ShortCuts in This Guide

• Know How Much to Save for College

  If you’re not sure what kind of financial goals to set to fund your child’s college education, a college saving calculator, such as this one on the TIAA-CREF Web site, can help as you think about saving money for college.

  Information You’ll Need before You Start
  

  • Cost of tuition for one year of college today: If you’re not sure where your child might go to school, simply pick a public four-year college in your state and check its Web site for its annual tuition.
  • Tuition inflation rate: This calculator sets a default rate of six percent. Depending on the school, the area of the country, and the current economy, this figure could be between two and eight percent.
  • Years to save before college: Assume your child will start college at eighteen, and subtract his or her current age to arrive at this number.
  • Initial savings: the amount of money you already have set aside for college
  • Contribution amount: If you have a dollar amount you’d like to contribute monthly, put it in here. You can change the amount to see how the totals change on the calculator.
  • Assumed rate of return: This calculator sets a default rate of six percent.

  What the Calculator Will Tell You

  • What four years of college will cost by the time your child attends
  • How much money your savings plan will have earned by that time
  • Your savings shortfall
  • What you would need to do to make up the difference, either as a lump sum, additional monthly contributions, or additional yearly contributions

  Keep in mind that most students do not pay full price for college (see “The Real Cost of College”).  Note: This exercise focuses on tuition only. College costs usually include room and board, books, and other costs.

  Putting It All Together: Three Examples

  1.  Aaron and Julie have a new daughter, Alicia. They want to open a 529 college savings plan for her with the hope that she will attend Big State University in eighteen years. They already have five hundred dollars to open up an account. They are not sure how much to invest monthly, but think that fifty dollars a month sounds reasonable. Let’s see:

  • Today’s tuition at Big State U: $9,000
  • Tuition inflation rate: 6 percent
  • Years to save before college: 18
  • Initial savings: $500
  • Monthly contributions: $50
  • Rate of return: 6 percent

  According to the calculator, in eighteen years, four years at Big State University will cost $112,380, or about $25,689 per year. Aaron and Julie’s 529 Plan will have $20,567, not quite enough to cover one year’s tuition. If they set their monthly contributions at $100 per month, they will have $40,550, enough to cover all of Alicia’s first year of school and $14,800 of her second year. To fully fund Alicia’s college tuition, they would need to set aside $265 per month.
  
  2.  Phil and LaDonna have a ten-year-old son, Ty. They haven't really thought much about college, but now that Ty is approaching middle school, they think they should invest something toward his college education. They plan to start with the thousand dollars they received as a federal tax refund, and then deposit one hundred fifty dollars a month in a 529 plan. Will that work? Here’s how the numbers work out:

  • Today’s tuition at Big State U: $9,000
  • Tuition inflation rate: 6 percent
  • Years to save before college: 8
  • Initial savings: $1,000
  • Monthly contributions: $150
  • Rate of return: 6 percent

  According to the calculator, in eight years, four years at Big State University will cost $62,752, or $14,345 per year.  By investing one hundred fifty dollars a month, Phil and LaDonna will have saved $20,321, enough to pay for one full year and part of a second. If they were to invest $265 a month (what Aaron and Julie need to invest to fully fund their child’s education), they would have $35,609, enough to pay for about 2 1/2 years of college. To fully fund Ty’s college education, Phil and LaDonna will have to invest $455 per month.
  
  3.  James and Elise have a fifteen-year-old daughter, Mandy, who just informed them that she wants to go to Big State University in three years. James and Elise have never really thought much about paying for college. Mandy is a smart girl, but they’re not sure how much she might get in scholarships.  They decide to start putting something away but aren’t sure how much good it will do. Here are the numbers:

  • Today’s tuition at Big State U: $9,000
  • Tuition inflation rate: 6 percent
  • Years to save before college: 3
  • Initial savings: $500
  • Monthly contributions: $200
  • Rate of return: 6 percent

  According to the calculator, in three years, four years at Big State University will $46,892, or $12,044 per year. By investing $200 per month, James and Elise will be able to pay $8,482 towards Mandy’s first year of college. If they invest $455 per month (what Phil and LaDonna need to invest to fully fund their child’s education), they will have $19,007, enough to pay for all of Mandy’s first year and about two-thirds of her second year. To fully fund her education, they will need to invest a whopping $1,073 per month.
  
  These examples illustrate the benefits of investing early for your child’s college education. But if you haven’t started saving yet, does that mean you shouldn’t? Should James and Elise even bother if all they can put aside is two hundred dollars a month? Absolutely. The $8,482 they save is $8,482 they won’t have to borrow and pay back later. Saving is always worthwhile.
  
  You may wonder if saving now will cut your child’s financial aid later. A little for some families, but you’re still better off having money than not, just as you’re better off earning wages than not despite income taxes. Using today’s aid formula, a low- or middle-income family could lose up to five dollars in aid for every one hundred dollars extra they saved in any of the current college savings tools.

• Know How Much to Save for College

  If you’re not sure what kind of financial goals to set to fund your child’s college education, a college saving calculator, such as this one on the TIAA-CREF Web site, can help as you think about saving money for college.

  Information You’ll Need before You Start
  

  • Cost of tuition for one year of college today: If you’re not sure where your child might go to school, simply pick a public four-year college in your state and check its Web site for its annual tuition.
  • Tuition inflation rate: This calculator sets a default rate of six percent. Depending on the school, the area of the country, and the current economy, this figure could be between two and eight percent.
  • Years to save before college: Assume your child will start college at eighteen, and subtract his or her current age to arrive at this number.
  • Initial savings: the amount of money you already have set aside for college
  • Contribution amount: If you have a dollar amount you’d like to contribute monthly, put it in here. You can change the amount to see how the totals change on the calculator.
  • Assumed rate of return: This calculator sets a default rate of six percent.

  What the Calculator Will Tell You

  • What four years of college will cost by the time your child attends
  • How much money your savings plan will have earned by that time
  • Your savings shortfall
  • What you would need to do to make up the difference, either as a lump sum, additional monthly contributions, or additional yearly contributions

  Keep in mind that most students do not pay full price for college (see “The Real Cost of College”).  Note: This exercise focuses on tuition only. College costs usually include room and board, books, and other costs.

  Putting It All Together: Three Examples

  1.  Aaron and Julie have a new daughter, Alicia. They want to open a 529 college savings plan for her with the hope that she will attend Big State University in eighteen years. They already have five hundred dollars to open up an account. They are not sure how much to invest monthly, but think that fifty dollars a month sounds reasonable. Let’s see:

  • Today’s tuition at Big State U: $9,000
  • Tuition inflation rate: 6 percent
  • Years to save before college: 18
  • Initial savings: $500
  • Monthly contributions: $50
  • Rate of return: 6 percent

  According to the calculator, in eighteen years, four years at Big State University will cost $112,380, or about $25,689 per year. Aaron and Julie’s 529 Plan will have $20,567, not quite enough to cover one year’s tuition. If they set their monthly contributions at $100 per month, they will have $40,550, enough to cover all of Alicia’s first year of school and $14,800 of her second year. To fully fund Alicia’s college tuition, they would need to set aside $265 per month.
  
  2.  Phil and LaDonna have a ten-year-old son, Ty. They haven't really thought much about college, but now that Ty is approaching middle school, they think they should invest something toward his college education. They plan to start with the thousand dollars they received as a federal tax refund, and then deposit one hundred fifty dollars a month in a 529 plan. Will that work? Here’s how the numbers work out:

  • Today’s tuition at Big State U: $9,000
  • Tuition inflation rate: 6 percent
  • Years to save before college: 8
  • Initial savings: $1,000
  • Monthly contributions: $150
  • Rate of return: 6 percent

  According to the calculator, in eight years, four years at Big State University will cost $62,752, or $14,345 per year.  By investing one hundred fifty dollars a month, Phil and LaDonna will have saved $20,321, enough to pay for one full year and part of a second. If they were to invest $265 a month (what Aaron and Julie need to invest to fully fund their child’s education), they would have $35,609, enough to pay for about 2 1/2 years of college. To fully fund Ty’s college education, Phil and LaDonna will have to invest $455 per month.
  
  3.  James and Elise have a fifteen-year-old daughter, Mandy, who just informed them that she wants to go to Big State University in three years. James and Elise have never really thought much about paying for college. Mandy is a smart girl, but they’re not sure how much she might get in scholarships.  They decide to start putting something away but aren’t sure how much good it will do. Here are the numbers:

  • Today’s tuition at Big State U: $9,000
  • Tuition inflation rate: 6 percent
  • Years to save before college: 3
  • Initial savings: $500
  • Monthly contributions: $200
  • Rate of return: 6 percent

  According to the calculator, in three years, four years at Big State University will $46,892, or $12,044 per year. By investing $200 per month, James and Elise will be able to pay $8,482 towards Mandy’s first year of college. If they invest $455 per month (what Phil and LaDonna need to invest to fully fund their child’s education), they will have $19,007, enough to pay for all of Mandy’s first year and about two-thirds of her second year. To fully fund her education, they will need to invest a whopping $1,073 per month.
  
  These examples illustrate the benefits of investing early for your child’s college education. But if you haven’t started saving yet, does that mean you shouldn’t? Should James and Elise even bother if all they can put aside is two hundred dollars a month? Absolutely. The $8,482 they save is $8,482 they won’t have to borrow and pay back later. Saving is always worthwhile.
  
  You may wonder if saving now will cut your child’s financial aid later. A little for some families, but you’re still better off having money than not, just as you’re better off earning wages than not despite income taxes. Using today’s aid formula, a low- or middle-income family could lose up to five dollars in aid for every one hundred dollars extra they saved in any of the current college savings tools.

• Set Aside Twenty-five Dollars a Month for College

  Though it is hard to predict exactly what the cost of your child’s college education will be, you can commit now to saving something—anything—to help pay for it. The key is to make a plan and stick with it. Even the most modest amount of money saved regularly and consistently can grow into an important source of financial aid for school. Plus, setting up a college saving program shows your child that you expect him or her to go to college and that you believe college student financial aid is a goal worth working toward.
  Why twenty-five dollars? Many 529 college savings plans allow people to begin investing with only twenty-five dollars a month, so that’s a good starting place. Where will that twenty-five dollars come from? Here are some ideas.

  Change You Can Believe In

  Start a coin jar and ask everyone in the family to empty their pockets and/or coin purses into it at the end of the day (twenty-five dollars a month is about eighty-three cents a day). One way to make sure you will have coins to contribute is always pay with paper money and never use change. That way you will get change back from every transaction.

  Bank on Coupon Savings

  When you use coupons to reduce your grocery bill, don’t just congratulate yourself on the money you saved. Take that amount (it’s usually listed at the end of the grocery bill) and put it aside. Coupon money will add up quickly.

  Create a Game

  As a family, come up with ideas for making saving fun. For instance, every time a letter from a college arrives, toss a dollar into the kitty. When the college is on your child’s dream list, increase the amount to five dollars. When your child brings home good grades on a report card, don’t pay him or her for every A or B. Pay the college fund instead.

  Skip the Vending Machines
  

  If you typically hit the vending machine for an afternoon soda or candy bar, start bringing those treats from home. Vending machine soft drinks can cost a dollar or more; a twelve-pack of soda for four dollars works out to thirty-three cents a can. Ditto for candy bars, chips, and cookies. Pack your own and earmark the savings for college.

  Rethink Your Lunch Plans

  If you eat lunch out every day, cut back even one day to save an average of seven dollars a week. When you do eat out, order water instead of soda. You’ll save nearly two dollars.

  Get to Know Your Library
  

  Libraries have more than books. You can borrow videos, DVDs, even video games for a lot less money than you’d spend at the corner video store. Most libraries also carry magazines; if they carry your favorite, you can cancel your subscription and send that money to the college fund.

  Review Your Bills
  

  Are you paying for things you don’t use? Do you need call waiting and caller ID on your phone?  Do you need your phone? (Many people are giving up their land lines and making their cell phone their main line.) Are you paying for premium cable channels that you never watch? Will bundling your phone and Internet cost you less than paying for them separately? Is your cell phone plan the most cost effective choice for your family? Can you read the daily newspaper online instead of paying for a subscription? Take the time to ask questions like these, and crunch the numbers to discover where a few extras dollars may be hiding each month.

  Beat the Budget

  If you budgeted one hundred fifty dollars for groceries and you spent only one hundred forty-six, put that four dollar savings into the college fund. If you figured it would take forty dollars to fill up the car and it only took thirty-three dollars, put that seven dollars in the college fund.
  

  Share Your Good Fortune
  

  When you receive unexpected money, such as a rebate, refund, or bonus, split it between yourself and the college fund. Encourage your child to do the same with birthday and holiday money.
  
  For more money-saving ideas, sign up for Michele Singletary’s weekly personal finance e-newsletter.
  
  Do an online search for “money saving tips” and explore Web sites like these:
  The Simple Dollar
  The Dollar Stretcher
  Better Budgeting
  Money-Saving Mom

• Set Aside Twenty-five Dollars a Month for College

  Though it is hard to predict exactly what the cost of your child’s college education will be, you can commit now to saving something—anything—to help pay for it. The key is to make a plan and stick with it. Even the most modest amount of money saved regularly and consistently can grow into an important source of financial aid for school. Plus, setting up a college saving program shows your child that you expect him or her to go to college and that you believe college student financial aid is a goal worth working toward.
  Why twenty-five dollars? Many 529 college savings plans allow people to begin investing with only twenty-five dollars a month, so that’s a good starting place. Where will that twenty-five dollars come from? Here are some ideas.

  Change You Can Believe In

  Start a coin jar and ask everyone in the family to empty their pockets and/or coin purses into it at the end of the day (twenty-five dollars a month is about eighty-three cents a day). One way to make sure you will have coins to contribute is always pay with paper money and never use change. That way you will get change back from every transaction.

  Bank on Coupon Savings

  When you use coupons to reduce your grocery bill, don’t just congratulate yourself on the money you saved. Take that amount (it’s usually listed at the end of the grocery bill) and put it aside. Coupon money will add up quickly.

  Create a Game

  As a family, come up with ideas for making saving fun. For instance, every time a letter from a college arrives, toss a dollar into the kitty. When the college is on your child’s dream list, increase the amount to five dollars. When your child brings home good grades on a report card, don’t pay him or her for every A or B. Pay the college fund instead.

  Skip the Vending Machines
  

  If you typically hit the vending machine for an afternoon soda or candy bar, start bringing those treats from home. Vending machine soft drinks can cost a dollar or more; a twelve-pack of soda for four dollars works out to thirty-three cents a can. Ditto for candy bars, chips, and cookies. Pack your own and earmark the savings for college.

  Rethink Your Lunch Plans

  If you eat lunch out every day, cut back even one day to save an average of seven dollars a week. When you do eat out, order water instead of soda. You’ll save nearly two dollars.

  Get to Know Your Library
  

  Libraries have more than books. You can borrow videos, DVDs, even video games for a lot less money than you’d spend at the corner video store. Most libraries also carry magazines; if they carry your favorite, you can cancel your subscription and send that money to the college fund.

  Review Your Bills
  

  Are you paying for things you don’t use? Do you need call waiting and caller ID on your phone?  Do you need your phone? (Many people are giving up their land lines and making their cell phone their main line.) Are you paying for premium cable channels that you never watch? Will bundling your phone and Internet cost you less than paying for them separately? Is your cell phone plan the most cost effective choice for your family? Can you read the daily newspaper online instead of paying for a subscription? Take the time to ask questions like these, and crunch the numbers to discover where a few extras dollars may be hiding each month.

  Beat the Budget

  If you budgeted one hundred fifty dollars for groceries and you spent only one hundred forty-six, put that four dollar savings into the college fund. If you figured it would take forty dollars to fill up the car and it only took thirty-three dollars, put that seven dollars in the college fund.
  

  Share Your Good Fortune
  

  When you receive unexpected money, such as a rebate, refund, or bonus, split it between yourself and the college fund. Encourage your child to do the same with birthday and holiday money.
  
  For more money-saving ideas, sign up for Michele Singletary’s weekly personal finance e-newsletter.
  
  Do an online search for “money saving tips” and explore Web sites like these:
  The Simple Dollar
  The Dollar Stretcher
  Better Budgeting
  Money-Saving Mom

• Choose a Tax-free College Savings Account

  Even if your child will not be college age for quite a few years, it’s never too early to begin saving money for college. Here are five different, inexpensive ways to start a tax-free college savings account. In order to pick the one that’s right for you, weigh the pros and cons of each. But in the end, any savings program is better than none.

  529 Savings Plans

  Pick the state that has the best plan for you. Choosing your home state’s plan can result in tax and other benefits. In Michigan, EduGuide’s home state, families can begin with as little as twenty-five dollars in the Michigan Education Savings Program (MESP). (See related ShortCut: “Set Aside Twenty-five Dollars a Month for College: Without Raiding the Sofa Cushions.”)
  Pro: Contributions are eligible for state tax deductions. In Michigan, it’s a $10,000 tax deduction ($5,000 for single filers). You can use 529 funds at any accredited postsecondary college in the United States and at many schools abroad.
  Con: The plan’s tax-free status is up for renewal by Congress in 2010. The account value may fluctuate depending on investment options.

  529 Prepaid Plans

  Pay tuition now and lock in today’s rates. Most states have prepaid plans. Example: with the Florida Prepaid College Plan, you can buy your five-year-old two years of tuition at community college (a lump sum of $4,193) with $37.14 paid every month until your child starts college. The same two years of college thirteen years from now when your child starts college could be nearly $10,000.  By prepaying and locking in today’s rate, you could save $5,900.  If you didn’t lock in today’s tuition rate with a prepaid plan, you’d need to save seventy-seven dollars each month to pay for the same two years of college.
  Pro: Guarantees against rising tuition costs. Monthly payment contract will motivate you to save. Can be used to pay for tuition at out-of-state and private colleges. Some states offer tax benefits associated with these plans.
  Con: State residency requirements. Some plans have restrictions on transfers to another child. The money is tied up until the child starts college.

  Education Savings Account

  Open an account with any bank, broker, or mutual fund—much like retirement savings.
  Pro: Can be used for college or any educational expenses K-12—including books, private school tuition, computers, and tutors. Lets you pick your own investments.
  Con: Limited to $2,000/year per child. Tax benefits for some plans phase out for some families making more than $95,000. May tempt you to spend before your child’s college years.

  Cash Back

  Buy selected goods with a registered credit card and get one to ten percent cash back for a college savings account. Upromise, EdExpress.com, Babymint.com and MBNA Fidelity credit cards offer such programs.
  Pro: Save while you spend. Average annual savings range from fifty to five hundred dollars. Registered friends can direct their earnings to your account.
  Con: Limited dollar value. Fewer investment options. May tempt you to chase rebates and eat up savings you could put into your child’s account.

  Roth and Traditional IRAs

  Tax laws now let you take money from these retirement accounts to pay for college without penalty. You can open IRA accounts at any bank or investment agency.
  Pro: Some experts recommend saving for retirement or a home before saving for college. This option allows you to save for both and choose how to spend later. You can pick your own investments.
  Con: Limited to $5,000 a year per person if you are forty-nine or younger in 2008. Some restrictions apply. May confuse your retirement planning; your retirement fund may not attract contributions from family members.

• Choose a Tax-free College Savings Account

  Even if your child will not be college age for quite a few years, it’s never too early to begin saving money for college. Here are five different, inexpensive ways to start a tax-free college savings account. In order to pick the one that’s right for you, weigh the pros and cons of each. But in the end, any savings program is better than none.

  529 Savings Plans

  Pick the state that has the best plan for you. Choosing your home state’s plan can result in tax and other benefits. In Michigan, EduGuide’s home state, families can begin with as little as twenty-five dollars in the Michigan Education Savings Program (MESP). (See related ShortCut: “Set Aside Twenty-five Dollars a Month for College: Without Raiding the Sofa Cushions.”)
  Pro: Contributions are eligible for state tax deductions. In Michigan, it’s a $10,000 tax deduction ($5,000 for single filers). You can use 529 funds at any accredited postsecondary college in the United States and at many schools abroad.
  Con: The plan’s tax-free status is up for renewal by Congress in 2010. The account value may fluctuate depending on investment options.

  529 Prepaid Plans

  Pay tuition now and lock in today’s rates. Most states have prepaid plans. Example: with the Florida Prepaid College Plan, you can buy your five-year-old two years of tuition at community college (a lump sum of $4,193) with $37.14 paid every month until your child starts college. The same two years of college thirteen years from now when your child starts college could be nearly $10,000.  By prepaying and locking in today’s rate, you could save $5,900.  If you didn’t lock in today’s tuition rate with a prepaid plan, you’d need to save seventy-seven dollars each month to pay for the same two years of college.
  Pro: Guarantees against rising tuition costs. Monthly payment contract will motivate you to save. Can be used to pay for tuition at out-of-state and private colleges. Some states offer tax benefits associated with these plans.
  Con: State residency requirements. Some plans have restrictions on transfers to another child. The money is tied up until the child starts college.

  Education Savings Account

  Open an account with any bank, broker, or mutual fund—much like retirement savings.
  Pro: Can be used for college or any educational expenses K-12—including books, private school tuition, computers, and tutors. Lets you pick your own investments.
  Con: Limited to $2,000/year per child. Tax benefits for some plans phase out for some families making more than $95,000. May tempt you to spend before your child’s college years.

  Cash Back

  Buy selected goods with a registered credit card and get one to ten percent cash back for a college savings account. Upromise, EdExpress.com, Babymint.com and MBNA Fidelity credit cards offer such programs.
  Pro: Save while you spend. Average annual savings range from fifty to five hundred dollars. Registered friends can direct their earnings to your account.
  Con: Limited dollar value. Fewer investment options. May tempt you to chase rebates and eat up savings you could put into your child’s account.

  Roth and Traditional IRAs

  Tax laws now let you take money from these retirement accounts to pay for college without penalty. You can open IRA accounts at any bank or investment agency.
  Pro: Some experts recommend saving for retirement or a home before saving for college. This option allows you to save for both and choose how to spend later. You can pick your own investments.
  Con: Limited to $5,000 a year per person if you are forty-nine or younger in 2008. Some restrictions apply. May confuse your retirement planning; your retirement fund may not attract contributions from family members.

• Choose the Right Student Loans for College

  Student loan information can seem overwhelming. Here is a quick review of the five types of student loans for college and the pros and cons of each.

  Perkins

  Best federal government need-based loan for students.
  Pro: Lower fixed interest rate. No fees. Credit history not a factor unless you are in default on prior student loans. Subsidized, so interest doesn’t start until after graduation.
  Con: Funding limited to those with greatest need.

  Stafford

  Most common federal student loan.

  Pro: Fixed interest rate better than PLUS loan. Can be subsidized depending on need. Repayment is more flexible for disability or job loss than most private loans.
  Con: Limit on how much can be borrowed using this loan.

  PLUS (Parent Loans for Undergraduate Students)

  Most common federal parent loan. Also used by grad students.
  Pro: Fixed interest rate. Can cover full cost of attendance minus other aid.
  Con: Subject to credit approval. Not as good a deal as Perkins or Stafford.

  Sponsored

  Provided by some colleges, states, employers, and scholarship groups.
  Pro: Can be a better deal than some federal loans.
  Con: Harder to find. Ask around and use scholarship directories. 

  Private

  Provided by banks and credit unions independent of the federal system.
  Pro: May cover expenses beyond aid award.
  Con: Subject to credit approval. Read the fine print—some private loans may compete with PLUS loans, but some are way more expensive than federal loans.

• Choose the Right Student Loans for College

  Student loan information can seem overwhelming. Here is a quick review of the five types of student loans for college and the pros and cons of each.

  Perkins

  Best federal government need-based loan for students.
  Pro: Lower fixed interest rate. No fees. Credit history not a factor unless you are in default on prior student loans. Subsidized, so interest doesn’t start until after graduation.
  Con: Funding limited to those with greatest need.

  Stafford

  Most common federal student loan.

  Pro: Fixed interest rate better than PLUS loan. Can be subsidized depending on need. Repayment is more flexible for disability or job loss than most private loans.
  Con: Limit on how much can be borrowed using this loan.

  PLUS (Parent Loans for Undergraduate Students)

  Most common federal parent loan. Also used by grad students.
  Pro: Fixed interest rate. Can cover full cost of attendance minus other aid.
  Con: Subject to credit approval. Not as good a deal as Perkins or Stafford.

  Sponsored

  Provided by some colleges, states, employers, and scholarship groups.
  Pro: Can be a better deal than some federal loans.
  Con: Harder to find. Ask around and use scholarship directories. 

  Private

  Provided by banks and credit unions independent of the federal system.
  Pro: May cover expenses beyond aid award.
  Con: Subject to credit approval. Read the fine print—some private loans may compete with PLUS loans, but some are way more expensive than federal loans.

• Ace the FAFSA

  Making mistakes on or leaving information out of your FAFSA could delay your application and possibly make you lose out on some financial aid for school. The National Association of Student Financial Aid Administrators (NAFSAA) has compiled a list of the most common errors people make on the FAFA.
  
  As you and your child complete the FAFSA, try to avoid these mistakes:

  • Leaving blank fields–enter a "0 or "not applicable" instead of leaving a blank. Too many blanks may cause miscalculations and an application rejection.
  • Using commas or decimal points in numeric fields; always round to the nearest dollar.
  • Listing incorrect social security number or driver's license number; check these entries and have someone else check them too. Triple check to be sure.
  • Entering the wrong federal income tax paid amount; obtain your federal income paid amount from your income tax return forms not your W-2 form(s).
  • Listing adjusted gross income as equal to total income; these are not the same figure. In most cases, the AGI is larger than the total income. This mistake is particularly common.
  • Listing marital status incorrectly; only write yes if you're currently married. If you're separated, you're considered married. Enter your marital status on the day you sign the FAFSA or Renewal FAFSA.
  • Listing parent marital status incorrectly; the custodial parent's marital status is needed; if they've remarried, you'll need the stepparent's information too.
  • Leaving the question about drug-related offenses blank; If you're unsure about something, find out before you submit your FAFSA instead of leaving a blank. A conviction doesn't necessarily disqualify you from getting aid.
  • Forgetting to list the college; obtain the federal school code for the college you plan on attending and list it, along with any other schools to which you've applied.
  • Forgetting to sign and date; if you're filling out the paper FAFSA, be sure to sign it. If you're filing electronically, be sure to obtain your PIN from www.pin.ed.gov. Your PIN is your electronic signature and will always be assigned to you only.
  • Entering the wrong address; this is the student’s permanent address, not a campus or summer address.

  Here is a list of materials that will help you and your child complete the FAFSA:

  • Your child’s and your social security numbers (can be found on social security card)
  • Your child’s and your driver's license (if any)
  • Your child’s W-2 forms for the previous year and other records of money earned
  • Your child’s 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
  • Your (the parents’) federal income tax return for the previous year (if your student is a dependent student as defined by federal criteria)
  • Your child’s untaxed income records for the previous year —Social Security, Temporary Assistance to Needy Families (TANF), welfare, or veterans benefits records
  • Your child’s current bank statements
  • Your child’s current business and investment mortgage information, business and farm records, stock, bond, and other investment records
  • Documentation that your child is a U.S. permanent resident or other eligible noncitizen.

  Bonus tip: If you apply online, your application will be processed faster and will likely be more accurate because your application will be processed on the FAFSA Web site to catch errors. The online application also provides worksheets that will calculate amounts and enter them into the field for you. You can save and continue the FAFSA at any time online and then sign your application electronically using a personal identification number (PIN) which you can get from the Federal Student Aid PIN Web site.

  There are resources available if you decide you need assistance filling out the FAFSA. Check the FAQ section on the FAFSA Web site, or call the Federal Student Aid Information Center at 1-800-4-FED AID (1-800-433-3243). You can also participate in College Goal Sunday in your state for personal assistance completing the FAFSA. College Goal is held every February at a college campus near you.
   

• Ace the FAFSA

  Making mistakes on or leaving information out of your FAFSA could delay your application and possibly make you lose out on some financial aid for school. The National Association of Student Financial Aid Administrators (NAFSAA) has compiled a list of the most common errors people make on the FAFA.
  
  As you and your child complete the FAFSA, try to avoid these mistakes:

  • Leaving blank fields–enter a "0 or "not applicable" instead of leaving a blank. Too many blanks may cause miscalculations and an application rejection.
  • Using commas or decimal points in numeric fields; always round to the nearest dollar.
  • Listing incorrect social security number or driver's license number; check these entries and have someone else check them too. Triple check to be sure.
  • Entering the wrong federal income tax paid amount; obtain your federal income paid amount from your income tax return forms not your W-2 form(s).
  • Listing adjusted gross income as equal to total income; these are not the same figure. In most cases, the AGI is larger than the total income. This mistake is particularly common.
  • Listing marital status incorrectly; only write yes if you're currently married. If you're separated, you're considered married. Enter your marital status on the day you sign the FAFSA or Renewal FAFSA.
  • Listing parent marital status incorrectly; the custodial parent's marital status is needed; if they've remarried, you'll need the stepparent's information too.
  • Leaving the question about drug-related offenses blank; If you're unsure about something, find out before you submit your FAFSA instead of leaving a blank. A conviction doesn't necessarily disqualify you from getting aid.
  • Forgetting to list the college; obtain the federal school code for the college you plan on attending and list it, along with any other schools to which you've applied.
  • Forgetting to sign and date; if you're filling out the paper FAFSA, be sure to sign it. If you're filing electronically, be sure to obtain your PIN from www.pin.ed.gov. Your PIN is your electronic signature and will always be assigned to you only.
  • Entering the wrong address; this is the student’s permanent address, not a campus or summer address.

  Here is a list of materials that will help you and your child complete the FAFSA:

  • Your child’s and your social security numbers (can be found on social security card)
  • Your child’s and your driver's license (if any)
  • Your child’s W-2 forms for the previous year and other records of money earned
  • Your child’s 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
  • Your (the parents’) federal income tax return for the previous year (if your student is a dependent student as defined by federal criteria)
  • Your child’s untaxed income records for the previous year —Social Security, Temporary Assistance to Needy Families (TANF), welfare, or veterans benefits records
  • Your child’s current bank statements
  • Your child’s current business and investment mortgage information, business and farm records, stock, bond, and other investment records
  • Documentation that your child is a U.S. permanent resident or other eligible noncitizen.

  Bonus tip: If you apply online, your application will be processed faster and will likely be more accurate because your application will be processed on the FAFSA Web site to catch errors. The online application also provides worksheets that will calculate amounts and enter them into the field for you. You can save and continue the FAFSA at any time online and then sign your application electronically using a personal identification number (PIN) which you can get from the Federal Student Aid PIN Web site.

  There are resources available if you decide you need assistance filling out the FAFSA. Check the FAQ section on the FAFSA Web site, or call the Federal Student Aid Information Center at 1-800-4-FED AID (1-800-433-3243). You can also participate in College Goal Sunday in your state for personal assistance completing the FAFSA. College Goal is held every February at a college campus near you.