Beth Pinsker: If the FAFSA makes you look too rich, here are 4 steps to boost college financial aid

by | Oct 7, 2022 | Stock Market

When parents fill out the arduous 100-plus questions of the Free Application for Federal Student Aid, or FAFSA, it’s a snapshot in time. You add up all your current account balances and cash — down to the change in the cup holder in the car, some fear.  And then the system ingests your taxes from two years prior to the application school year, now lyrically referred to as the prior prior year’s taxes. So for the FAFSA that parents are filling out now in 2022 for the 2023-2024 school year, it uses your 2021 taxes. Is everyone still following? 

What’s distinct about the predicament this year: A lot has happened.  For one thing, some 19 million people still might not have yet filed their 2021 taxes, and face an extension deadline of Oct. 17 — unless they qualify for additional time due to Hurricane Ian.  But the real issue for many families is that the economy is rough. College savings invested in the stock market have faltered as the S&P 500
SPX,
-2.07%
has fallen into a bear market. Even those who shifted to bonds
TMUBMUSD10Y,
3.855%
likely have losses. At the same time, families crunched by inflation may have had to put ongoing savings earmarked for tuition toward the grocery budget. And most of all, with talk of …

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