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Last year, families that filed the Free Application for Federal Student Aid — or FAFSA — for college found themselves trapped in a computer nightmare. In an attempt to make the process simpler, the government botched the rollout, leaving many families unable to file FAFSA until January — three months late. And that delayed college notifications of financial aid until June, in many cases.

So how is FAFSA doing for the 2025-2026 school year, which will affect current high school seniors and returning college students who need to reapply each year for financial assistance?

The answer is ... it’s off to a slow start. According to Jack Wallace of Yrefy, a lender that specializes in refinancing distressed student loans, at least this year the government delayed its full launch only until November 21. But starting in October, a “beta” testing program allowed about 167,000 applicants to move through the system to see if the process would be smoother this year, including not only filing but also forwarding the information to schools.

Since the November 21 full FAFSA opening, about 1.5 million families have been able to file, without much complaint. But that still leaves an estimated 16.5 million waiting to file for aid for the coming academic year. And that means the pipeline could get clogged again soon.

So, my first bit of advice is to spend the holiday season completing the FAFSA process. As a reminder, now the student and the family file with separate log-ins at www.StudentAid.gov. The student gets one account and the parents get a separate account, keeping financial information confidential.

The student should start the process by completing his or her account first. Once each account is confirmed, the parent (or guardian, or “principal contributor”) must log back into the website to separately start completing the FAFSA form. Each saves information separately. The process links them together based on the child’s Social Security number.

Notably, this year the person who provides the most financial support to the dependent child must fill out their information as the “principal contributor.” In case of divorce, or even two-income families, only one parent — the parent that contributes the most to support the child — must set up the account. The StudentAid.gov website has a new tool, the “parent wizard,” to help determine who must file.

The first goal of the original FAFSA simplification was to link the application to the IRS tax return filed by the parent. But the parent must check the box on the application to give permission for the IRS to send tax information. Obviously, the latest return will be the one filed last year — the 2023 tax return. If it was a joint return, with two parents working, even though one may be the “principal contributor,” the total income on the return is what impacts financial aid.

The new, streamlined FAFSA form allows you to automatically have your information sent to up to 20 schools. That doesn’t mean you must follow up with an application, but at least the school will have your information on file if you do.

Now here’s another word of advice. This is the time to have a frank conversation between parent/contributor and child about the cost and choice of schools. Go to each school’s website and look up the COA — cost of attendance — which includes not only tuition but also an estimate of room, board and fees. And don’t forget to include travel costs.

While it’s fine to apply to a more expensive school, and hope that a financial aid award will make it affordable, you should also include community or state schools that would be affordable even in the absence of a lot of financial aid. You don’t want to be left out completely if your aid package is not sufficient.

Don’t fall into the trap of thinking that your family can’t possibly qualify for financial aid. Statistics show that 85% of those who file do get some form of financial aid. That percentage is high, because the FAFSA is frequently required for free money, even when scholarships or grants are not necessarily based on need. Also, many individual schools and state scholarship agencies look at the FAFSA in determining financial aid. So, it’s not just about federal student loans.

Financial aid beyond federal student loans is typically first come, first served. That includes Pell grants, scholarships and work-study programs. So don’t procrastinate. File the FAFSA form right now. It could be a long-lasting holiday gift to yourself and your family. And that’s The Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2024 Terry Savage. Distributed by Tribune Content Agency, LLC.