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Complete the appliation as soon as possible after January 1st. Then contact each school she is applying to. Tell the Financial Aid office the special situation. They may be able to adjust her aid based upon your new yearly income.
You may want to take a look at this Department of Education site on financial aid. The FAFSA 4caster will help you determine the approximate aid she will recieve. http://studentaid.ed.gov/PORTALSWebApp/students/english/index.jsp
I agree with library lady… in addition, have your daughter start applying for all the scholarships that she can (aim for those that require essays because they receive fewer applicants). She can search the web, or she can go to the library or bookstore and get one of the gigantic scholarship books that they offer. In addition, your daughter should meet with her guidance counselor who should be able to recommend specific scholarships for her. Good luck and I’m so sorry about your husband passing away.
When your daughter does her fafsa after January 2010, (using your 2009 income tax return) it will ask her parents marital status. She will have the option of choosing “Widowed” make sure she chooses this option. By doing so, she will not be allowed to include any of her deceased fathers earned income (from dad working that year) on the fafsa. However, you are required to include all assets and cash (regardless of the source). The fafsa DOES take into a account (when determining aid) a parents need to save for retirement. So don’t assume she isn’t going to get anything because you have some money saved.
Don’t worry, you are not obligated to use it to pay for their education (so don’t spend that money on their education) both of your girls can get financial aid (in the form of low income student loans) if they don’t qualify for free grants for college. They are perfectly capable of getting jobs and saving for their college education. The chances of them actually graduating is much higher if they work for it anyway.