It's January 2011. So, what does that mean? Well, for starters, Happy New Year! I'm sure many of you have been thinking about your plans for the upcoming year, maybe even jotting down some resolutions. There are two in particular that we might have in common: go back to or finish up school, and save money.

With that in mind, I have been working diligently to bring you the most current and useful information about the new 2011-2012 FAFSA form. The FAFSA, Financial Application for Federal Student Aid, is the first step in your financial aid process.

This month's newsletter provides helpful tips for applying for financial aid.

Why File a FAFSA if You Know That You Won't Qualify?

Why should a family complete the FAFSA when they know today that they will not get any aid for their child's education? I answer this question for many families as they embark on this rigorous process.

And I answer it with another question: How do you know that you will not get aid for your child's college education? Financial aid formulas are complicated, making it hard to predict eligibility for need-based aid. The only way to be certain that your child will not qualify for student aid is to apply. You should continue applying every year even if your child did not qualify the previous year, because small changes in your family situation can have a big impact on aid eligibility.

Some parents insist they know that they won't qualify for financial aid and make bad decisions as a result. Perhaps a relative, neighbor or coworker's children didn't qualify for financial aid. Perhaps the parents are basing their belief on their own experiences two decades ago. Perhaps newspaper and magazine articles have convinced them that college is unaffordable. But often these convictions are wrong. Each family's financial circumstances are different, and financial aid has changed a lot in just the past decade.

There are no explicit income cutoffs in the federal need analysis formula, though lower income families are more likely to qualify for federal grants than upper income families. But even if you had millions in income and savings, you should still submit the FAFSA.

The FAFSA is a prerequisite for several forms of non-need-based aid. Among the federal student aid programs, the unsubsidized Stafford Loan and the Parent Plus Loan do not depend on financial need. But the FAFSA is required before the student can get an unsubsidized Stafford loan and a Parent Plus Loan.

6 New Year Resolutions That Could Lower College Tuition

If one of your New Year's resolutions is to find more money for college, here are six steps you can take to reduce the financial pain of higher education:

1. File your FAFSA: The new FAFSA application became available January 1 -and for the first time this year, filling it out is mandatory for anyone applying for a Federal Parent Plus Loan.
   
2. Contact your Financial Aid Office: If you think the information on your FAFSA form does not accurately reflect your current economic status, don't be afraid to alert your school's financial aid officers about extenuating circumstances. The 2011-12 FAFSA determines your need for aid based on your financial situation in 2010. But if a parent lost a job recently and saw a dramatic decrease in income, or if a family member had big medical expenses (which aren't reported on the FAFSA), among other situations, schools are permitted to adjust your eligibility for financial aid.
   
   Reach out to your school's financial aid office early with a letter or E-mail that specifically outlines and documents your unusual expenses or drop in income. Students and parents can also appeal to the financial aid office after receiving their aid package.
   
3. Collect a "tax scholarship": Students and families can get several kinds of taxbreaks for their educational expenses. Low- and middle- income families can collect American Opportunity tax credits (AOTC) of up to $2,500. The AOTC is attractive because even families who don't owe a cent in taxes can still get checks of up to $1,000 from Uncle Sam.
   
   You may be able to deduct qualified tuition and related expenses that you pay for yourself, your spouse or a dependent as a tuition and fees deduction.
   
4. Get a late-deadline scholarship: Though the due dates for many hefty merit-based scholarships have passed, surf the web and look around your community for any remaining opportunities. Sites like Fasweb.com match a student profile against a database of scholarships and only consider applications that are still available. It's not too late for a high school senior to begin thinking about scholarships, but they shouldn't just sit on their hands now, they should hop online and see what's out there.
   
5. Be realistic: Parents have to be much more conservative in terms of what they're telling their kids they can finance for college. Have a conversation about financial savings as early as your high schooler's freshman year, so everyone is on board with what your family can afford instead of selecting a school first and then figuring out how to finance the education. Families need to better integrate financing into the college choice.
   
6. Start saving now: Even for parents of teenagers, it's not too late to start squirreling away future funds. Families should save for college even this late in the game. Every dollar you save is a dollar less you will have to borrow.

What You Need On-Hand to Complete the FAFSA

For most client families, I will submit your FASFA with you, correctly and on time.  In fact, thanks to the organization and hard work of our client families, we've already completed 35 FASFA applications in the first few days January! 

If you choose to complete the form on your own, make sure you have all the necessary materials before you sit down at the computer:

•  Student social security card  
• Student driver's license, and or alien registration card if not a US citizen
• Student income tax returns, W-2 forms and 1040 forms for the previous year
• Parent's income tax returns, W-2 forms and 1040 forms for the previous year
• Current bank statements and records of stocks, bonds, mutual funds and other investments
• Current mortgage information
• Business or farm records

Key Tip:  Make copies of all documents and keep them in a dated financial aid file.

What is Expected Family Contribution (EFC)?

The information you report on your FAFSA is used to calculate your Expected Family Contribution (EFC) to determine your federal student aid eligibility and financial aid award.  This number is calculated and provided at the end of the FAFSA application process located on your confirmation page.

Expected Family Contribution (EFC) is a measure of your family's financial strength and is calculated according to a formula established by law. Your family's taxed and untaxed income assets and benefits are all considered in the formula. Also considered are your family size and the number of family members who will attend college.

The EFC is not the amount your family will have to pay for college nor is it the amount of federal student aid you will receive. It is a number used by your school to calculate the amount of federal student aid you are eligible to receive.

The EFC is critical because college financial aid offices use it to determine a student's financial need - a calculation that varies by school each year. Need is the difference between the cost of attending a given school and the student's EFC.

FinAid.com has a Financial Aid Estimation Form that may be used to calculate your EFC and an estimate your eligibility for financial aid.

• Save you time and money by helping you complete countless and sometimes confusing financial aid forms.

• Protect you from missing a deadline and making costly mistakes.

• Guide you through the entire financial aid process.

• Provide peace of mind knowing you've received the financial aid you're entitled to, while minimizing your time, effort and energy.