What is FAFSA and How Does it Work?
You know that paying for college is expensive. And you’ve heard that there’s mystical free money for college somewhere. But you’re not sure how to connect the dots between the two.
After starting to apply for scholarships early and taking on college credits while you’re in high school, one of the first steps in your college-funding process is filling out the FAFSA.
It’s the key to finding a lot of that mystical cash, as the FAFSA can give you free money depending on your financial need.
What is the FAFSA?
FAFSA stands for the Free Application for Federal Student Aid.
When you fill out this form, you are providing the federal government with the information it needs to calculate your expected family contribution (EFC). It then uses your EFC to calculate how much aid you will be offered.
Who Qualifies for the FAFSA?
To fill out the FAFSA, you must have a Social Security number. Those that qualify for aid must be US citizens. That means if you’re a DACA student, you will be able to fill out the FAFSA, but you’re not going to be eligible for aid.
Here’s the problem: Most schools generally require you to fill out the FAFSA to qualify for institutional aid from the college. To address this situation when you’re undocumented or qualify for DACA, the Department of Education (ED) encourages you to talk to your financial aid office.
They can help you figure out if institutional aid is dependent on the FAFSA at your school, and if it is, they can help you figure out the best way to address the situation. Some schools may have aid available without filling out the FAFSA, though that tends to be the exception rather than the rule.
Do I Have to Provide My Parent’s Tax Information?
When you fill out the FAFSA, you’ll quickly note that dependent students must enter parental financial data.
Dependent students are those who meet all of the following criteria:
- You’re under age 24.
- You’re not married.
- You’re not active-duty military.
- You’re not a veteran.
- You’re not a grad student.
- You’re not a parent.
- You’re not an emancipated minor.
- You haven’t been a dependent/ward of the court, been orphaned, or been in foster care at all since you turned 13.
- You haven’t been homeless or at risk of homelessness since two Julys prior to your initial Fall semester. (Ex. For the 2020-21 school year, you must not have been homeless or at risk of homelessness from July 1, 2019, forward.)
Your parents don’t need a Social Security number for you to qualify for federal aid, but you do have to provide their income information. There are no questions about your parents’ or guardians’ citizenship status.
If you aren’t a dependent student, you’re considered an independent student and do not have to submit your parents’ or guardians’ financial information.
Am I Eligible for the FAFSA if I Have a Criminal Conviction?
You may be eligible for federal aid if you have a criminal conviction. While you’re incarcerated in a state or federal facility, you can get aid, but that’s only a technicality. The aid you are eligible for requires eligibility for Pell grants, and you’re not eligible for Pell grants while you’re incarcerated.
You may be eligible for federal work-study, but more often than not, that doesn’t work out because of ‘logistical difficulties,’ according to ED.
If you’re incarcerated outside the state or federal system, you are still eligible for Pell grants. If you qualify for a Pell grant, you may also be eligible for a Federal Supplemental Educational Opportunity Grant (FSEOG).
Any student who is hoping to get some FSEOG money — whether you’re incarcerated or have a pristine record — should apply as close to the October 1 deadline as possible as the funds are limited and do routinely run out.
How Does the FAFSA Work?
Every October 1, FAFSA applications open for the following Fall semester. That means that on October 1, 2020, you will be able to apply for the 2021/22 school year
The application process used to be far more complicated than it is today. Because most taxpayers file with the IRS online, the FAFSA can now pull your data digitally, saving you the time of interpreting and transposing data off of your physical 1040. If you are a dependent student, your parents’ or guardians’ tax information is also required.
Provide Basic Information
You’ll provide some basic information like your name, address, Social Security number, high school and potential college, university, or qualified trade school. If your tax information is digitized, it will be pulled for you to verify.
You will have to eSign to complete the form, and should then be directed to your state’s department of higher education financing.
You will have to print out, sign, and send your FAFSA form via snail mail if you have a Social Security number, but your parents do not.
After your information is submitted, ED will calculate your EFC. The amount of financial aid the federal government offers you will be based on this EFC. Your state may run its own EFC calculation for its additional aid package depending on where you live.
Now that your FAFSA is filled out, your school can use it to figure out how much money it will offer you in institutional aid. There are only a handful of private institutions that do not use the FAFSA to make this calculation. The financial aid offered by your school is what we’re referring to when we say, ‘institutional aid.’
How Much Money Do You Get From FASFA?
The FAFSA itself only issues you federal aid, even if state or institutional formulas are based on it. There are multiple different types of aid you may be offered; it’s essential to understand the differences between them.
As long as you complete the course of study you were awarded for, grants are money you’ll never have to repay. For example, If you were given a Pell grant split over two semesters but you only actually attended during the Fall semester, you wouldn’t get to walk away with a refund check for the Spring semester.
If you did, you’d have to repay that money, even if it was from a grant.
As long as you don’t cut and run, you will not have to repay this money. Grants are awarded based on financial need rather than academic performance, though you will have to maintain a minimum academic performance set by your school to maintain eligibility.
Grants available from the federal government via the FAFSA include:
- Pell Grants. Awarded based on need. While the funds are technically limited, there is a surplus every year. Even if you think you’ve waited too long, you probably haven’t for Pell grants.
- FSEOGs. If you have a small EFC, you may qualify for a supplemental grant. This funding does tend to be first-come, first-serve as each school has a finite amount of resources. These resources do tend to run out, unlike Pell grant funding.
- Iraq and Afghanistan Service Grant. Those who lost their parents in service of the United States in Iraq or Afghanistan post-9/11 before the student’s 24th birthday may qualify for the equivalent of Pell grant funding even if their EFC disqualifies them from a Pell grant. Note that this grant is only given to those that would otherwise qualify for a Pell grant, were it not for a high family EFC.
- TEACH Grants. The TEACH grant is available to those who intend to work in education after graduation. If you pledge to work at least 50% of the first eight years after graduation teaching in a high-needs field in a low-income area, the federal government will give you thousands of extra dollars for your education. Watch out, though. If you fail to complete your service requirement after graduation, these grants will convert to student loans, complete with back interest.
You may also qualify for Federal Work-Study. Depending on where you attend school, you may have the opportunity for part-time, hourly paid work either on or off-campus. You will be paid at least minimum wage depending on your employer and the skill level required for your position.
Your paychecks will be sent straight to your financial aid office to be applied directly to your tuition bill, or to be distributed directly to you in the form of a check every month. If you’d prefer the former, you’ll have to put a written request with your school.
Federal Student Loans
Even though it’s a stretch to label student loans as ‘aid’ rather than ‘debt,’ federal student loans will be a part of qualified students’ award letters.
Currently, you may find any combination of the following loan offers on your financial aid award letter:
- Direct Subsidized Loans. While you’re in school, you won’t have to pay anything on your principal as these payments will be deferred, and the federal government will pay (or subsidize) your interest payments. These loans have the lowest interest rate of any federal student loan. Only available to undergrad students.
- Direct Unsubsidized Loans. While you’re in school, you won’t have to pay anything on your principal as the payments will be deferred. However, the federal government will not pay your interest payments while you’re in school (unsubsidized.) You will either have to pay the interest while you’re in school yourself or opt not to, knowing that the interest will compound. Undergrads will pay the same interest as Direct Subsidized Loans, but graduate students will pay rates, which can soar closer to PLUS rates.
- Direct PLUS Loans. Available to parents and graduate students, Direct PLUS Loans carry the highest interest rates of all currently offered federal student loans. Your credit history will matter here, and you’ll need to get a cosigner if you can’t qualify on your own.
Federal student loans also come with a litany of advantaged repayment programs, some of which base your monthly payment on your disposable income. Others qualify you for programs like Public Student Loan Forgiveness (PSLF), which will relieve you from a large portion of your debt later in your career.
These repayment programs are a significant draw to the federal program if you have to take out loans.
Where Else Can I Get Financial Aid?
Outside of the FAFSA, look to your state government for financial aid opportunities. While you should be redirected to your state’s site after completing the FAFSA, if you aren’t, you should take the initiative and find the application on your own.
If you are disabled, check with your state’s department of vocational rehabilitation to see if they offer scholarships or other funding for disabled students. Even if your state doesn’t allocate cash resources to this department, they will have access to additional resources that can help you in your college and professional career.
You can also look to organizations on the community level to the national level to find scholarships. Scholarships, much like grants, are money you won’t have to repay. While there may be financial requirements for some scholarship opportunities, scholarships as a whole tend to be based on merit more so than financial need.
Student loans are more accurately described as ‘debt’ rather than ‘aid,’ but if you have exhausted all other resources, you may end up looking to private student loans.
These loans may have fixed or variable interest rates, typically do not allow for deferment of any kind while you’re in school and do not come with the advantaged repayment programs federal student loans will enable you to access.
Why Should I Fill Out the FAFSA?
The FAFSA opens gates to so many avenues of financial aid. Whether you want to access state or federal grants or want to find out the scholarship package your school is willing to offer you, it all starts with filling out this form.