Financial Transparency: The FAFSA, Your Student, and You

Some parents are wary about sharing financial information with their students when filing the FAFSA. Here's how to avoid it and the bright side if you don't.

by
Content Marketer, ValuePenguin.com

Last Updated: Jan 5, 2021

Applying for financial aid through the Free Application for Student Aid (FAFSA) is a process that a majority of admitted college students undergo, as approximately 18 million applications are filed annually. Filling out the FAFSA application requires the financial information of both the dependent student and their parent or legal guardian. However, some parents are uncomfortable sharing details about their finances with their kids. If your student is asking for your financial details for the FAFSA but you’re hesitant about showing them, here’s what to know and what you can do.

Can you prevent your child from seeing your financial information?

The short answer? Kind of. The FAFSA is considered the student’s application, which is why students are required to be in charge of the process, and parents should only be playing a supporting role. In an email interview, a spokesperson for the Department of Education noted that students are required to certify the accuracy of the application, which means they need to be able to view all the information on the form—including their parent’s financials. While the FAFSA is designed to be a collaborative process between you and your college-bound student, this level of transparency may still give you pause. Here are two ways to fill out the financial form discreetly:

Use the IRS Data Retrieval Tool (DRT)

The IRS Data Retrieval Tool (DRT) allows students and parents to pull their recently filed US tax return information into an electronic FAFSA form—it’s a method that Federal Student Aid (FSA) describes as “easy, fast, [and] accurate.” “If eligible to use the IRS DRT, a parent can initiate a transfer directly from their IRS tax return into the student’s FAFSA form,” the DOE spokesperson said. “This financial information is masked and is not visible to the student of the parent, so a parent’s use of the IRS DRT is a way to restrict visibility of their financial information.”

FAFSA form fields that are completed using the tool—a parent’s income and net worth, for example—appear as “Transferred from the IRS” instead of showing the actual financial details. To be eligible to use the IRS DRT, you must have already filed your US tax return with the IRS. However, depending on your filing status, you may not be eligible to use the tool. Here’s more information about IRS DRT eligibility.

Related: How to Get the Most Financial Aid Possible

Fill out your own sections of the form

Are you not eligible for the tool but still uncomfortable having your student present while your financial paperwork is spread out in front of you? Filling out the parent section separately from your student is the next-simplest option. You and your student can create separate FSA accounts with individual FSA IDs but still both be able to sign the form. 

Whoever starts filling out the FAFSA application first can create a “save key.” The save key allows you and your student to collaborate on the same FAFSA form at the same time, even if you’re not sitting together in the same room. You both can use this temporary passcode to work on your separate sections when you need to—just make sure that each person saves their changes before exiting. Although your student can technically go back through the form and see all your manual entries, it’s one alternative that the FAFSA affords you, and you may just need to have a conversation with your student requesting your privacy.

Financial transparency is a great learning opportunity

Although your personal and family finances can be a complex topic to breach, consider the FAFSA process as a natural opportunity to open the conversation. Financial transparency can be great in helping your student develop smart financial skills. For example, they might see you’ve contributed to a tax-deferred retirement savings plan. This can open the door to conversations about the benefits of saving for their own retirement. Similarly, they might notice you have investments and ask questions about how they can start investing their own money. Not all money conversations are easy, but the more frequently you have them, the easier they’ll get.

Related: How to Help Your Teen Save Money for College

We all know money can be a sensitive subject, so don’t feel bad if you’re just not comfortable sharing your financial information with your student. You have a couple of options to avoid revealing more than you wish while still being able to help your student receive financial aid for college. But if you’re on the fence, consider the learning advantages of sharing this information and having important conversations for a better financial future for your student. 

For more helpful advice to get your student to the right school at the right price, check out our Parents section.

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Tags:
college admission college planning fafsa finances financial aid paying for college

About Callie McGill

Callie McGill is a Content Marketer for ValuePenguin.com.

 

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