It’s that time of year!  If you have a student entering or returning to college in the fall of 2020, now’s the time to start the financial aid process.  An hour of your time could mean thousands of dollars for tuition and expenses.  Don’t make the mistake of assuming you don’t qualify. It’s worth your time to check!

If there are thousands of dollars at stake, you would expect most parents and students to be anxious to apply. Unfortunately, that’s not the case.  A 2018 study found that eligible high school seniors left $2.6 billion of free money on the table – and that included 36 percent of eligible students in Indiana.

Is college in your or your student’s future? Then, set aside time to complete the Free Application for Federal Student Aid (FAFSA).  

The Basics

Financial aid doesn’t just happen. You have to begin the process by completing the FAFSA to determine how much aid you’re eligible for. Financial aid is a combination of grants, loans, and work study funds provided by the federal government.

The student’s financial situation determines the amount of aid that will be available to him/her. Both students and parents must provide their personal and financial information to complete the FAFSA. This information is also available to colleges and universities to help determine if they are able to provide any additional aid to the student.

Applications can be submitted online at or via the myStudentAid app. If you have all the necessary information, it should take only 30 to 60 minutes to complete the FAFSA!  What makes it so easy? Both the website and the app can transfer your tax data directly from the IRS, making what used to be a daunting process somewhat easier.

Applications for the 2020-2021 school year became available on October 1, 2019, and technically can be submitted until June 30, 2021. However, financial aid is available on a first come, first served basis, and certain types of aid tend to get depleted faster than others.

Filing sooner rather than later is highly recommended.  Individual states and colleges will likely have their own deadline as well.  And “once and done” doesn’t apply to the FAFSA. Even though your financial situation may not change much, it must be completed annually for the student to continue to qualify for financial aid.

The Complexities

The key to completing the FAFSA in a timely manner is to have all the information you’ll need collected before you begin. What financial information does the FAFSA require?

  • Checking/savings accounts, brokerage accounts, custodial accounts for the benefit of the student, and 529 plans owned by the parent or student must all be disclosed.
  • Excluded from reporting are retirement plans, the value of your primary residence, equity in a small business and life insurance.
  • Accounts owned by someone else, grandparents, for example, don’t need to be disclosed on the initial FAFSA application. However, once Grandma makes a distribution from her 529 for the student’s education, that income stream is factored into the student’s future financial aid packages. If you don’t want that income to be factored in, you may ask Grandma to delay making a distribution until the student is in his/her junior or senior year of college.

Starting in 2017, the FAFSA began looking at income tax data from two years prior, rather than the prior year. This has been helpful for families since they no longer have to provide estimates, which can be tricky to do for the prior year.  However, if your tax situation has changed significantly compared to the data the FAFSA is requesting, you should still provide the requested information. Then, after submitting the FAFSA, contact your school’s financial aid office to explain your situation and determine how they want to proceed. 

Divorced Parents

As indicated previously, both the student and parent need to provide their financial information to submit the FAFSA. If the student’s parents are divorced, only one parent – the one the student lived with more during the last 12 months – needs to provide the information. If the student spent equal time with both parents, then the parent who provides the greater amount of financial support completes the FAFSA.  

What if that parent is remarried? Both parent’s financial information, as well as that of the stepparent, needs to be included.

Show Me the Money

After submitting the FAFSA, you should receive a Student Aid Report (SAR) within three weeks. The SAR is simply a summary of the information you provided on the FAFSA and does not outline your financial aid options. If you notice any errors, you can and should, submit corrections!

The schools you listed on the FAFSA will also receive your financial information and each will calculate the aid you are eligible for at that particular school. You will then receive an award letter from each of your selected schools that explains the financial aid package it is offering. 

Make sure you understand every aspect of these financial aid packages! Some aid won’t need to be repaid (grants) and other funds may be a combination of different types of loans. Don’t be afraid to ask questions! 


The FAFSA is the foundation to receiving financial aid, whether need-based or non-need based.  Even if you think you won’t qualify, taking 60 minutes to complete it could turn out to be well worth your time. 

Sarah Mahaffa is a Senior Wealth Advisor with Bedel Financial Consulting Inc., a wealth management firm located in Indianapolis. For more information, visit their website or email Sarah.

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