What is FAFSA and How Does It Work?

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What is FAFSA and How Does It Work?

One of the most important documents students fill out when going to college is the Free Application for Federal Student Aid (FAFSA).

Understanding the FAFSA application is vital if you want to make the most of your college funding efforts. Here’s what you need to know.

What is FAFSA?

The FAFSA application collects information about students and their families in an effort to help schools determine what financial aid they can offer applicants. If you want access to the following types of aid, you must fill out a FAFSA:

  • Federal grants
  • Federal student loans
  • Federal work study
  • Many state and institutional scholarships

Because the FAFSA is standardized, many schools like to use it when determining need-based scholarships.

The main point of the FAFSA is to establish your expected family contribution (EFC). As a result, you’ll answer questions about your financial situation, and your parents’ situation. You can use a FAFSA calculator to estimate the aid you’re eligible for, but until you fill out and submit the FAFSA, it’s not official.

 

Who’s Eligible for the FAFSA?

Every U.S. citizen is eligible to fill out a FAFSA, and even some non-citizens are eligible under certain circumstances. Some of the requirements for filling out a FAFSA include:

  • Valid Social Security number or other identifying documentation
  • High school diploma or GED
  • Acceptance to an eligible program
  • No previous student loan defaults

Even if you don’t qualify for government grants, filling out the FAFSA is important because you might need access to federal student loans or be eligible for work-study. Plus, your school might require a FAFSA before you can be entered for scholarships.

 

How Does the FAFSA Work?

It’s possible to fill out the FAFSA application online. In general, if you’re a dependent student — meaning your parents still claim you on their taxes — you need your parents to fill out the form as well as completing your section.

In order to submit your FAFSA online, you need to register with the Department of Education, including creating a PIN that you can use to access your application later if needed.

It’s possible to connect your FAFSA to your taxpayer record with the IRS, and quickly and easily import the information into your FAFSA. The IRS data retrieval tool is a great help and can be used by students and parents alike.

Once you fill out all the information, and your parents fill out their information, your FAFSA is sent to your desired schools. The schools use the information to put together a financial aid package. This package can include grants, scholarships, loans, and work-study, as well as combinations of these options.

You can choose to accept or reject different aspects of your financial aid package. If there’s still a gap, however, you might need to apply for private student loans to ensure you have the funding you need to pay for college.

Note that you have to fill out your FAFSA application for each year you want financial aid. So if you go to college for four years, you’ll need to fill out a FAFSA each year. 

Do you have to pay back FAFSA?

It’s important to understand that the FAFSA itself is not a loan or a grant. It works as a gateway to financial aid but it isn’t a loan. Instead, it’s an application you use to get access to resources from the federal government (and even from some state governments).

When you get a federal loan, you do repay the loan, but you make payments to a servicer. Grants, however, don’t have to be repaid.

 

What’s the FAFSA Deadline?

Your FAFSA deadline is based on the school year you’re applying for. In general, the application is open on October 1, and the final deadline is June 30 of the school year in question.

So, if you’re looking for the FAFSA deadline for 2019-20, you’d have to pay attention to the following dates:

  • FAFSA applications for 2019-20 were accepted starting on October 1, 2018
  • You must apply for aid for the 2019-20 school year by June 30, 2020

As you can see, there’s a rather long FAFSA deadline. However, if you’re eligible for grants, you want to turn in your FAFSA as early as possible. You can receive up to twice as much for filing earlier rather than later.

Many schools also have their own deadlines if you want to be considered for a scholarship. Check with the school to see when they expect to receive the FAFSA if you want to be in the running for scholarships.

 

Is Your FAFSA Application Enough?

While the FAFSA application is required for all federal forms of student aid and is used for aid from other sources, it might not always be enough.

Some schools and states require additional applications for specific scholarship and grant programs. Additionally, some schools ask that you fill out a CSS Profile on top of the FAFSA. Nonprofit organizations often require a separate application and essay as well.

Make sure you understand the requirements as you apply for additional scholarships.

Finally, if you want private student loans, the FAFSA isn’t going to cut it. Filling out the FAFSA guarantees you access to federal student loans, which don’t have credit or income requirements. If all you get are federal loans, the FAFSA is sufficient.

However, private student loans are another matter altogether. Instead, you need to fill out the loan application, which takes into account credit score and your income — and this information for your cosigner as well.

 

Bottom Line: Fill Out the FAFSA

Even if you know you’ll apply for outside scholarships and loans, it’s still a good idea to fill out the FAFSA application. With your FAFSA, you’ll have access to the full range of federal student aid options, as well as access to many state and school-specific programs.

Filling out the FAFSA is an essential part of establishing your need for grants, as well as ensuring that you have access to federal loans that aren’t dependent on credit and income. 

Make sure you fill out the FAFSA as quickly as possible after October 1 each year to ensure that you’re able to take full advantage of all the federal programs available to you.

 

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Miranda Marquit

Miranda Marquit

Miranda Marquit has been covering personal finance for more than 10 years, including aspects of college planning and student loans. She is a recognized money expert and has contributed to numerous media outlets, including Forbes, Marketwatch, NPR, USA Today, Investopedia, and U.S. News & World Report. She lives in Idaho with her teenage son — who she’s just starting to guide through the college selection and admissions process.
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