Everything Finance

A full 25 percent of families did not complete the Free Application for Federal Student Aid (FAFSA) last year, making them ineligible for federal financial aid to help pay for college, according to a recent study by Sallie Mae and Gallup on “How America Pays for College.” Sallie Mae, the nation’s leading saving- and paying-for-college company, reminds students that they may file a FAFSA beginning Jan. 1 and urges them to complete the form to qualify for federal financial aid for college.

According to the U.S. Department of Education, an estimated 15 million students file FAFSAs annually. The federal government, state governments and higher education institutions each award financial aid and rely on a student’s FAFSA information when making award determinations. Federal aid includes need- and non-need-based grants, scholarships, work-study and low-cost student loans.

Submitting the FAFSA early and before state and higher education institution deadlines maximizes a student’s chances of receiving the gift aid they are entitled to. Gift aid, such as grants and scholarships, is financial aid that does not have to be repaid. Last year, approximately $163 billion in student aid was awarded, according to the College Board, with grants comprising approximately 40 percent of that total.

“Don’t think for a second that you can’t pay for college in these difficult economic times,” said Martha Holler, spokeswoman for Sallie Mae. “You can, and it all starts with the FAFSA. Investing an hour or two to complete your FAFSA will pay off over a lifetime.”

Sallie Mae’s award-winning CollegeAnswer.com Web site has free tools and information to simplify the application process and help families navigate the financial aid process. Resources include sample FAFSAs in both English and Spanish, a list of state financial aid deadlines and a three-minute FAFSA podcast, which can be downloaded to an MP3 player or computer. CollegeAnswer.com also contains the largest free online scholarship database, containing more than 2.8 million scholarships worth over $16 billion. Visit www.CollegeAnswer.com/fafsa for more information.

Sallie Mae recommends students and their parents gather relevant documents and information, including Social Security Number or alien registration card, driver's license, latest federal income tax return, W-2 forms, bank statements and investment information, before going online to www.fafsa.ed.gov to complete the application. This will help them complete the FAFSA in as little as an hour or two.

Students need to submit a FAFSA every year they are in college to receive federal student aid. Students who are already attending college and who are renewal-eligible for 2009-2010 will be sent a Renewal Reminder notification from the U.S. Department of Education. The Renewal FAFSA form is pre-populated with information from the student’s previous FAFSA.

Students and families completing the FAFSA will find Sallie Mae’s new Education Investment Planner useful. The free Planner helps students and families understand the total cost of college and how to pay for it without going beyond their means. The Planner estimates the total cost of a college degree, builds a plan to pay for college, and estimates the salary a graduate would need to keep repayment of student loans manageable. Visit www.SallieMae.com/plan for more information.

Sallie Mae always advises families to use its 1-2-3 approach to paying for college: first, use free money by filling out the FAFSA to access need-based grants, research and apply for scholarships. Then, supplement with current income, college savings, and an interest-free monthly tuition payment plan. Second, explore federal loans. Available to both students and parents, they can offer low, fixed interest rates and flexible repayment options. Third, fill any gap with private education loans. They are convenient and designed to help students meet the total cost of college.

The recent passage of the Higher Education Opportunity Act will simplify the federal student aid application process in the future. Sallie Mae strongly supports efforts to make applying for college financial aid quicker and easier for families. The new legislative changes include:

· Reducing the number of questions on the FAFSA form over the next five years.

· Revising the FAFSA form so that it contains consumer friendly language.

· Creating a two-page FAFSA-EZ form for low-income families.

· Simplifying the FAFSA re-application process.

· Sharing data from federal tax forms between the Internal Revenue Service and the U.S. Department of Education to further simplify the FAFSA process upon consent from students and their families.

In addition, the U.S. Department of Education is planning a $300-million upgrade of www.fafsa.ed.gov, the Web site students visit to complete the FAFSA. The upgrade will take place over the next five years.

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