New Year's is the best day to apply for financial aid

Ivory Tower: Student Debt Crisis
Ivory Tower: Student Debt Crisis

Hoping to relax on New Year's Day? Well if you or a family member is headed to college in 2015, that's too bad.

January 1 is the first day students can submit the nationwide financial aid application (known as FAFSA) for the upcoming school year. Applying early is hands down the best way to maximize the amount of money a student gets to put toward college.

Here are five things you need to know about the process.

1. It's a single application for three different kinds of aid.

This form is super important because it determines the amount of aid a student will get from the three main sources available: the federal government, state governments and schools. Funding can include loans as well as money that students don't have to pay back, like scholarships, grants and work-study gigs.

2. The sooner you file, the more money you can get.

Some states and colleges have a finite amount of money to dole out and it's allocated on a first-come, first-serve basis each year, according to Sallie Mae spokeswoman Martha Holler. So it's always best to be at the front of the line.

Don't wait for your W-2 to come in or to get your tax returns. The application can always be updated later with exact numbers, Holler said.

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3. Don't assume your family is too wealthy.

The amount of aid granted to students is largely based on income. The value of the home a family lives in and any retirement savings aren't taken into consideration.

And keep in mind that a family with more than one student in college is actually eligible for more help. A family with two kids in school could see its expected contribution to tuition cut in half, Holler said.

Related: More and more food banks are for college students

4. Watch out for different deadlines.

There can be early deadlines to get state aid. The first one is in Connecticut, where families must submit the form by February 15 to be eligible for state aid.

5. There might be another form

Some states and schools require more information than this application calls for. Once the standard form is submitted, links to supplemental forms can be found on the confirmation page -- but not on the confirmation email, so be careful!

The form is free to file and can be found here. Holler says it should take about 30 minutes to complete.

"A little time could translate into a lot of money," she said.

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