What Is the FAFSA?

by TBS Staff
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The Free Application for Federal Student Aid (FAFSA) allows college and graduate students to apply for federal grants, loans, and work-study funding.

Undergraduate and graduate students use the FAFSA to apply for federal financial aid. By submitting FAFSA forms, learners become eligible for federal loans, grants, and work-study funds. Applicants must provide financial information alongside demographic details.

Students must apply for the FAFSA every academic year for as long as they are in school. Applicants must be citizens of the United States or eligible non-U.S. citizens, hold a valid Social Security number, and have a high school diploma or equivalent. Alongside federal grants, loans, and work-study aid, the FAFSA is also used to determine eligibility for state and institutional scholarships.

How Does the FAFSA Work?

To fill out an online FAFSA, students must first create a Federal Student Aid (FSA) ID. When applying, students need a Social Security number, details about family and personal income, and a list of their prospective schools. After filling it out, students should double-check the form to ensure accuracy. After the form is digitally signed, all selected schools will receive the application.

Once the Department of Education has evaluated their applications, each candidate receives an offer of aid, which varies by student. Financial aid options include loans, grants, scholarships, and work-study awards, all of which a student can accept or reject. After accepting aid, each learner receives a notification of the disbursement date.

Students also receive an expected family contribution (EFC) number, which is the amount of money the FAFSA determined that the student or their family could afford to pay toward college tuition. The amount of aid a student receives is directly tied to their EFC.

What Kinds of Aid Can I Qualify For?

By submitting FAFSA forms, students apply for federal loans, grants, and work-study funds. The amount of financial aid they receive varies significantly based on individual circumstances.

  • Grants: Federal grants are financial awards that recipients do not need to repay, provided they adhere to the grant's conditions. Individuals within specific demographic groups, such as women and minorities, can often receive grants specific to them. Individual states and institutions also offer grants.
  • Loans: Loans offered through FAFSA fall into several categories. Students can receive loans based on factors like cost of attendance or financial need. Recipients must repay loans after graduation, and each type of loan carries different repayment requirements.
  • Work-Study: Work-study programs offer students money in exchange for working on campus. Only some jobs qualify as work-study positions, and most institutions limit the number of hours a student can work each week.

Types of Grants

Federal Pell Grant

Undergraduate students receive Pell Grants based on financial need. Recipients must not hold a previous bachelor's, graduate, or professional degree. Students do not usually need to repay these grants, unless certain circumstances arise.

Federal Supplemental Educational Opportunity Grant

Administered by participating institutions, the FSEOG supports undergraduate students with exceptional financial need. To qualify, applicants cannot have previous bachelor's degrees. Awards range from $100-$4,000 per year.

Iraq and Afghanistan Service Grant

Individuals with a parent or guardian who died in military service after September 11, 2001, in Iraq or Afghanistan may apply for these grants. Amounts vary and can equal the rates of Federal Pell Grant awards, but they may not exceed a student's overall cost of attendance for an academic year.

Teacher Education Assistance for College and Higher Education Grant

Students who intend to become teachers in high-need disciplines or within low-income areas can receive a TEACH Grant. Applicants must enroll in an eligible program and agree to teach in high-need areas for four complete academic years within eight years of graduation.

Types of Loans

Direct PLUS Loan

Direct PLUS Loans benefit graduate and professional students by offering fixed interest rates. Parents of dependent undergraduate students can also apply. The funds can pay for expenses not covered by other financial aid awards.

Direct Subsidized Loan

Undergraduate students can apply for direct subsidized loans, which do not accrue interest during the period of student enrollment. Recipients do not need to begin repaying these loans until after leaving school.

Direct Unsubsidized Loan

Students receive Direct Unsubsidized Loans based on their cost of attendance and other financial aid. They do accrue interest while the student is enrolled, and repayment begins six months after the recipient leaves school.

Federal Perkins Loan

The Federal Perkins Loan Program provides low-interest loans to undergraduate and graduate students with substantial financial need. Recipients do not need to repay Perkins Loans for nine months after leaving school.

How Much Aid Will I Receive?

Even if applicants do not know how much aid they need, they should still submit FAFSA forms. Billions of dollars in financial aid funds go unused or unclaimed each year.

Financial aid determinations takes two main factors into consideration. The first is cost of attendance (COA), which is determined by estimating tuition and fees, room and board, and books and other expenses. Next is the estimated family contribution (EFC), which considers a student's existing financial resources and determines how much the student or their family is able to pay toward a college education.

The amount of aid a student receives is determined by subtracting their EFC from their COA, arriving at their financial need. If a student's EFC is high, they may receive no award. This can also result from incorrect or omitted FAFSA information, so be sure to fill out your forms thoroughly.

Need-based aid includes federal grants, work-study funds, and direct subsidized loans. Students will also receive offers for non-need-based aid, which is usually determined by academic merit, career goals, or demographics.

Eligibility

Undergraduate and graduate students who have been accepted to or enrolled in colleges can complete FAFSA forms. Awards can be used at online or on-campus programs, public or private institutions, and approved trade schools and certificate programs.

Additional eligibility requirements include U.S. citizenship or status as an eligible non-U.S. citizen. Each applicant needs a valid Social Security number, current enrollment or acceptance to an eligible program, a high school diploma or GED certificate, and financial records for them and their family. Applicants must also register with Selective Service, and they may be disqualified if they have drug-related convictions or outstanding refunds or defaults on previous financial aid.

Undocumented Students

Undocumented students can not receive financial aid through a FAFSA application. However, other funding opportunities can help undocumented learners, many of which come from individual states and institutions. Private organizations and nonprofits also offer scholarships and grants for members of specific demographic groups.

You can find out more about financial options for undocumented students below.

How Do I Fill Out the FAFSA?

Students can submit FAFSA forms through the mail or online. The quickest, easiest way to submit a FAFSA is to do so electronically.

Unlike a physical application, an online application allows individuals to save and return to their FAFSA numerous times before submitting. The online application also has room for 10 schools, while the printable version only allows four. By applying for FAFSA online, students can also access previous applications and use them to fill out new forms every academic year.

What You'll Need

Your Social Security number Your parents' Social Security numbers, if you're a dependent A driver's license or state identification Your Alien Registration number, if you're an eligible non-U.S. citizen Federal tax information or tax returns with IRS W-2 information for yourself, your spouse (if applicable), and your parents (for dependent students). These documents can include an IRS 1040 form, foreign tax returns, or comparable paperwork from a U.S. territory Records related to your checking and savings accounts, cash holdings, investments, and business assets (and for your parents, if you are a dependent) Details of untaxed income, such as interest, veterans' benefits, and child support The names of schools to which the FAFSA should be sent

Application Process

When filling out the FAFSA, students myst provide essential information such as their name, Social Security number, date of birth, and address. They also include a driver's license number, details of marital status, education history, and citizenship status, as appropriate.

After choosing the names and locations of schools to which they hope to apply, applicants select their dependency status. Dependent students need to provide information about their parents, including names, Social Security numbers, dates of birth, and contact information. Independent applicants must provide details about any children or dependents of their own.

Financial information can be entered manually or through the IRS Data Retrieval Tool (DRT) preceding the final review. Students receive a confirmation after they submit the form.

Application Dos and Don'ts

Dos

Create an FSA ID Read each question carefully Complete every question according to the instructions File a FAFSA as early as possible Have your most recent financial records and tax information available Use the IRS DRT to import tax information directly Review your Student Aid Report and your EFC Indicate your interest in different types of aid Submit a FAFSA each academic year

Don'ts

Wait until the last minute to apply Assume funds will be available at the last minute Rush through the application Include incorrect information or omit required information Assume you are not eligible and skip submitting a FAFSA Forget to sign your FAFSA Forget your FSA ID and password

Application Deadlines

The federal deadline for the FAFSA falls at the end of June for the 2020-2021 and 2021-2022 academic years. Awards are distributed on a first-come, first-served basis, so applicants should apply as early as possible.

State and college deadlines for grants and scholarships vary. Contact the financial aid administrator at your specific school to identify deadlines relevant to you.

What Happens After I Submit My Application?

Online FAFSA forms require 3-5 days for processing, while mailed applications take 7-10 days. Once processed, each applicant will receive a copy of their Student Aid Report (SAR), allowing them to review their information for accuracy and completion. Candidates should use this time to make any changes or corrections to their applications.

Student Aid Report

The student aid report (SAR) arrives by mail or email, depending on how the application was submitted. The SAR includes the information contained within the FAFSA, with space to make corrections and additions. The SAR also lists an applicant's EFC and a data release number to allow schools to access their financial information, if necessary.

Changes to Your Application

An incomplete FAFSA form will result in no EFC on the SAR. Individuals must add all missing or incorrect information to their FAFSA forms to receive a complete SAR. Students may need to make additional changes or corrections over time, like updating contact information, reporting a change in dependency or marital status, and adding or removing prospective schools. Tax information imported from the DRT cannot be changed.

Online applicants can make changes by logging in with their FSA ID and password. To amend or add to a paper application, students must update their SAR by hand, sign it, and send it back to the address provided on the document.

Award Letter

Award letters often arrive along with acceptance letters to colleges and universities. They include a lot of numbers, which pertain to individual parts of an entire financial aid package. Here are a few of the things they will include:

  • COA is the sum of the average tuition and fees, room and board, transportation, and supply cost a student will incur.
  • EFC is what the student or their family is expected to pay. This number should beidentical to what was on the SAR.
  • Financial need is the difference between COA and EFC.
  • Gift aid includes awards students need not repay, such as grants. An accompanying letter will detail the type of award and how much a student will receive.
  • Work-study funds indicate how much money a recipient can apply toward tuition in exchange for taking a qualifying job on campus.
  • Student loan information articulates the different types of FAFSA loans available and their specifics amounts.

When reviewing an award letter, students should keep in mind how much money they need before accepting or rejecting financing. Applicants do not need to accept or reject entire packages and can instead choose the most accessible aid. Students should first accept funds that do not require repayment if they meet the conditions of the award.

Comparing Awards

With different COA figures, gift awards, and loans at each institution, learners should compare their financial aid options among schools. The EFC is the only fixed part of an award letter; COA varies significantly by school, causing financial need to also differ.

While available aid for an expensive college or university may include more scholarships, grants, and loans, it may not make for a better overall financial aid package. Students should look for financial aid packages that come close to fulfilling financial need and do not require repayment.

Receiving Your Aid

Schools usually release grant and loan money in multiple payments per year. Some awards go directly to the school, while others go to the recipient's bank account. Generally, recipients apply financial aid directly to tuition, fees, and related costs at the start of a semester, trimester, or quarter. Work-study money is usually paid at least once per month.

Federal financial aid should only be used for education-related expenses. Institutions may designate grants and scholarships for specific costs, such as childcare, textbooks, or room and board. FAFSA loans should also only be used for school expenses, and students should only borrow as much as they need.

What's Next?

The FAFSA assesses your eligibility for federal financial aid as well as most state aid programs, but you have other funding options as well. Private grants offered by corporations, public funds awarded by community organizations, and scholarships from professional organizations can all supplement federal aid. Check out the link below for more information about scholarships.

Frequently Asked Questions

What Is the Income Limit for FAFSA?

There is no income limit for completing a FAFSA, but income level influences eligibility for specific types of aid, such as need-based grants, scholarships, and loans. Even if you believe you will not be eligible for aid, it's a good idea to fill out the FAFSA, as you may qualify for merit-based scholarships.

When Should I Fill Out the FAFSA?

Students should fill out their FAFSA forms as early as possible. Candidates receive funds on a first-come, first-served basis. Early submission of a FAFSA also helps learners get a clear view of their financial options early in the college enrollment process.

How Much Money Will FAFSA Give Me?

Need-based funds offered as a result of a FAFSA are determined by individual COA and EFC numbers. These numbers vary significantly between students and institutions, so there is no one answer to this question. Awardees can also receive non-need-based funds. The best way to find out how much money you will get is to fill out and submit a FAFSA form.

Do I Qualify for FAFSA?

Current U.S. citizens and eligible non-U.S. citizens qualify for FAFSA funding. Applicants need a valid Social Security number, current enrollment at an eligible institution, and a high school diploma or GED certificate. Qualified applicants must also register with Selective Service, have no serious drug-related convictions, and no outstanding refunds or defaults on previous financial aid.

What Is the FAFSA Deadline?

Applicants must submit FAFSA forms for the 2020-2021 academic year by the end of the day on June 30, 2021. For the 2021-2022 academic year, the deadline is June 30, 2022. Individual colleges and universities may have their own deadlines. State deadlines also vary due to differing deadlines for specific grants and scholarships.

Header Image Credit: Lucy Valdes | Getty Images

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