You have probably heard about FAFSA, the Free Application for Federal Student Aid, and perhaps you have also run across PROFILE, a similar financial needs assessment report.  Parents often ask me if they are the same thing and if they should complete one or the other or both.  Here's a quick breakdown of both.

First of all, your FAFSA details will help you qualify for federal grants and aid.  A full description and application is available at www.FAFSA.ed.gov.  (If you accidentally go to FAFSA.com, recognize that it is a private site that makes you pay a fee to submit your FAFSA form, which should tip you off.  If the first F stands for "Free", why should you pay for it?  Go to FAFSA.ed.gov for the real deal.)  If you want to be qualified for federal grants or aid, you must complete a FAFSA application, submitting a new one each year.   Play it safe and submit FAFSA so that you can make sure you get all the aid for which you might qualify.  Even middle income and upper income families will find that their student qualifies for certain grants or aid.

Note:  Filling out your FAFSA form is similar to doing your taxes and asks much the same information.  Therefore, President Obama has proposed that we do away with the whole FAFSA process and just let a family's tax return serve as their financial aid application. However, I haven't seen a decision on that proposal yet.  It could simplify the process, that's for sure.

In addition to FAFSA, families can fill out the PROFILE application, administered by College Board.  PROFILE conducts a financial analysis similar to FAFSA's.  Your PROFILE report can then be used by colleges to allocate non-federal grants and scholarships.  Not all colleges use PROFILE data so check with your selected schools to see if they require it.  You can find out more about PROFILE and how to apply by going to http://www.collegeboard.com/parents/pay/scholarships-aid/21406.html

So, the main difference is that FAFSA is used to determine a student's eligibilty for federal grants and aid and the PROFILE data can be used to allocate non-federal need-based grants and scholarships.  FAFSA application is free but PROFILE will cost $9 to complete, plus $16 per school to whom the data is sent.  Both sites have help lines to answer any questions you may have.  It's a tedious process but it's worth the effort.

Caution:  There are private companies that host FAFSA nights and guarantee that if you pay them $1000-$2000 to complete your FAFSA for you, they will net much more than that in extra grants or aid on your behalf.  They claim they know certain angles or loopholes that can get you more aid.  Be careful!  Many of the tactics they recommend can invite the attention of the IRS or get you in other trouble with the federal government.