SENIOR YEAR
Making sense of financial aid
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inancial aid for college is a topic that can be as mystifying as it is intimidating. In order to take some of the uncertainty out, we spoke to Fred Amrein, a nationally recognized expert on the subject and the founder and CEO of PayForED, a company that offers software solutions to help navigate student loan and repayment decisions. Our conversation with Fred will hopefully provide you with a solid foundation as you consider your own financial aid options and strategies. ➤ At what point in the application process should students begin exploring financial considerations? Fred Amrein: Most families do not begin to look at the financial aspects until the end of junior year. The problem is that the financial aid process uses a time frame called Prior Prior. This means it uses the tax filing information for college-bound students from their second semester sophomore year and the first semester of their junior year. The tax years and school years do not match. The best time to evaluate your financial aid position is before 12/31 of sophomore year. Any financial decision made after that time will impact financial aid. 16
➤ What is the FAFSA and what does it mean to me? FA: FAFSA is the Free Application for Federal Student Aid. It is available every October 1 for the upcoming school year. As an example, the 2022–23 FAFSA will be available on October 1, 2021. It will use the tax information from the tax year 2020. This is related to the term Prior Prior. For most, it means you use the tax return you have in hand on October 1. Every family should complete the FAFSA. It is critical to the student debt structure and repayment options if grad school will be required. ➤ Are there any basic starting points for evaluating your options? How does one know where to look? FA: The first step in evaluating your financial aid position is understanding your Expected Family Contribution (EFC). This is the resulting number a family will get after completing the FAFSA. The FAFSA is the federal financial aid process. The EFC will be changing its name to Student Aid Index (SAI) starting in the school year 2024 or before. Families need to be careful here. To get the EFC you need to disclose your entire financial life such as income and assets.
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