Over the past decade, college tuition rates rose an average of 5% per year. The average bachelor’s graduate in 2015 had over $35,000 in student loan debt. To graduate without burdensome debts, students must maximize their aid options. This means understanding the Free Application for Federal Student Aid (FAFSA), and using their knowledge to maximize student aid.
Starting with the 2017-2018 FAFSA, maximizing federal aid is easier than ever. The U.S. Department of Education now allows access to the FAFSA three months earlier (October rather than January). Applicants will also use an earlier year for income and tax information. This means it’s easy to incorporate FAFSA into the college application timeline.
What is the FAFSA?
The FAFSA is the Free Application for Federal Student Aid. It’s a dense form that students must complete to receive federal student aid.
The form ensures that federal student aid goes to students with the greatest need. However, this does not mean that only low-income families should fill out the form. Filling out the FAFSA is the only way to receive access to low-cost federal student loans. The FAFSA also gives families access to some scholarships, grants, and work-study programs. Some schools require a completed FAFSA for a student to apply for merit-based aid.
What do I need to fill out the FAFSA?
Filling out the FAFSA may seem daunting, but proper preparation will help families complete the application with minimal stress.
Here’s a checklist of items you’ll need before filling out the FAFSA.
- Social Security number
- Alien registration number (if you are not a U.S. citizen)
- Student’s federal income tax returns from the appropriate year
- Student’s prior year W-2 or other earning statements from the appropriate year
- Student’s records of untaxed income from the appropriate year
- Student’s bank statements (checking, savings)
- Student’s non-retirement investment account statements (after tax brokerage, 529 accounts, Coverdell ESA accounts, CDs, money market accounts)
- Student’s record of non-taxed income (including income gifts that come from 529 plans owned by grandparents, income gifts to pay tuition, etc.)
- Student’s records for investment real estate
- An FSA ID to sign electronically
Dependent Students Only
- Parent’s federal income tax returns from the appropriate year
- Parent’s W-2 or other earning statements from the appropriate year
- Parent’s records of untaxed income from the appropriate year
- Parent’s banking and checking account statements
- Parent’s non-retirement investment account statements (after tax brokerage, 529 accounts, Coverdell ESA accounts, CDs, money market accounts)
- Parent’s records for investment real estate (not personal home)
Most students will be considered dependents. This is true even if a student is self-supporting for a period of time prior to starting college.
To be classified as independent, a student must meet one of these qualifications:
- Student turns 24 prior to January 1 of FAFSA start year (see chart above)
- Student is starting postgraduate studies
- Student is on active military duty (not for training purposes or for state service only)
- Student is a military veteran
- Student supports dependent children
- Student is a legally emancipated minor
- Parents died after age 13, foster child after age 13, or dependent or ward of the state after age 13
- Student is homeless or self-supporting and at risk of homelessness after July 1 in the year prior to start year (see chart above)
One of the most important ways to ease the stress is to gather documents from the appropriate time. Use the chart below as a reference guide to understand the appropriate documents.
|School attendance window||FAFSA form||FAFSA availability||Income and tax year||Assets and liabilities||Born before this date for independent student status||Homeless or self-supporting and at risk of homelessness after this date for independent status|
|July 1, 2016-June 30, 2017||2016-2017||January 1, 2016-June 30, 2017||2015||As of filing FAFSA||January 1, 1993||July 1, 2015|
|July 1, 2017-June 30, 2018||2017-2018||October 1, 2016-June 30, 2018||2015||As of filing FAFSA||January 1, 1994||July 1, 2016|
|July 1, 2018-June 30, 2019||2018-2019||October 1, 2017-June 30, 2019||2016||As of filing FAFSA||January 1, 1995||July 1, 2017|
|July 1, 2019-June 30, 2020||2019-2020||October 1, 2018-June 30, 2020||2017||As of filing FAFSA||January 1, 1996||July 1, 2018|
When are the FAFSA deadlines?
College students need to fill out the FAFSA every year that they want to receive federal financial aid. A traditional student who spends four years in school can expect to fill out the FAFSA four times through their college career.
Starting with the 2017-2018 FAFSA, the U.S. Department of Education extended the FAFSA deadlines. Previously, the U.S. Department of Education released the FAFSA on the January 1 prior to the attendance window. Applicants could complete the form from January 1 through the end of the attendance window.
Now, the U.S. Department of Education releases the FAFSA on October 1 prior to the attendance window. You may complete the FAFSA from the date it is released until the end of the attendance window. You can retroactively receive grants and loans for the school year provided that you complete the FAFSA by the end of the attendance window.
Deadlines for state and institutional aid
State and institutional aid organizations are not as lenient as the U.S. Department of Education. Most states require aid applicants to complete their FAFSA as soon after October 1 as possible. You can check your state-specific deadline on the FAFSA website.
Most states have just one FAFSA deadline, even if you plan to attend school on a delayed schedule. Often states give out aid on a first come, first served basis. Do not delay completing the FAFSA. You can work out changes based on your attendance after you’ve completed the FAFSA.
In general, you want to file the FAFSA as soon as you can to maximize institutional aid. Many universities grant institution-specific aid shortly after accepting students. Submit your FAFSA to all potential schools soon after you apply. Even if a school hasn’t accepted you yet, you should allow them to see your FAFSA responses.
Filling out the FAFSA alone may not be enough to get aid from your state or school. Many states require that you fill out additional forms to receive state-based aid. The most common form is the College Scholarship Service (CSS) profile. The CSS profile considers more data, and it offers students and their families the opportunity to flesh out their financial situation.
The CSS profile and other financial aid applications DO NOT replace the FAFSA. To get any federal student aid, you must fill out the FAFSA. You may also need to fill out additional forms. The Edvisors Network maintains a comprehensive list of state-based scholarships and grants. Students can research the forms that their state requires.
Students who are seeking college-based aid may have to complete institutional applications. These applications may be in addition to the FAFSA or in lieu of it. If aid details aren’t clear from the school’s website, contact the financial aid department to learn more. Many students find that their best chance at institutional aid comes right after applying to the school.
What happens after I fill out the FAFSA?
1. You’ll receive your Student Aid Report via e-mail
Three to five days after you complete the FAFSA, you will receive a Student Aid Report via email. This report is what schools will use to determine your eligibility for federal (and sometimes other) student aid.
Understanding your Expected Family Contribution’ (EFC)
The most important number on the FAFSA is your Expected Family Contribution (EFC). Your family’s EFC is the amount parents and students are expected to allocate toward educational expenses. This amount can vary from zero dollars to more than the expected cost of college. This number is in the upper right-hand corner of the Student Aid Report.
In general, the lower your EFC, the more federal aid you will receive. Your specific eligibility for federal aid depends on your school’s cost of attendance.
The Student Aid Report also includes a Data Release Number (DRN). You will need this four-digit code to allow your school to change certain information on your FAFSA.
In addition to these two numbers, you will see your responses to questions on the FAFSA. If you find a mistake, you will need to correct it on FAFSA.gov. You can use your FSA ID to log in and submit changes. If your situation changes (such as the number of people in your parents’ household or your dependency status), you will need to update your FAFSA because it will change your EFC.
2. Schools will submit awards packages to you
The U.S. Department of Education will send your Student Aid Report to any schools you have listed on your FAFSA. If you apply for another school after completing the FAFSA, you should log in to FAFSA.gov to submit your Student Aid Report to that school.
Once you’ve been accepted to the school, the school will use the EFC and their cost of attendance to determine your eligibility for federal aid. The school will send you a report that includes your eligibility for federal grants, subsidized and unsubsidized loans, and work-study programs. They may also send you details about other financial awards that you’ve received from the state or the institution.
You may need to contact the financial aid office at a school to see if you’re eligible for any scholarships or grants that they didn’t list. Be proactive in meeting other financial aid deadlines defined by your school’s financial aid office. Completing the CSS profile or institutional applications may allow you to earn more scholarships or grants or better loan rates. Check with schools where you’ve been accepted and your state’s website to learn more.
You can receive awards packages from multiple schools, even if you haven’t enrolled. Compare the awards packages to find the most cost-effective education. The federal aid will remain the same in every package, but the state and institutional aid can have a huge effect on your out-of-pocket costs.
3. You have to accept or decline the financial aid offered to you
Once you choose a school, you will need to decide whether or not to accept the various forms of aid. Most people will accept grants and scholarships since those do not need to be paid off.
You will need to decide if accepting federal work-study or loans is best in your circumstances. You can work closely with a financial aid officer from your school to understand the pros and cons behind these options.
Once you make a decision, you’ll have the option to accept aid (including loans) through an online platform offered by your school.
How is my federal aid package determined?
Federal aid is awarded based on expected family contribution (and to a lesser extent the cost of attendance at your chosen university). A lower expected family contribution means you’ll get more aid, including subsidized loans and possibly a Pell Grant for low-income students.
The expected family contribution accounts for four variables:
- Student’s income (and spousal income for independent students)
- Student’s non-retirement assets (and spousal income for independent students)
- Parent’s income (for dependent students)
- Parent’s non-retirement assets (for dependent students)
Parents and students can shelter a limited amount of their income and assets from the EFC. The sheltering limits change each year, and they are published within the FAFSA application.
Students are expected to contribute 50% of their income after sheltering. They are expected to contribute 20% of nonsheltered assets to their educational expenses. Students cannot shelter as much income or net worth as parents.
Parents are expected to contribute 22% to 47% of income after sheltering. They are expected to contribute 12% of nonsheltered assets.
Using the EFC and an expected cost of attendance, the U.S. Department of Education appropriates funds. The FAFSA4caster will help you determine your current EFC and an expected aid package based on current costs of attendance. This is a useful tool for students who are more than one year out from starting college.
Full-time students with an EFC less than $5,200 can expect to receive a Pell Grant worth between $600 and $5,185.
Students who demonstrate financial need (those with a cost of attendance greater than their expected family contribution) will be eligible for either direct subsidized or direct unsubsidized loans. Both loans for undergraduate students have an interest rate of 3.76%. Graduate students will pay 5.31% on their direct unsubsidized loans.
The federal government places limits on direct borrowing. The limits are in the table below. If you need to borrow more money, you will have to look to federal PLUS Loans (higher interest rates), private loans, or covering educational expenses through other means.
|Year||Dependent Student Limit||Independent Student Limit|
|First Year Undergraduate||$5,500 (up to $3,500 subsidized)||$9,500 (up to $3,500 subsidized)|
|Second Year Undergraduate||$6,500 (up to $4,500 subsidized)||$10,500 (up to $4,500 subsidized)|
|Third Year + Undergraduate||$7,500 (up to $5,500 subsidized)||$12,500 (up to $5,500 subsidized)|
|Undergraduate Student Total Limits||$31,000 (up to $23,000 subsidized)||$57,500 (up to $23,000 Subsidized)|
|Graduate Students||N/A||$20,500 (unsubsidized only)|
|Graduate Student Total Limits||N/A||$138,500 (up to $65,500 in subsidized loans). Aggregate amount includes totals from undergraduate studies.|
How can I maximize my federal aid?
You must use accurate information when you complete the FAFSA. However, careful planning and understanding the FAFSA can help you maximize your aid. Keep these steps in mind as you apply for aid.
Avoid common FAFSA errors
It’s easy to make errors when you’re filling out a 100+ question application, and the wording on the FAFSA can be unclear. These are a few mistakes to avoid.
Easy mistakes that can throw off your FAFSA submission
Incomplete e-signature. The FAFSA can also trip you up on seemingly-easy steps, like providing an e-signature. If you don’t provide the e-signature correctly, or think you hit ‘submit’ but didn’t, you may waste valuable time waiting for an email that won’t come until you sign the form properly.
Missing mistakes on your Student Aid Report. About two weeks after you submit the form, you should receive a Student Aid Report which gives you basic information about your eligibility for federal student aid along with your Expected Family Contribution – what your family is expected to pay. The SAR also includes a four-digit Data Release Number (DRN), which you’ll need to allow your school to change certain information on your FAFSA.The SAR also lists your responses to the questions on your FAFSA, so be sure to review it and correct any mistakes.
Income verification notifications. After you receive your SAR, check to see if you’ve been flagged for ‘income verification’ as about 1/3 of students are required to verify their parent’s income with additional proof to complete the FAFSA process. The government usually follows up on students who are more likely to qualify for the federal Pell grant or other grant-based aid, Page says. If flagged for income verification, you’ll have to submit verification to each school you apply to, and the schools may have different paperwork and processes.
Missing deadlines in e-mail. When you create and submit the FAFSA, you give the Education Department your email address. The Education Department will email you, so you need to check the inbox of the email address you provided for correspondence. Create your FAFSA account using an email account you check regularly. Turn on your email notifications on your devices so you won’t miss any emails reminding you to submit your FAFSA form or letting you know if something went wrong somewhere in the process.
If you’re not sure what a question means, use the guide Completing the FAFSA to understand the definition. The wording of questions leads a lot of people to overestimate their EFC.
How can I use FAFSA to plan for college costs?
The FAFSA is not a college-cost planning tool, but you can use other tools to plan for upcoming college costs. College Navigator offers free information on current college costs. Using it with estimated aid from the FAFSA4caster will give high school students a good idea of their aid options. You could also consider using a paid tool like EFC Plus for an easier college-planning tool.
Parents and students looking to keep student loan debt low will benefit from using the Family Budget Analyzer, which can help you find places to cut expenses. A college cost projector will help you know the costs that your family needs to cover. Sallie Mae also offers a long-range planning calculator that can help you estimate your total indebtedness upon college graduation.
Understanding the FAFSA is one small part of planning for college costs. It will pay for you to understand it, but federal aid is just one component of the college-planning picture. Most students will need to devote time to finding a cost-effective education and applying for grants and scholarships to supplement federal aid.