Time is growing short for parents of high school seniors (and those returning to college for the 2026-27 school year) to file the FAFSA – the Free Application for Federal Student Aid. This is not just for low-income parents to gain access to Federal Student Loans. FAFSA is used in many college grants and private scholarships. So it’s critical to file FAFSA as early as possible. It’s available online at StudentAid.gov.

Many state financial aid programs are on a first-come, first-served basis, so the money can run out long before you know if your student has gained admission. That’s why you file this electronic form (which became available last October 1st) and list your schools in order of your priority. To get started, go to StudentAid.gov. Parents and students each get a separate FAFSA ID number. (That way, parental income and assets are not shown to their children!)

The FAFSA analysis generates a SAI (Student Aid Index). It shows the family’s financial strength, and helps schools decide how much aid the student will receive. It’s a simple math formula. The school takes the Cost of Attendance or COA (including tuition, room, board, books and fees), and then subtracts the SAI. The resulting number is the “need” the family has for financial aid.

The FAFSA form parents will file now for school year 2026-27 automatically downloads the parents’ 2024 income from the return that was filed in April, 2025. But that information can be adjusted if one of the parents has lost a job, or income has been substantially reduced in 2025. That two-year lag is a major reason to plan ahead and to know what counts as assets and income.

Brian Safdari, of CollegePlanningExperts.com, has helped more than 25,000 families gain admission to favored schools and get the maximum amount of financial assistance. He advises starting early in high school to “package” the student beyond just grades, to become an attractive candidate. And he says his ultimate goal is to make sure families get the maximum of “free money” without impacting their retirement!

Safdari notes that many families make mistakes in the FAFSA process – mistakes that cost them loans and grants. Among the most common mistakes:

• Listing their home equity under their “net worth”. That increases their assets and reduces aid. Home equity is not counted in the FAFSA process (although it might be counted in the CSS form used by many elite private schools). So if attending a state school, and if parents have savings in their own name, it might be wise to use some of those assets to pay down the mortgage before applying.
• Not reducing their income as much as possible by contributing extra to a 40lK) plan, an IRA, a health savings account (HSA) or even cash value life insurance policies in the years for which income is calculated for the FAFSA. And if you take a loss on any investments this creates a capital loss to lower the AGI, and thus qualify for more aid.
• Misunderstanding the impact of UGMA accounts. They weigh 7x more heavily against the family in the financial aid calculation. Those accounts should no longer be opened, and if existing should be transferred to 529 plans before the student starts high school.
• Not knowing their state school’s Adjusted Gross Income threshold, below which they will provide grants – free money. If you know that level, you might be able to reduce your income below it – just by making an additional contribution to a 40l(k) or IRA. Again, that requires advance planning, since the tax filings used for aid come from two years prior. But you have until April 15, 2026 to open an IRA (if eligible) reducing 2025 income, which will be used in next year’s FAFSA.

Safdari has one more piece of advice, just in case you don’t get enough aid from your favorite school. If you are accepted elsewhere, and receive more aid, you can appeal the aid decision of your favorite school. They just might think it’s worth contributing more to your aid package.

If you think this is a complicated process that could require experienced advisors, you’re likely right. Just like filing a tax return, professionals know all the twists and turns of the process. And when you’re talking about financing a four-year college education that could cost a quarter of a million dollars, any savings is welcome. That’s the Savage Truth.