Getting ahead of the FAFSA: Money moves to make when your kid is in high school

High school kids headed to college in a few years have a lot on their plates: homework, extracurriculars, ACTs and SATs—not to mention identifying potential colleges, completing applications and visiting campuses.

As a parent, you may want to help your child with college preparations in their last years of high school as much as possible along the way. One consideration to add to the list is completing the Free Application for Federal Student Aid (FAFSA), which typically opens every year on October 1 ahead of the next school year.

A note on changes applicable to 2025-26 financial aid applications: The Federal Student Aid is preparing to make some significant changes to the FAFSA. Although new applications are usually available in October, the FAFSA for the 2025-26 will be delayed to December 2024.

Why is the FAFSA important to think about even when college is a year or more away? Preparing for the FAFSA and making strategic financial moves ahead of time can reduce the chance of surprises and maximize your possibilities. You can take steps now to get a sense of how much you'll be able to contribute and how you can help your child qualify for a better financial aid package.

The main use of the Free Application for Federal Student Aid is to determine a student's eligibility for federal financial aid for college. However, most schools also use it to calculate a student's eligibility for other forms of financial assistance, such as scholarships, grants and work-study programs.

Once you submit the FAFSA and the Department of Education has processed it on the federal level, they send the application and information to the schools you've identified on the form. Those educational institutions then make their assessments and prepare their own financial aid offers.

The FAFSA is essential for you and your student to compare the cost of schools. The schools' financial aid offers generally lay out these key details:

Estimated cost of attendance, including:

• Tuition and fees
• Housing
• Meal plans
• Books and supplies
• Other associated expenses

Estimated financial aid information, including:

• Your Student Aid Index (SAI)—a determination of how much you're able to pay
• Your financial need, which may include any need-based aid—the difference between the cost and what you're able to pay
• Merit aid—grant or scholarship money that you wouldn't have to pay back
• Work-study programs—student-friendly part-time work opportunities associated with the school
• Student loan offers—the federal loans you would qualify for (that you'd repay with interest)

Even if you've saved money for school and don't think you'll get much federal or institutional help, the financial aid offers you get from completing the FAFSA will reveal everything that's available to you and give you a good idea of your total cost.

Laughing mother and daughter posing for graduation photos during dinner on restaurant deck

How does a 529 plan affect financial aid?

Some people worry that having money in a 529 reduces the amount of aid a school offers. That's by no means a sure thing. And there may be steps you can take to minimize reductions to your award.

Dive deeper

The FAFSA typically becomes available on October 1 each year for the next school year. The application window stays open until June 30 of the following year, but it's important to realize some schools have earlier deadlines and some may allow it to be filled out right up to the start date of the term.

Some financial aid is first come, first served, so it's a good idea to complete the FAFSA as soon as possible—while your student is still finishing high school. It is important to pay attention to each individual school's FAFSA deadlines to maximize financial aid.

When filling out the FAFSA, students are required to provide personal and financial information for themselves and their parents. This includes:

• Social Security and driver's license numbers
• Federal income tax return information from two years ago
• Tax information and W-2s for the most recent year
• Bank and investment account balances
• Information on nontaxable income, such as child support, certain interest income and veteran benefits
• Financial information for any businesses or farms owned by the family
• Up to 10 schools you're considering, even if you haven't applied or been accepted

The FAFSA uses tax information from the "prior-prior year"—that is, your verified tax return from two years ago. For example, when you complete the FAFSA for the 2025-26 academic year, you'll use financial information from your 2023 tax return. Using verified information from the prior-prior year reduces the need to use estimates when completing the form.

Knowing the information required to complete the FAFSA and the timeline covered by the application can help you take proactive steps now to prepare for the application process.

You can use the Department of Education's Federal Student Aid Estimator to figure out your expected family contribution before actually filling out the FAFSA. Your SAI is calculated according to a formula established by federal law and considers your taxed and untaxed income, assets and federal benefits such as unemployment compensation and Social Security benefits.

Knowing your SAI can give you a better idea of how much financial aid your student may be eligible for when applying.

Once you have your SAI in hand, you can see how any financial decisions you're contemplating would change your SAI and the amount of financial aid your student might qualify for. This is perhaps the greatest reason it's important to think about the FAFSA early.

For example, if you're considering large financial outlays, such as buying property, making home renovations, starting a business or taking a sabbatical, you may want these events to coordinate with your FAFSA application for the year (or years) you'll be completing it.

You also might consider plans that could increase your available assets, such as selling property or a business or accepting a significant cash gift from a grandparent. These can affect eligibility for financial aid and other forms of assistance.

Remember that college students must fill out a new FAFSA each year to remain eligible for federal, state and school-specific financial aid. If you have more than one child headed to college, you may be filling out FAFSAs for the next decade or more. You might not be able to delay major financial moves indefinitely to maximize the financial aid available to your student(s), but it's worth thinking about and running the numbers.

The key reason the FAFSA is important is that you'll know ahead of time how the costs, your SAI and any aid awards stack up with your college savings accounts and other finances. The earlier you start planning, the more possibilities there are for adjustments. With preparation, you can aim to maximize your student's financial aid eligibility and help them get closer to achieving their education goals.

Even if your student ends up receiving little or no financial aid, there are other options like loans, grants and merit-based scholarships. Your local Thrivent financial advisor can provide helpful advice on college education planning. They'll evaluate your individual circumstances and can help you find solutions that fit your financial strategy.