October 2020
College & Tax Planning

College costs are increasing at about twice the rate of inflation each year and have averaged between 6-7% for several decades. At Copperwynd we use a College Cost Attention parents and grandparents! October 1st, marks the opening of FAFSA (Free Application for Federal Student Aid) submission window! The FAFSA is the first step in the financial aid process. It is used to apply for federal financial aid, such as grants, student loans, and work-study. Don’t think your family will qualify for financial aid? The FAFSA should be completed regardless, as loans and scholarship awards may also take the information on the FAFSA into account, and with tuition prices where they are these days, every dollar counts! 

These steps must be taken each year, before filing the FAFSA. 

1. The student should create a FSA ID at https://fsaid.ed.gov/npas/index.htm The FSA ID is an electronic signature, used to sign the FAFSA. Write down the username, password, email address and challenge questions and keep this information somewhere safe (e.g., take a picture of it with your smartphone). Also, provide your cell phone number when registering for a FSA ID. This will make recovering a lost or locked FSA ID much easier. Even though the FAFSA season starts on October 1, you don’t need to wait until then to get a FSA ID. 

2. Determine the student’s dependency status. The student’s dependency status will affect whether parent information is required on the FAFSA. The student is only independent if he or she is pursuing a graduate degree, has a child, is married, or a member of the US armed services. 

3. Gather important documents, such as your Social Security card and driver’s license (if any). If you are not a U.S. citizen but an eligible non-citizen, get your alien registration number and permanent resident card (green card). And gather financial records relating to income, assets, and investments as all of this will be asked about while filling out the FAFSA. 

4. Create a college list. You do not need to have applied for admission to a college to list it on your FAFSA. You must provide at least one college on the FAFSA for the FAFSA to be processed. It is a good idea for the college to be an in-state public college, since listing a state college first is often required for the student to be considered for state grants. You can add more colleges later. 

The FAFSA is filed annually, once for each year in college. 

If you are attending FAFSA workshops or presentations by your child’s school, please be aware that while they are experts at the bureaucracy that is financial aid, they do not understand YOUR financial life. Consult with us before making any changes to your accounts as there are potential tax and estate considerations when you move money around. 

If you have questions, please contact us.

MARKET UPDATE
FINANCIAL PLANNING
401(k) ALLOCATION
GRAPHIC OF THE MONTH

To download the October 2020 Newsletter: CLICK HERE