This free application can lead you to a wealth of financial aid for college, and filling out the FAFSA is now easier than ever.

More than 85% of first-time four-year undergraduate students receive some form of financial aid. To get your share of most of that aid, you must first file the federal government’s Free Application for Federal Student Aid, better known as the FAFSA. It determines eligibility for all federal aid programs, from Pell Grants to student loans. It determines eligibility for most state and collegiate-based aid programs. And it even indirectly determines eligibility for some merit-based aid, since many schools reserve their own (limited) scholarships for students who don’t qualify for need-based funds.

How much aid you’re eligible for will depend on the financial and personal information you provide on the FAFSA. Federal processors evaluate the data, determine your family’s ability to pay, and then tell you how much you and your family should contribute toward college, aka your Expected Family Contribution (EFC).

Your colleges will then use your FAFSA results and EFC to determine your need and what (if any) need-based aid they will award you. FYI, the formula colleges use is roughly as follows:

Total cost of attendance (tuition, fees, room, board, books, etc.) – Estimated Family Contribution = Your official financial "need"

The FAFSA has been simplified greatly in recent years, and it can take as little as half an hour to complete. Of course, it can still be a little intimidating! But it’s well worth the effort and easy to do if you take it step-by-step. You can also get an idea of what the process entails, plus an estimated aid package, using the FAFSA4caster.

Finally, don’t forget, it’s free to file, so you have nothing to lose.

You should file the FAFSA ASAP after October 1 the year before you hope to enroll (or continue) in college. (It used to be January 1 the year you hoped to enroll. Here's a closer look at the 2016 FAFSA changes.)

For example, if you're planning to start college in September 2017, you would file the FAFSA on or after October 1, 2016, with tax info from 2015. All these dates might seem a little confusing at first, but this new FAFSA schedule makes the financial aid process more closely align with the admission process. This should enable you and your family to make better college financial decisions overall—and sooner.

You should also make sure you're aware of all filing deadlines that apply to you. The federal FAFSA filing deadline is probably different from your state deadline, and your colleges will likely have their own internal filing deadlines too. (You can look up your state FAFSA deadline here.)

But even if your deadlines are months away, you should file your FAFSA as soon as you can, since a great deal of financial aid is first come, first served. Money is awarded until it runs out—and late filers might get nothing. Unfortunately, many students miss out on financial aid opportunities because they fail to meet the filing deadlines. The best financial aid awards (those heavy on grants and lighter on loans) are generally given to the earliest applicants. So make sure you're ready to roll when the FAFSA becomes available on October 1...

First, hop over to fafsa.ed.gov to make or log in to your account and access the application so you can see what's ahead of you. Then work with your parents to start collecting the necessary financial records. To get organized, you might try putting your paperwork and information into two folders:

Here’s the financial information you’ll need to collect:

• Taxable income for parents and the student, including wages, pensions, capital gains, interest, dividends, annuities, unemployment compensation, alimony received, rent collected, and business income

• Non-taxable income for parents and the student, including workers’ compensation, welfare benefits (excluding food stamps), housing and food allowances, child support received, untaxed Social Security benefits, untaxed income from pensions and annuities, veterans’ non-education benefits, tax-exempt interest income, deductible payments made to a retirement plan (such as an IRA or Keogh), and earned income credit

• Expenses such as US income taxes paid and any child support paid

You must report the net worth of all these assets as of the date you and your parents sign the FAFSA, so before you record any totals, be sure your family pays off all its bills and pays down any consumer debt, like credit card balances.

• The value of cash, savings, and checking accounts held under the names of the parents and the student

• Net worth of all the parents’ and student’s investments (except for retirement plans), including stocks, bonds, CDs, money market funds, mutual funds, commodities, trust funds, education IRAs, state-based college savings plans (except pre-paid tuition plans), and real estate holdings (rental property and second homes); you need not include the equity in your family’s primary residence.

• The net worth of any family business and/or farm (excluding farms that are principal residences)

In completing your FAFSA, it's critical that you read instructions carefully and be as accurate as you can be. Mistakes will cause your application to be returned.

If a question or two seems confusing, call the federal student aid hotline at 800-4-FED-AID, or ask a guidance counselor or financial aid administrator at one of your colleges for help. Many colleges now have toll-free numbers for exactly that purpose. If a question still proves troublesome, you can explain your problem in a letter to the school’s financial aid administrator. Also, even though you can still send in a paper application, keep in mind that filling the FAFSA out online is generally easier and less prone to errors, especially since your family can import their tax information directly using the IRS Data Retrieval Tool.

Once you’ve gathered all of your financial data, the FAFSA is pretty straightforward. It should take about half an hour to an hour to fill in. Answer each question unless the FAFSA specifically tells you it’s a step you can skip.

Let’s review each FAFSA section:

Student demographics and eligibility

These questions cover your basic personal information (name, e-mail address, permanent address, Social Security number, date of birth, permanent phone number, citizenship status, marital status, and optional driver’s license number), plus some other basics, such as:

• The student’s educational plans and high school

• The highest level of education completed by the student’s mother and father

• The student’s state of legal residence

• The types of aid for which he or she wants to be considered (To maximize your chances for receiving aid, you should indicate a willingness to accept loans and work-study. You can always change your mind later.)

• Registration for the Selective Service (If you’re male, age 18–25, you may use this section to register. In most instances, male students must be registered to receive federal student aid.)

• Drug offenses (If you’ve never been convicted of a drug offense, simply check the “No” box and move on. If, however, you do have a past drug-related conviction, you will not be considered for federal aid; however, you may still receive state or institutional aid, so it's still worth filing the FAFSA.)

School selection

This is the part where you add the colleges (up to 10) you'd like to send your FAFSA results to. Good news: you fill out the FAFSA only once regardless of how many colleges you’re considering! You'll be asked if you intend to live on campus, off campus, or with parents too; this helps aid administrators better determine their cost of attendance.

To make sure your data goes to the correct school, make sure you know each school’s federal school code. Most publish their FAFSA codes online and with their application for your reference, but you can also search for and add them manually through the FAFSA online.

Dependency determination

These questions address the student’s dependency status. Students who meet one of these criteria may be considered an “independent” student, and your eligibility for college financial aid will be determined without consideration of your parents’ income and assets.

You’re independent if you are:

• 24 years old by December 31 of the award year

• A graduate or professional student during the award year

• Married (or separated)

• A parent or have other dependents who currently receive more than half their support from you

• An orphan or a ward of the court

• A veteran of the US Armed Forces

Schools may also determine dependent status based on unique living circumstances, such as being raised by grandparents. Ask your high school guidance counselor or a financial aid administrator at one of your intended colleges if you are unsure of your own “dependency” status.

Parent demographic information

In this section dependent students must provide information about their parents’ marital status, Social Security numbers, number of household members (including the number who will be enrolled in college), and more. Each of these elements affects the calculation for your Expected Family Contribution (EFC), so answer the questions carefully. For example:

• Older parents are expected to contribute less since they are closer to retirement.

• Parental contribution is divided by the number of students in college.

• If the parents are divorced or separated, include only the financial data of the parent with whom the student lives for the greater part of the 12 months preceding the date of the application. If that parent has remarried, the student must include that stepparent’s income and asset data as well. Note: some colleges request information on the “other” natural parent and may expect a contribution from that parent as well.

Parent tax information

These questions ask you about your parents’ tax filing status. Again, try to complete tax returns before you tackle the FAFSA. You can also transfer filed tax information online, making the FAFSA much easier to complete!

Parent financial information

The FAFSA then rolls into the key determinants of your aid as a dependent student: parental income and assets. The EFC calculation is based primarily on the family’s adjusted gross income (AGI); however, it is designed to reflect the financial strength of the household, so it counts untaxed income as well. Be exact in your numbers—and above all else, be truthful. The FAFSA also collects your parents’ Social Security numbers to make it easier for the Department of Education to verify income reported on the FAFSA with the Internal Revenue Service (IRS).

Many people think the “net worth” of their assets will eliminate them from aid consideration, but this is not necessarily the case. Remember, the FAFSA takes many financial considerations into account, and parents may have sheltered assets. It behooves every family to file!

Student tax information

Now it's time to talk about your tax filing status—which tax return you will file and whether you have already completed this tax return. If you haven't already (say, if you filed an extension), complete your tax return before you file the FAFSA. Much of the information is the same, such as your adjusted gross income, US income tax paid, and number of exemptions.

Student financial information

Some of these questions cover student income and assets, and dependent students may find they are not relevant. In this case, enter “0.” Keep in mind an unanswered question can get your FAFSA returned with a “request for additional information.’’ This will hold up the processing of your form and could jeopardize the amount of funding you will receive. Needless to say, you don't want that!

Sign and submit

Finally, students and parents must sign and date the form. In doing so, they certify that (if requested) they will provide information (for example, a copy of their tax return) to verify any recorded data. They also declare that they are not in default on any federal student loans and promise to use any federal student aid for educational purposes only.

If the form was completed by someone outside your immediate family, that person must sign and date the form as well. There is nothing wrong with getting help with your FAFSA, like if your family has a financial advisor; however, the Department of Education wants to know—that way it can clear up innocent misunderstandings, as well as detect patterns of fraud.

Note: never mail your tax return with your FAFSA. Processing centers are only interested in the financial data you provide on your FAFSA. Also, don’t mail your tax return (or any other forms, for that matter) to a college or university unless specifically requested.

Within two weeks of submitting the FAFSA, students/families will receive a multi-part document called a Student Aid Report (SAR). If you supplied an e-mail address with your FAFSA (as most students do these days), you will receive a link to your SAR in as little as three days!

The SAR lists all the information you included on your aid application and tells you how much money you’ll be expected to contribute to college costs. Again, this is your EFC (Expected Family Contribution). The information will also be sent electronically to the schools you designate and your home state’s scholarship agency (as well as the state agency of every school on your list).

Review your SAR very carefully. If there are any mistakes (for instance, if a $500 has become a $5,000) send the correction back to the processor immediately. It is now up to the college financial aid administrator to take all this information, determine your eligibility for student aid, and develop your financial aid package