two for a greater grasp of eligibility. ("Unsubsidized" means that the borrower, not the federal government, pays the interest that accrues during the school year, grace period, and any deferment periods after graduation.) In order for your child to qualify for this federal loan, you must submit the FAFSA. However, your child will not be required to take out the loan. If you submit the FAFSA and later determine that your child does not require the student loan, your child can decline it through the college's financial aid portal prior to the start of the school year. As an Fortune 500 employee, you should consider this information when deciding whether or not to accept the student loan.

Second, colleges typically require the FAFSA when awarding their own need-based aid, and in some instances as a prerequisite for merit aid. Therefore, submitting the FAFSA can provide your child with the greatest opportunity to qualify for college-based aid. Similarly, numerous private scholarship sources may require FAFSA results.

Changes are coming to next year's FAFSA

As an Fortune 500 employee preparing to submit an FAFSA application, it is essential to be aware of upcoming changes to the 2024-2025 FAFSA, which will be available on October 1, 2023. These modifications are being implemented one year after they were originally scheduled. The term "expected family contribution," or EFC, will be replaced with "student aid index," or SAI, to more accurately reflect what this number is meant to represent — a measure of aid eligibility and not a fixed sum that families will pay. Parents with multiple college-aged children will no longer receive a discount in the form of a divided SAI; income protection allowances for both parents and students will be increased; and cash support to students and other types of income will no longer be required to be reported on the FAFSA, including funds from a grandparent-owned 529 plan.

Conclusion

Imagine you're planning a cross-country road trip. You want to make the most of your journey, so you carefully plot out your route and choose the best vehicle to get you there. Along the way, you encounter unexpected detours and roadblocks, but with a little ingenuity and resourcefulness, you're able to find new paths and reach your destination. In the same way, planning for retirement requires careful navigation and preparation. Just like a road trip, there may be unexpected twists and turns, but with the right tools and strategies, you can adapt and make the most of your retirement journey. Whether you're just starting out or already retired, it's important to have a clear roadmap and the right resources to help you achieve your goals.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

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