Terry Savage: Time to confront FAFSA-phobia

Terry Savage, Tribune Content Agency on

Ready, get set ... FAFSA!

If you’re the parent of a senior in high school, you’re about to embark on an amazing journey into the first step of paying for college. FAFSA stands for Free Application for Federal Student Aid. All families should apply, regardless of income. Many colleges use the application to offer additional financial support, or scholarships, regardless of need. So now is the time to get started.

The application process begins right after Labor Day, when students and parents each create their own FAFSA account. While you can’t file the forms until October 1, you can set up your account now at under the “Apply for Aid” tab. Since parents must upload the most personal financial information, these separate accounts with passwords allow for privacy from your teen children.

After opening your account, you’ll receive a FAFSA ID. That number, along with your password, allows you to upload the required information securely, once the forms become available on October 1. Your most recent tax returns are gathered automatically with a secure link to the IRS.

But this form wants to know about more than your income. You’ll have to list the value of all your assets and investments — not including your family residence, your retirement accounts and smaller family-owned businesses.

Even the value of your college savings in a parent-owned 529 plan is included in the asset profile, as 5.64% of the value is considered accessible for college in any one year, as part of the formula.


As you can see, the FAFSA is the most intrusive form Americans are required to file, reporting not only income but assets — so the government can decide how much in federal student loans their children can receive for the coming year. You’ll have to file an updated every year in which you re-apply for aid.

The “formula” for calculating the expected family contribution (EFC) is as closely guarded as the secret recipe for Kentucky Fried Chicken! But basically, the idea is to let the family know how much federal financial aid their student can receive – and how much parents should be prepared to provide.

Lest you mistakenly think that federal aid will cover all the costs of college, consider these numbers. For 2022-23, the maximum Pell Grant amount is $6,895. These grants are made on the basis of need.

As for federal subsidized and unsubsidized loans, freshmen may only borrow $5,500 per year; sophomores may only borrow $6,500; and juniors, seniors and those who study beyond their fourth year are limited to $7,500 per year. Don’t be surprised if there is a huge gap between what federal financial aid offers and the full cost of college — every year, for four years!


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