FAFSA: What You Need to Know

If college is in the picture for the 2019–2020 academic year, it is almost the time to file the FAFSA, or Free Application for Federal Student Aid. Here are answers to some of the most important questions about the FAFSA.

Why should I file the FAFSA?

Regardless of financial situation, filing the FAFSA is the first step to qualifying for many forms of aid, not just those based on income. Federal Student Aid’s Myths About Financial Aid (PDF) provides more information on why all students should submit the FAFSA.

Whose information goes on the FAFSA?

The student who will attend college will provide biographical and financial information on the FAFSA. Dependent students, whether or not they are financially supported by their parents, will need to provide parent or guardian biographical and financial information.

Is the FAFSA only for federal aid?

The federal government uses the income, family size and other information provided on the FAFSA to award federal aid in the form of grants, work-study and loans. You need to file the FAFSA to qualify for federal work-study and federal student loans. In addition, many states and colleges and some private organizations use the information to determine eligibility for grants, scholarships and other aid.

When should I start?

The 2019–2020 FAFSA opens Oct. 1 and is available until June 30, 2019. Some types of aid have limited funds, so the earlier the FAFSA is completed and submitted, the better the chances of receiving more financial aid from those programs.

Remember to complete a new FAFSA the fall before each new college year.

What information will I need?

The student should create an FSA ID to make it easier to complete and access the FAFSA. You can also gather identifying information (Social Security numbers for student and parent, driver’s license number, and Alien Registration number if applicable); federal tax information or returns from 2017; records on any untaxed income; and balances for cash, savings and checking accounts, investments, and business and farm assets for both the student and parents.

Note: You may be able to use the IRS Data Retrieval Tool to pull in applicable tax information while you complete the FAFSA, but this information will not be displayed on the online FAFSA or your Student Aid Report.

If you have any questions on the information you will need to provide, start by reviewing the Completing the FAFSA guide (PDF).

Where do I start?

You can complete your FAFSA online at https://fafsa.gov.

You may also download a PDF form to print and complete or call (877) 433-7827 to request a form be mailed to you. Some colleges may allow you to file your FAFSA at their financial aid office.

Do I need to do it all at one sitting?

You may save the information entered into the FAFSA online if you need to stop before completing it. Then, when you’re ready to finish, log back in to complete the form, sign and submit it.

What will happen next?

Within three weeks after submission, you’ll receive a Student Aid Report, which summarizes the data you submitted. You should review this report carefully and follow the instructions for correcting any mistakes.

Your Student Aid Report will also tell you if you’ve been selected for verification. This is not necessarily an indication that something is wrong; verification may be based on a random selection or because one or more of the schools listed requires all FAFSAs to be verified. If you are selected, follow the instructions to verify your information with the requested documents.

Federal Student Aid also shares the information you submitted with the colleges you listed when you completed the FAFSA, your state and the states of colleges you entered. Each college you have been accepted to will follow its own timeline to send you a financial aid award packet detailing the financial aid available to you if you choose to attend that school.

More information is available from Federal Student Aid.

By: Iowa Student Loan

3 Budget Basics for Middle Schoolers

If they haven’t begun already, current middle school students will soon be considering part-time jobs, saving for college and paying for their own expenses. You can help your child set a strong financial foundation with these three budget basics.

1. Understand the value of money.

Help your student appreciate the value of money by encouraging them to earn their own. By babysitting, doing yard work, helping around the house or otherwise working for money, your child will soon learn how much work is required to earn $1, $10 and $100.

Then, help your student complete the picture by involving them in decisions about purchases. Ask them to help you make decisions about common expenses like groceries or clothing. Encourage them to think about the quality, quantity and other features of specific brands for the cost.

2. Know the importance of goal-setting.

Having specific financial goals provides a framework for decision-making. If your student is saving for a particular purchase, discuss how many hours they will need to work for pay for it. Encourage them to consider whether making other purchases in the meantime is worth delaying the larger purchase.

If your student is saving for a major purchase such as a car or college, help them set smaller goals, like saving a certain amount per month. This is a good opportunity to research different methods of saving, like 529 plans and saving accounts, and the advantages of each, as well as the effects of compound interest over long periods of time.

3. Compare earnings to purchases.

If your student has his or her own spending money, encourage expense tracking. Then discuss how your child is spending money and whether they are surprised by the amount spent on specific purchases. Tracking spending helps consumers see their own habits and pinpoint how to cut back to improve their overall financial situation.

After tracking spending for a time, you and your student can then use a basic budget to compare earnings and income to expenses and savings goals. Multiple online tools and apps are available for free to get you started. As your student builds assets and becomes more responsible for expenses, add to your budget template or move to a more robust version.

By: Iowa Student Loan

5 Reasons to Start a 529 Plan Today

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Saving for your child’s college education can be stressful, but it can also be one the best things you can do to help ensure he or she has a solid financial start in life. If you’re considering different savings options, check out these benefits of a 529 plan.

1. Plans are good nationwide.

Most states, including Iowa, and a number of institutions offer 529 plans, and the plans are not restrictive to the state you live in or where the student attends college. That means parents can take out a College Savings Iowa 529 Plan and the student can use the funds at any eligible school in the country and even some colleges or universities outside the United States.

2. Anyone can open a 529 plan account.

Parents, grandparents and even friends can open a 529 plan for a potential college student. You can even start a 529 plan for your own education.

Parents: Enter to win a $1,000 contribution to a 529 plan.

3. There are tax benefits.

While contributions are not deductible at the federal level, Iowa taxpayers may deduct some contributions from their adjusted gross income. When the plan owners deduct funds to pay eligible college costs, that money is not taxed. For the beneficiary, all earnings on the 529 plan grow tax free.

4. Plans are flexible.

You can choose to change the investment options up to twice per calendar year. Plan owners can make regular contributions, open an account with an initial deposit and never make another contribution, or make deposits whenever it’s convenient. You can even change the beneficiary if the person the account was opened for decides not to attend college.

5. You stay in control of the account.

When you open a 529 account for your child, or anyone else, you maintain control of the account and how the funds are spent. The money is not automatically transferred to the student to spend.

By: Iowa Student Loan

11 Benefits of a College Saving Plan

Most states offer college saving plans, or 529 plans, that allow families to invest money that can later be used for qualified higher-education expenses. These plans offer savings and tax benefits over other ways of saving for college. Here are 11 reasons you may want to consider a 529 plan, such as a College Savings Iowa plan.

1. You can choose, and change, your investment strategy.

College saving plans offer a variety of investment tracks to allow you to decide how to invest contributions. You may choose from among recommended investment tracks based on the age of the beneficiary and your comfort level with risk. Or you may wish to choose from among individual portfolios of specific bond and stock funds.

After choosing your initial investment strategy, you can make changes over time. You may make changes to existing contributions twice a year.

2. You receive tax benefits.

Your 529 assets grow deferred from federal and state income taxes as long as the money remains in the plan. Many states also offer additional state tax advantages for in-state residents.

3. Qualified withdrawals are not subject to taxes.

Withdrawals used to pay for qualified higher-education expenses are also tax-free. This means any growth from your principal investments in a 529 plan used for qualified expenses will never be included in your income tax.

4. The assets are less impactful on financial aid.

The formula used to calculate financial aid treats 529 plan assets more favorably than it treats savings or investments owned by the student. According to savingforcollege.com, a maximum of 5.64% of all parental assets, including 529 plans owned by a parent or a dependent student, is counted toward the expected family contribution for college by the federal financial aid formula, compared to 20% of student assets.

5. Anyone can start or contribute to a plan.

You don’t need to be related to the student you name as the beneficiary of a 529 plan you open. This means you can be a parent, grandparent or friend of the student who will use the money, or you can be the student. There are no income limits, age limits or annual contribution limits for account owners.

Someone who would like to make a gift to the student can also make one-time contributions to an existing account.

6. Minimum investments are small.

College Savings Iowa allows initial investments or contributions of $25 or more and a minimum of $15 for employers that offer payroll deduction. Investments in 529 plans can be as large or small as comfortable for families.

7. You are not limited to your state’s plan.

You may choose to use any state’s 529 plan even if you don’t live there or the student doesn’t intend to attend college in that state.

8. The money can be used for attendance and other expenses at a wide variety of institutions.

The student beneficiary can use the money to attend any eligible two- or four-year college, postgraduate program, trade or vocational school, online college and university programs and even some international institutions or study-abroad programs.

Besides tuition, money can be applied to other qualified higher-education expenses like fees, books, housing, meals, supplies, computers and printers, software and internet access.

9. Plans are transferable.

If the student beneficiary named on the plan doesn’t need the money, it can be transferred to an eligible family member of the student, like a sibling, child, parent or spouse.

10. You can always withdraw the money if needed.

If the student earns a scholarship or enrolls in a military academy, you can withdraw up to the amount of the scholarship or the value of the education tax-free. If the student passes away or becomes disabled and is unable to attend college, there is also no penalty for withdrawals.

If you withdraw money for any other reason than these circumstances and the withdrawal is not used for a qualified higher-education expense, a 10% federal tax penalty will may apply to any earnings. (You would receive the full value of your contributions minus any administration fees.) A tax adviser can help you understand tax consequences of non-qualified withdrawals from a 529 plan.

11. A 529 plan may encourage college attendance and graduation.

Researchers have found that when money is set aside for college, families save more. Even when budgets are tight, families with even relatively small amounts of money earmarked for college find creative ways to save more. Additionally, the perceived value of higher education increased and a high percentage of parents felt their children would finish college.

By: Iowa Student Loan

6 Ways to Help Your Student Save

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If you’re not independently wealthy, chances are you’ll be relying on a variety of sources to help your child pay for college: scholarships, loans, your own savings and earnings, and your student’s savings and earnings. How can you help your student maximize savings so you don’t end up draining your retirement resources to help them out?

1. Understand how much your student will need.

Many free online calculators provide estimated college expenses for a variety of college types for the year your student will enter college. Try different scenarios to understand the range of expected college expense.

2. Foster an environment of saving.

What do you do with your paycheck? If you expect your child to save 50% of earnings in a savings account, set an example by building your own savings. The same goes for discount shopping, clipping coupons and so on.

3. Encourage your student to reduce expenses.

If your child tends to spend a large portion of earnings and gift money on clothes, for example, work with him or her to find ways to dress in the same manner for less. Think creatively—garage sales, thrift shops and discount store sales can provide a wealth of bargains.

4. Explore interest-bearing accounts with your child. 

Leverage savings by depositing the money in an interest-bearing account. Spend some time researching options and discussing the risks and advantages to different account types. Make an appointment with a specialist at your own financial institution and attend with your student so you both learn your options.

5. Know the options to reduce college costs.

If you realize you and your child will not be able to save enough for college by the time he or she will be ready to enroll, consider how to reduce the overall cost of college. Will your student be able to live at home? Attend a less-expensive school, at least for part of his or her education? Work while attending college? Apply for more scholarships and grants? Graduate early?

6. Set goals and monitor progress.

Use what you’ve learned about college costs and financial products to set goals. Then, periodically check that your student is working toward those goals. You may consider a matching contribution or other reward for progress.

By: Iowa Student Loan

Student Loan Basics: What Parents and Cosigners Need to Know

StudentLoanBasics-ParentsNeedKnow

If a student in your life did not receive enough financial aid to cover the full cost of attendance for college, he or she may turn to you for financial help. If you are considering taking on a federal parent loan or cosigning a private student loan with your student, consider these important points.

1. Student debt is a financial decision.

You are likely emotionally invested in wanting to see your student succeed in college, but it’s important to remember student loans are a financial product and require objective, not emotional, consideration.

2. You are financially liable for the debt.

If you take out a federal Parent PLUS Loan, you are taking on the debt yourself. Carefully consider the repayment terms, interest rate and fees you may face.

If you are considering cosigning a private student loan, be aware that you will be responsible for payments if your student doesn’t make them. Late payments, delinquency and default will affect your credit.

3. The total repayment amount will be more than the loan amount.

Student loans generally accrue interest every day. Interest may also capitalize at certain times, such as when the student graduates or a period of assistance ends. This means accrued, unpaid interest will be added to the principal balance. In addition, you may have origination, late or other loan fees incorporated into the total repayment amount.

4. The responsibility can last as long as the loan term.

Student loans are not typically discharged in the event of bankruptcy or other circumstances. In addition, if your student doesn’t graduate, earn as much as anticipated after graduating or obtain the anticipated career, the debt doesn’t go away. If the loan has been disbursed, cosigners are equally responsible for payment.

Many lenders offer a cosigner release. If you are counting on being released from your obligation to repay the debt, pay careful attention to the requirements for obtaining this benefit. Your student will likely need to make a certain number of on-time payments and meet other conditions before cosigners are eligible for release.

5. Your circumstances may change before the debt is repaid.

If your child or grandchild is entering college now, consider how your income may change before the end of the anticipated loan term. Will you still be working or will you be stretching a retirement income to cover any payments? What happens if you or your student loses a job?

6. You can help your student successfully repay debt.

Preparing your student to fulfill his or her obligations for a cosigned loan or taking on PLUS Loan payments (if that is your and your student’s understanding) is an important step.

  • Research loan options. Consider interest rates, terms and fees, available repayment assistance in the event of hardship, borrower benefits and potential starting salary when thinking about your loan options.
  • Understand potential starting budget. It’s easy for an incoming college student to overestimate how much a starting career will pay and underestimate other expenses when they consider the cost of college and their ability to repay debt after graduation. Together with your student, go through ROCI Reality Check to see starting salaries and job outlook by specific major to gain a realistic view of life after graduation.
  • Monitor college success. Good grades, valuable job and internship experiences and appropriate career preparation can all help your student have an advantage in the job search. You can help your student position him- or herself for a starting salary that will allow manageable loan payments.
  • Make your plan. Experience the parent version of Student Loan Game Plan for tips and information on how to work with your student to ensure success.

By: Iowa Student Loan

Getting Involved: 9 Reasons Why

Opportunities to become involved in extracurricular activities, athletics, and work activities abound. Here are nine reasons high school students should take advantage of at least a few of those opportunities.

1. Discover new possibilities.

Involvement in an activity could spur a lifelong passion, introduce career options and help define identity. For example, many students first find a love for debate or technology through school activities

2. Ease transitions.

Moving from elementary to middle school, or from middle to high school, can be a big change in routine, relationships and environment. Continuing or discovering activities can help make the change go more smoothly.

3. Relieve boredom.

Being involved in an activity often means hours of practice, preparation and, sometimes, travel, which leaves less time for boredom or less-desirable activities.

4. Relieve academic pressure.

As the school work load increases, it may seem counterintuitive to spend more time on other activities, but the outlet is often a needed break from homework and studying.

5. Increase academic performance.

Education Next reports being involved in activities outside the classroom may play a role in improving grades and standardized test scores.

6. Build important skills.

No matter what the future brings, skills like teamwork, cooperation, creative problem-solving, decision-making and leadership will always be important. Many extracurricular activities allow the development of these skills that are transferrable to school, family and future life.

7. Make connections.

Whether it’s a coach, a teammate, a parent or an event judge, involvement in many extracurriculars brings students into contact with others who may become valuable connections later.

8. Improve college applications.

If college is the next step after high school, a record of involvement over several years can demonstrate a continued interest in a particular cause, activity or event. Colleges and universities appreciate seeing applicants who demonstrate that they are successful outside the classroom and will become active members of their academic communities.

9. Find others with similar interests.

A variety of activities are available for students of all backgrounds and circumstances, including:

  • School, club or community sports teams
  • Special interest clubs like card or chess clubs
  • Academic-related activities such as competitive math or science teams
  • Fine arts groups, like newspaper or social media, drama, dance or music
  • Student government
  • Volunteering for nonprofit and service organizations
  • Career-related internships and jobs
  • Other jobs such as retail, babysitting and tutoring

By: Iowa Student Loan

How Working Can Help Your College Student

Wking-Help-College-Student

The financial, networking and training benefits of working part-time while in college can seem pretty obvious. Students earn cash that can be used to offset loans, pay college costs and fund other expenses. They learn to value money and to budget. They can connect with professionals who may be able to help them locate and succeed in future jobs. They learn how to navigate the workplace, gain skills they can use in their careers and put classroom lessons into practical use.

What may not be so obvious is how working part-time during the academic year can also boost a student’s grades. Although a student’s first job is performing well in school, working for pay a few hours a week may help the student achieve more academically.

The most recent data available from the National Center for Education Statistics (NCES) demonstrates that the academic performance of students who work 1–19 hours a week was better than all other students’ performance, including those who worked more or less and those who didn’t work at all.

According to 2016 NCES data:
  • The average GPA for all full-time college students is 2.94.
  • Those who worked 10–19 hours per week earned an average GPA of 3.02.
  • Those who worked 1–9 hours per week earned an average GPA of 3.08.
  • Those who did not work earned an average GPA of 2.94.

GPA Per Hours Worked

Estimated Hours Worked Per Week

Average GPA

0–40+ (overall) 2.94
0 2.94
1–9 3.08
10–19 3.02
20–29 2.88
30–39 2.86
40+ 2.95
Source: U.S. Department of Education, National Center for Education Statistics, 2015–2016 National Postsecondary Student Aid Study (NPSAS: 16)

Why Working Works

The reasons for the grade boost may vary widely by student, job and college, but researchers often conclude that the busier schedule forces students to better manage their available time.

Hanna, a graduate of an Iowa high school attending Kansas State University, agrees. “Having the extra responsibility of a part-time job forces me to study more efficiently,” she said. “I know I won’t have the time to keep procrastinating.”

Another possible reason for the higher average GPA may be that students who work to pay for part of their education expenses are more invested in the outcome. Students who are likely to succeed because of their own goals and motivation may also be more likely to look for and obtain part-time work.

By: Iowa Student Loan

Parents’ Guide to College Prep (Infographic)

Download this infographic as a PDF.

Knowing your student is prepared can help ease your anxiety as they make the move away. Use these tips to help ensure they’re ready for daily life on their own.

Plan for medical emergencies

You are not automatically granted access to your student’s health information or permitted to make medical decisions if he or she is 18 or older and becomes incapacitated, even if you carry the insurance and pay the bills. You may want to have your student properly complete, sign and have notarized official power of attorney and medical information release forms that you can carry on your phone or otherwise easily access in case of emergency. Some colleges have law offices or students available to help undergraduate students with legal needs for reduced or no fees.

In addition, your student should understand when an illness or injury requires self-treatment, a visit to the health center or a specialist, or a trip to the emergency room.

Prepare for other medical events

Check with your student’s college to see if you’re being charged for health insurance and if you can waive it if your plan already covers your child.

You may find your student needs vaccinations or boosters, as well as a regular physical, dental cleaning or vision check before college or soon after arriving on campus. Encourage your student to schedule appointments, complete the appropriate paperwork and fill or refill a prescription for upcoming visits with your help so it’s not all new for later appointments. In addition, provide your child with copies of the pertinent medical, prescription, vision and dental insurance cards.

With your student, put together a basic medical kit for the dorm room with pain reliever, bandages and other health items you normally keep at home.

Set up a financial system

If you will be helping your student financially, ensure you can easily transfer money to him or her, perhaps through a student checking account that also carries your name. Check for financial institutions that have a branch or no-fee ATMs on or near campus.

Adding your student to a credit card account also makes financial transactions simpler. Because a college student’s card could be easily lost or stolen, you may want to set up a new card or account number to avoid problems with your own purchases.

Attend an orientation

Besides actually signing up for an orientation date, your student may need to take online placement tests and training or safety courses before attending. In addition, if he or she will be signing up for classes at orientation, suggest that your student look through the course catalog for entry-level required classes and come up with a preferred and alternate schedule. If your student didn’t attend a summer orientation, look for opportunities with the start of classes.

Get ready for classes

If your student hasn’t yet attended orientation or signed up for classes, suggest that he or she look through the course catalog for entry-level required classes and come up with a preferred and alternate schedule. Besides attending orientation itself, your student may need to take online placement tests and training or safety courses before arriving on campus.

Plan the big move

Decide if it makes sense to purchase items now or wait until you get on campus, depending on planned transportation and availability. Some department store chains allow you to select items at one location or online and pick up at a location close to campus. In general, understand that dorm rooms are small, students will probably only need half or less of their original packing list and they can usually pick up or order items they forgot later.

Make needed reservations

If you plan to attend parents weekend or other upcoming special events with your student, check hotel and transportation availability early. Especially in smaller college communities, nearby rooms and rental vehicles may be booked quickly. If your student will fly home and back to school during high-traffic times like Thanksgiving or Christmas, you may also want to book those flights early.

Get the car college-ready

If your student will be taking a car to campus, help him or her set up any appointments for needed maintenance or repairs over the summer. Discuss an appropriate schedule and possible locations for service they may need close to campus. You might consider a AAA membership with towing services if the student will be driving far, and you may also need to let your car insurance provider know. Finally make sure your student knows what to do in case of a car accident, such as whom to call and what to say to another party.

If your student won’t be taking a car to campus but normally drives under your car insurance policy, contact your provider about possible savings and reduced coverage.

Take care of any additional paperwork

If your student may need an updated passport or their Social Security card or birth certificate, help him or her locate those and discuss how important it is to keep these documents safe. If your child relies on his or her cell phone contact list for phone numbers for you and other important contacts, suggest a printed or electronic list in case the phone is broken, lost or stolen.

If your student will have valuables on campus, consider dorm insurance or check your homeowner’s policy for coverage.

By: Iowa Student Loan

Before Applying for a Student Loan

So, awarded financial aid isn’t enough to cover the full cost of attendance and you know you or your student will need additional student loans to pay for college. Before filling out loan applications, consider future repayment for any loans. Here’s what you need to know.

Federal student loans are limited.

Undergraduate students can take out only so much in federal student loans each year. If additional student loans above that limit are required, you may need to consider private student loans or parent loans.

Undergraduates need adult assistance.

Students need to have a creditworthy cosigner for any private student loans, unless they can meet underwriting criteria on their own. If parents are willing to consider a federal Parent PLUS Loan, the parents will need to borrow that money and be responsible for paying it back themselves.

The debt will need to be repaid.

Student loans are not usually dischargeable for bankruptcy or other financial hardship. When you think about a future repayment amount, remember:

  • The repayment amount will be more than the original loan amount. Student loans accrue interest on a daily basis. At certain times, unpaid accrued interest may be capitalized, or added to the principal balance, and begin accruing interest as well.
  • Payments may come from a limited income. Carefully consider how much a graduate with the same major can realistically expect to make in an entry-level position. Add anticipated student loan payments for all the undergraduate years, including any federal loans in the financial aid package, to anticipated expenses for a realistic budget based on a starting salary. If all your expenses can’t be covered with a realistic starting salary, student loan debt may need to be reconsidered.

Interest and other payments can be made during college.

Most lenders allow early or extra payments on student loans at any time without penalty. In addition, paying interest as it accrues during school can reduce the amount of interest that will need to be repaid after graduation.

Private student loans vary.

Every lender has its own underwriting criteria, qualification requirements, loan terms and repayment schedules. Before you sign for a loan, research your options. Consider:

  • Variable vs. fixed interest rates. A variable rate may go up or down according to market conditions, while a fixed rate remains the same throughout the loan term. A low variable rate is often appealing, but remember that it may change drastically over the loan term.
  • Actual interest rate. Many lenders offer different rates based on the applicants’ and cosigners’ credit. If you are unable to determine your rate upfront, consider the highest rates.
  • Repayment assistance and benefits. Some lenders or loan servicers offer assistance if a borrower is unable to make required monthly payments. Some loans also offer special benefits, such as a reduced interest rate for making automatic electronic payments. Consider these features carefully.
  • Managing repayment. Will additional loans be needed for future years? Should all loans be obtained from a single or limited number of lenders to make repayment easier? Will consolidating multiple loans later be important, and does the lender offer that option?

College choices matter.

If you find that you or your student cannot afford to take on enough debt to pay the full cost of attendance, a new plan might be essential. Some options students have include:

  • Earning more. Increase the ability to pay college costs as they occur by earning more income during school terms and on breaks.
  • Reducing expenses. The full cost of attendance may include expenses that can be cut. Can living off campus without a meal plan save money? Are the book and fees and transportation costs realistic for you or your student?
  • Asking for help. Are relatives willing to help pay for college? Are additional scholarships, either through the school or outside entities, available?
  • Attending a less-expensive school. If the cost of attendance is still not affordable without taking on unmanageable debt, you may need to consider attending a less-expensive school, at least for a year or two.

Visit Student Loan Game Plan for more information and tips.

By: Iowa Student Loan

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