Preparing for college? Here's what you need to apply for financial aid

High school graduation may be a few months away, but now is the time for college-bound students to start thinking about financial aid.

On Oct.1, the Free Application for Federal Student Aid (FAFSA) became available to students across the nation. On that first day, nearly 238,000 online applications were submitted, an 8% jump from last year.

The FAFSA is an important key to securing federal aid in the form of grants and low-interest loans. Operated by the Department of Education, the office of Federal Student Aid provides more than $120 billion in assistance every year, helping more than 13 million students pay for college.

Completing your FAFSA early could greatly impact your award. First, every school has a different deadline, so getting it in early will prevent you from accidentally missing out. Additionally, some funds are awarded on a first come, first served basis, so it’s wise to send in your application early, even if you’re unsure of where you’re going to school.

What you need

Before you go online, plan ahead and have the following information available.

FSA ID

Sign up for an FSA ID. This is what allows you to access the Federal Student Aid system online. Secondly, it will serve as your legal signature on the FAFSA. You can easily create a new FSA ID online. Note: If a parent is providing information on a FAFSA, he or she will also need his or her own FSA ID.

Financial information

In order to create a full financial picture, the FAFSA will ask for your family’s 2016 tax information. For this, you will need to provide your federal income tax return and W2 form. You can also use the IRS data retrieval tool to easily access this information.

On top of tax documents, the FAFSA will also ask to see your bank statements, records of investments, and records of any untaxed income.

If you are a dependent student, you must provide all of the same information for your parents.

Personal information

In addition to your tax details, the FAFSA will also require your Social Security number or Alien Registration Number if you’re not a U.S. citizen.

Tools to help

If you’re not ready to file your FAFSA, but want an estimation of your aid, try the FAFSA4caster. This free tool will estimate your financial aid eligibility. After entering the name of a specific school or university, the calculator will summarize the cost of attendance and provide an estimated Expected Family Contribution (EFC). It can also estimate your Pell Grant and federal loan eligibility.

As you move through the FAFSA process, it’s wise to familiarize yourself with some of the most common terms with this helpful info sheet. From Expected Family Contribution to Direct Unsubsidized Loans, knowing the definition of these key terms will help you to better understand your financial aid offer.

Brittany is a reporter at Yahoo Finance. 

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