It’s January first and you’re sitting in front of your computer without any idea of what FAFSA is, what it decides or how important it is so colleges can decide how much money you will receive in financial aid.

FAFSA is the Free Application for Federal Student Aid, and gives the federal government and colleges the information they need to know to determine how much your expected family contribution, or EFC, will be.

“When a student submits the FAFSA and provides all of the information requested, the government takes it all into consideration and runs it through a formula called federal methodology,” Grand Canyon University Admissions Counselor Candace Wilkins said. “The result of the formula is a number called EFC which is based on the family’s financial ability to assist the students in paying for college.”

The outcome of submitting your FAFSA is a financial aid package for students who colleges feel need them.

Financial aid packages can consist of grants, work-study and student loans; the amount of financial aid you get depends on your EFC. The lower your EFC is the more financial aid you are likely to receive.

A grant is free money and does not have to be repaid, unless you withdraw from school and owe a refund. According to a FAFSA informational book, there are five different types of federal grants which vary in eligibility and amount.

Students who receive work-study will work part-time to pay for their education. It is available to graduate and undergraduate students and to full-time or part-time students.

Loans must be repaid and there are five different types but they vary in eligibility, award amounts, interest rates and by the length of time students have to repay them.

FAFSA is based only on financial need; GPA, ACT or SAT scores will not be taken into consideration or asked for.

In order to make sure your EFC is as low as possible, send your scores to as many schools as possible, even if you already know where you want to go.

“The financial aid officer that will put together your aid package gets to see the information you submit on the FAFSA and you want to create competition for yourself,” Ordway said. “If you list just one school on your form, the financial aid officer does not have incentive to offer you a better financial aid package because he knows you are attending
his school regardless.”

According to Ordway, Arizona is one of the worst states to hand out financial aid because most of the schools are public and the state does not have the money to help students finance their education. He suggests looking at private institutions or out-of-state schools, because although they may seem to cost more, they may cost less. “Never let the price tag of any school deter you from considering that school,” Ordway said.

One of the biggest mistakes students make is procrastinating. The application opens January 1 and closes June 30, but it is important to apply as soon as possible. Ordway suggests students have their FAFSA completed by the end of January.

“If you apply early, there are more funds available so you have the opportunity to get a better financial aid award package by applying early,” Ordway said.

When applying, the form will ask you if you have filed your taxes for 2010. You should know that you do not have to have filed your taxes in order to apply. Parents and students can use their last pay stubs to estimate how much money they made that year. Then, after you have completed your taxes, you can update and resend in your FAFSA for
completion.

“The sooner they put in their applications, the sooner [schools] can process it and the sooner they can determine how much money you receive in financial aid,” Career Specialist Cindy Fair said.

The second mistake students can make is to file their FAFSA through the wrong website and give out all their information to frauds.

“[A] common mistake is to go to a website or pay an agency claiming to help with a guarantee of filing or eligibility for financial aid,” Wilkins said. “Many of these site require a fee to be paid to submit the application. Many of these website and agencies are scams. Keep in mind that the first “F” in FAFSA stands for free.

You can currently start preparing for the FAFSA by compiling all the paperwork and information you will need to complete the application.

“FAFSA will ask for parents and students to provide social security numbers, alien registration or permanent resident card (if not a U.S. citizen), date of birth, driver’s license (if any) and income from the prior year’s tax return,” Wilkins said. “The application will ask for untaxed income received the prior year such as veteran’s non-education benefits, child support received or worker’s compensation. Also, any current business, investment and
mortgage information.”