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How to win the FAFSA race

Some states have made college financial aid explicitly "first-come, first-served."

Brian O'Connell
by Brian O'Connell, MainStreet contributor

NEW YORK (MainStreet) — Federal and state college financial aid funds are limited, and the Free Application For Financial Student Aid program really works on a first-come, first-serve basis.

This week, the Sacramento, Calif.-based Student Aid Financial Services, which specializes in completing FAFSA forms for college-bound families, elaborated more fully on the issue. Illinois, Kentucky, North Carolina, South Carolina, Tennessee, Vermont and Washington have made a "first-come, first-served" warning explicit, saying they don’t have as much funds on hand as they did before the Great Recession.

According to the National Association of State Student Grant Aid Administrators, state funding for college students has fallen 2 percent from 2007 to 2012, a slide the group expects to continue.

Thus the real need to get those FAFSA forms in early.

READ: Six steps to completing a FAFSA application for college aid

“Speed and accuracy are essential when preparing a FAFSA,” said Brad Baker, president of Student Aid Financial Services. “The aid process is competitive and it pays to submit early.”

That’s no hyperbole. SAFS says that the average college undergraduate student secured $13,218 in state and federal aid, including loans, grants and work-study programs.

How can you leverage your FAFSA form to maximize the amount of money you can earn for your son or daughter’s college education? Here are a few pointers from analysts at SAFS:

Know the price before you apply. SAFS advises get an estimate of what financial aid they may be eligible for before applying to specific schools. One tip: most college websites offer net price calculators that can help you narrow down your likely estimate for college aid. The company has more detail on net price calculators here.

READ: Three tips to use in your search for college funding

You don’t have to include a tax return. Since tax returns aren’t due until April 15, it’s perfectly fine to prove estimated annual income on your FAFSA form. “There is no penalty for estimating income, it is actually recommended so that deadlines aren’t missed,” SAFS says. “Students can easily make any necessary adjustments once their (or their parents’) income tax filing is completed.”

Know the “dependency” statutes. Few issues are more misunderstood with FAFSA than dependency. According to SAFS, even if a college student lives one their own and is financially independent from his or her parents, states still consider children to be dependents “for financial aid purposes.” The rule, then: Always include parents’ financial aid data on the FAFSA. For details on the dependency issue, visit FAFSA here.

SAFS also says that nontraditional households must file FAFSA forms in the name of the custodial parent in a divorce situation. If there is a joint custody situation, file under the parent who has provided the most financial support.

Maximizing college funding opportunities via the FAFSA form isn’t a luxury for most families — it’s a necessity. Take the advice listed above and get your FAFSA form in early.

It’s likely the best college funding move you’ll make this year.

Brian O’Connell has 15 years of experience covering business news and trends, particularly in the financial, health care and career management sectors. He has written 14 books and appeared on CNN, Fox News, CNBC, C-Span, Bloomberg, CBS Radio and other media outlets and in such publications as The Wall Street Journal and The Street.com. He is a former Wall Street bond trader.