College is going to be really, really expensive in the future. The bad news is that it’s already really, really expensive right now.
Even with a funded 529 account and a side gig or two, it can be hard to get through college without taking out at least one loan. That’s why the national student loan debt sits at $1.3 trillion. What if there was something out there to help make your college debt a little less life-crippling and soul-crushing?
Federal financial aid through FAFSA can help cover education costs without the same strings attached as other more expensive options. But what exactly is FAFSA, and how do you qualify for financial aid through it?
What is FAFSA?
FAFSA stands for Free Application for Federal Student Aid – and it does just that: provides federal funding for college costs. There are three types of financial aid you can apply for through FAFSA:
Grants. Unlike loans, grants don’t have to be repaid, essentially making them free money for higher education students. The most common type of federal grant is the Pell Grant. The maximum Pell Grant award for 2017-2018 is $5,920, but the actual amount you can receive depends on your qualifications (which we’ll get into later). Another popular federal grant is the Teacher Education Assistance for College and Higher Education (TEACH) Grant, for those looking to go into a career in education.
Low-interest loans. These do have to be repaid, but typically at lower interest rates than you’ll get from private lenders.
Federal work-study program. Rather than receiving money in advance, these programs will allow you to work for money and pay your way through school while receiving valuable career training at the same time.
FAFSA aid is typically only for undergraduates (though some post-bachelor students can apply based on their specific circumstances) and, in fact, some data has shown that completing a FAFSA application can increase enrollment chances for students by two percentage points. While FAFSA is most broadly used for federal financial aid, states and individual colleges will use the information to determine further financial aid eligibility.
Your FSA ID
FAFSA is your key to federal financial aid, and your FSA ID is your key to FAFSA.
Until 2015, you signed into your FAFSA using a simple PIN. That’s since been updated to an FSA ID, which is a proper login with a username and password.
Seems simple enough, right? This is the same format you use for almost any other online account. But there are a few quirks with the FSA ID.
The Department of Education recommends you register for your FSA ID well in advance of submitting your FAFSA. It can take three days between registering and being able to use it to sign in to your FAFSA. The last thing you want is to wait until the day before your FAFSA is due and realize you can’t use your FSA ID yet. You’ll need your FSA ID to sign your FAFSA and submit it.
Also, depending on the student’s status, the student and parent will need their own FSA ID to fill out relevant information. Don’t assume that you’re set just because you have one but not the other.
How do you know if you qualify for FAFSA aid, and how much aid will you get? The Department of Education recommends that everyone apply (it’s free, after all) because many people assume they don’t qualify when they actually do.
Your eligibility for aid depends primarily on two things: the cost of attendance for the school(s) you’re applying to, your Expected Family Contribution , and your student status.
The cost of attendance (COA) is pretty straightforward. It’s the tuition, room and board, and any other fees and expenses associated with a school.
Your Expected Family Contribution (EFC) is comprised of your family’s income (taxed and untaxed), assets, and benefits. This includes any 529 savings accounts. It also takes into account family size and the number of family members who will be attending college.
Your EFC is subtracted from the cost of attendance to show how much need-based aid you’re eligible for, but the Department of Education is quick to point out that your EFC is not necessarily the amount you’re going to be paying for college. Instead, they describe the EFC as "an index number" rather than a dollar amount. Their example?
If your COA is $16,000 and your EFC is $12,000, your financial need is $4,000; so you aren’t eligible for more than $4,000 in need-based aid
The FAFSA application
Okay, so you need financial aid...you’ve got your FSA IDs...you have at least a ballpark idea of how much aid you’re eligible for…
So how do you actually apply?
Because it’s the 21st century, you can apply online. It’s as simple as going to the FAFSA website and going through the application process. You can speed up the process by knowing what to expect and having the right information ready when you apply:
Your FSA ID, Social Security number, and driver’s license number (if applicable). Basically, you need to prove that you’re you. You can start your application without your FSA ID, but you’ll eventually need it to complete your application, so best to have it when you start.
Tax information. You’re required to provide federal income tax returns with your FAFSA. For the 2017-2018 FAFSA, that means using a 2015 return rather than a 2016 return (if you had a substantial change in income between then and now that would affect your EFC, you can note that). The good news is that the application process has a nifty IRS Data Retrieval Tool that lets you import your tax information to your FAFSA! The bad news is that the tool has been down for a while, so get ready to dig out those returns!
Asset records. Bank statements, investments records, and records of untaxed income will be handy for reporting all of the assets that will be used in calculating your EFC.
Schools. Since the cost of attendance is also used to calculate your EFC, you’ll want a list of the schools you’re planning on applying to. Lots of people have a dream school, and the Department of Education reports that two-thirds of FAFSA applicants list only one school on their applications. That can be a problem if you end up not getting into that school, because your EFC – and therefore the amount of financial aid you actually qualify for – will change.
Do you need parent or student information?
The student is the one going to school, so it seems logical that that’s whose information you’d need on your application. But if it’s a dependent student, a parent’s information will also be needed for all of the above points.
Even if a student doesn’t live with their parents, that doesn’t necessarily make them independent. The Department of Education has provided a useful chart for determining whether or not a student is dependent or independent, and whether or not parent information needs to be included on the application.
On that same note, the definition of "parent" is pretty specific when it comes to your FAFSA, and they also happen to have a chart for that, too.
Students have always been able to start their FAFSA submissions starting January 1 of the upcoming school year (ie, January 1, 2016 for the 2016-2017 school year) but this was recently bumped up to October 1. That means students and parents have an extra three months to work on their FAFSA submission.
The federal deadline for FAFSA submissions is June 30 of the upcoming school year (June 30, 2017 for the 2017-2018 school year) with two important caveats. First, there may be different deadlines for state and institutions. Second, individual schools may have different definitions of "deadline" – it might be when they receive it, or it might be when they process it.
Use the FAFSA deadline tool to figure out the deadlines for your state, and check with any schools that you’re applying to (or plan on applying to) to see when their deadline is.
One final important note: FAFSA financial aid isn’t for your entire college career. You have to go through the process each school year, so mark those deadlines on your calendar so you don’t forget!
Even the most financially-responsible people might need help to put themselves or their children through college. A FAFSA application is a quick, free way to see if there’s additional financial aid out there. What have you got to lose?