If there’s a high school senior in your family, your first task of the New Year is to get ready to file the FAFSA form – the Free Application for Federal Student Aid. You can file starting Jan. 1, and the early bird gets the aid!

All college seniors, who want to get financial aid for school this fall, must file the FAFSA form, as well as current students who want to renew or increase their aid.80 percent receive aid

Nearly eight out of 10 full-time undergraduates receive some form of financial aid. Almost all aid – whether government loans, grants, scholarships or work-study awards – requires the student and family to file this “universal” application form.

While it can take less than an hour to file the application online at www.fafsa.ed.gov, it can take far longer than that to gather the required information. That’s because FAFSA requires that you submit information not only about the student’s and parents’ income, but their assets, as well. Only home-equity and retirement plan assets are exempt.

Here’s the information you’ll need to to file:Identity information: Social Security number, driver’s license, alien registration card.Latest federal tax return. You’ll need to make an accurate estimate of your 2007 adjusted gross income, as if you had prepared the tax return that will be filed in April. You can amend this later, if needed.

Bank statements and investment information from year-end.

Several weeks after your FAFSA form is filed, the student applicant will receive a Student Air Report. That letter explains the Expected Family Contribution (EFC), which is also sent to the colleges you list on the FAFSA form to help them determine the aid they will offer if they decide to admit the student. The college might offer both need-based as well as federal student loans.

That EFC amount might be – and usually is – far more than the family can provide out of its own savings. Then students or parents might have to take out other loans to fill any gaps. That’s why it’s particularly important for you to fill out the FAFSA forms correctly to qualify for the most aid possible.

Then, in spring, the student will receive acceptance letters and the financial aid package offered by each school, based on the EFC. That’s when you’ll need to act quickly and be flexible. There are basically two things you can do when the aid offer arrives if it falls short of what you need.

Ask for more aid. This isn’t an impossible task, but must be approached with delicacy. There’s no rule that says you can’t call the financial aid office of a school, explain that your student really wants to go there, but simply can’t bridge the gap. Maybe the school will offer more, maybe not.

Select another school. Be flexible about picking the school that offers a greater amount of scholarship aid, requiring less in the way of parental borrowing. In fact, the more expensive schools might offer a more complete aid package, as a way of getting a diversified student body. Parents: Speak up!

Now this is where parents must speak up and guide their children. Here’s what we know as parents with the benefit of hindsight: College is college. The lower tuition at your state school might be a far better investment than the debt required to attend that prestigious private college.

I personally think it’s insane for college students to graduate with more student-loan debt than their parents took on in their first mortgage. But someone needs to tells a 17-year-old this fact of life. And until 17-year-olds (and their parents) start telling colleges they “can’t afford” to attend, colleges won’t get the message that they must keep tuition increases in line with the Consumer Price Index.

It all starts with each student, each family facing up to reality. File the FAFSA, get the most aid possible, evaluate the costs and consequences realistically, and then make the intelligent choice about where to attend. That’s the one smart decision that doesn’t require a college degree! And that’s The Savage Truth!

Terry Savage is a registered investment adviser. Check out Terry’s answers to reader questions at suntimes.com, and click on Business.