Everything You Should Know About Financial Aid (FAFSA)

Everything You Should Know About Financial Aid (FAFSA)
Sergio Guevara

Sergio Guevara

Head of Client Success at Gradehacker

So you’re thinking of beginning your college journey to finish that career that will change your life. You’re head deep in the process: taking the SAT or ACT, filling out applications, writing college admission essays, and getting recommendation letters. Even though this process is tedious and time consuming, there is a bigger worry that plagues your mind. How am I going to financially manage to go to college?

This is where the Free Application for Federal Student Aid (FAFSA) comes into the picture. Financial Aid can be a major help as it provides you with money to pay for your tuition.

Here at Gradehacker, our work consists of helping college students on a daily basis with both their assignments and exams. Due to our years of experience helping college students we have seen firsthand the burden students feel in terms of college finances.

We have come into contact with students who are unable to enjoy becoming college students as they don’t know how they will financially manage going to college. We have also seen how many soon-to-be college students do not know how Financial Aid works.

This is why in this article we are going to present you with an extensive guide on how to obtain Financial Aid (FAFSA). This will allow you to gain a better understanding on how Financial Aid works, and feel confident in taking that step! 

Before getting started, let’s clear up a few relevant details. 

What are the costs of college?

The cost of college, according to FAFSA and its fund disbursement, is associated with how much money you have to pay every year for your education. It only takes into account direct university costs including: room and board, tuition, and textbooks. It does not take into account food, transportation, off-campus room and board, and other indirect costs. Of course, the cost depends on your specific college, whether it is public or private, and other factors. For your reference, the average cost of a school year in a private college is $35,676, while state residents at a public state college pay $9,716, and out-of-state students end up paying $21,629. 

Here you can check out a detailed board with college costs and other fees.

Everything You Should Know About Financial Aid (FAFSA)

According to the Federal Student Aid annual report, the U.S Department of Education gives away more than $122 billion in federal grants, loans, and work-study positions.

This means that more than 13 million students are getting some type of financial help to complete their studies.

That means $33 million dollars to pay for school. And you better believe this is valuable money as according to Sallie Mae (2017), 25% of student families pay for college through funds given by scholarships and grants.

You can check out this chart to see how families and students usually pay for their college fees.

Everything You Should Know About Financial Aid (FAFSA)

What is FAFSA?

FAFSA (Free Application for Federal Student Aid) is a resource students and parents have to receive financial aid from the government to pay college fees and ease the burden of student and family debt . This aid is offered by the U.S. Department of Education, and federal funding covers expenses such as tuition and fees, room and board, books, supplies, and other school-related costs. The best part of all, is as the name suggests, it’s FREE! 

That means $33 million dollars to pay for school. And you better believe this is valuable money as according to Sallie Mae (2017), 25% of student families pay for college through funds given by scholarships and grants.

You can check out this chart to see how families and students usually pay for their college fees.

Who can take advantage of FAFSA?

EVERY college student should take advantage of FAFSA. Often, high-income families think their children won’t be eligible for the aid because of their financial status. This is not true! The only way of knowing if you qualify for the FAFSA is by applying. As an added bonus and incentive to have you complete the FAFSA applications, many states use FAFSA to determine if a student is eligible for grants and merit aid awards beyond the federal levels.

Additionally, you should fill out FAFSA to receive federal student loans. These can include both subsidized and unsubsidized loans. This means that FAFSA is an opportunity for every student and shouldn’t be missed out. Remember that this process is entirely free, so you won’t lose anything by trying. 

When can I start applying for FAFSA?

You can start submitting your applications for the 2020-2021 school year beginning October 1, 2019.

The FAFSA deadline for the 2020-2021 deadline is June 30, 2021.

Remember that the sooner you apply; the higher your chance of getting financial aid.

Why? Funds, grants, and loans are issued on a first-come, first-serve basis. And since FAFSA funds come out of a predetermined federal budget, it will run out! Once it is all disbursed there is no more money left. So the earlier you apply, the more money you can be eligible for from federal aid programs. Some state and school-specific aid programs often have even earlier deadlines, so the sooner you fill out the application, the safer you will be.

An essential piece of information is that you should re-apply every year you are in school, even if your financial situation hasn’t changed.

You will always need to re-apply to continue receiving aid and to have an opportunity for other programs and funds you may not have had available before. 

How long does it take to finish the FAFSA application?

The Department of Education states that during the 2019-2020 FAFSA cycle, students took 47 to 58 minutes on average to complete a new form, and 32 to 42 minutes to complete a renewal;

while independent students spent an average of 18 to 24 to complete a new form and 14 to 19 minutes for a renewal.

How Do I Start the FAFSA Application Process?

First, create an FSA ID. With this ID, you’ll be able to access myStudentAid app, sign loan contracts, and check out certain FAFSA information online. Remember that if you are a dependent student, one of your parents will need an FSA ID as well. You can check out how to get your FSA ID here. 

What documents do I need for the FAFSA application?

Before you start the process, be sure you have all the documentation available. 

Remember that having an FSA ID is essential to log into the U.S. Department of education’s website. You can create your FSA ID here.

Whose financial information should I use?

If you are a dependent student, you should use your information and your parents’ information.

  • Under 24 years old by December 31 of the school year for which you are applying.

AND

  • Attending an associate’s or bachelor’s degree program.

AND

  • Unmarried, with no children or dependents of your own.

Keep in mind that:

Your parents should provide their info regardless if they are helping you pay for college or not.

A complete application (one with both your info and your parents’ info) has a higher probability of receiving financial aid.

If you are an independent student, you should use your information and your spouse’s information if you are married.

  • 24 years old or older by December 31 of the school year for which you are applying

OR

  • Attending a master’s or doctorate degree program.

OR

  • Married or separated but not divorced.

OR

  • Supporting children or dependents of your own.

OR

  • A veteran of the U.S. Armed Forces or currently serving on active duty.

OR

  • An emancipated minor. 

How Does FAFSA Work?

FAFSA will determine if you are eligible for federal and state aid, including loans, grants, and work-study positions. Also, FAFSA will determine the expected family contribution for your education, which varies by school. This information will be shared with the colleges you want to apply to.

Most of the time, students can’t pay for what college actually costs. If you anticipate this deficit, you can use financial aid so your school will cover as much of this cost as you can.

Once you have created your FSA ID, you must wait one to three days to verify your information. After that, you should receive a confirmation email inviting you to get started with the FAFSA application. 

What happens next?

  • You will enter your information as you would on a tax form. You will enter some primary data like address, contact info, citizenship status, etc. Also, you will be asked if you have any drug convictions that occurred while you were receiving federal student aid. Saying yes won’t disqualify you.
  • Present your tax returns and bank statements. You will be asked about adjustment gross income, earnings, and assets like the balance on your savings and checking accounts.
  • If you are a dependent student, this is the time to ask your about parent’s information. The FAFSA asks the number of people in your parent’s household, and how many plan to go to college at least part-time during the application year.
  • You, or your parent’s, if you are a dependent student, will be asked if you receive benefits from any federal programs. Note that saying ‘yes’ won’t reduce your chances of being eligible.
  • Double-check your information to ensure everything’s accurate. Remember that incorrect information will delay the process of you getting the aid. However, you can always make corrections after signing the application, but it’s always better to save time.
  • Sign and date your application. The FSA ID is used to sign the form electronically and is legally binding as a signature.

You will enter the schools you want your information sent. Each school has a federal code, and you can search for that here.

Who will see my FAFSA information? How will they use it?

After you complete the form, the school you list on your application will receive your information. State and financial aid programs will check your information to know your eligibility for grants, loans, scholarships, and federal aid.

Remember that this is a secure process. Every time you send personal information, be sure you are on the fafsa.gov website, which is a secure site. 

When and how is financial aid offered?

After submitting the FAFSA, you will be considered for any state and federal aid available. Some states require an additional application, but you can transfer all your information from the federal FAFSA. You should get a confirmation page after you submit the online form.

You will also receive a Student Aid Report (SAR) anywhere from three days to three weeks after you submit the application. This document is a summary of the information you used for the form.

After your application is processed, you will get a financial aid offer . This aid is sent out by individual schools that have accepted you. Typically, these offers come in the spring for a fall semester start. Keep an eye out from email communication that will come from EACH school. Every school will offer you something different depending on the school’s own individual factors and requirements for financial aid. So what you are offered by one school may be better than what you are offered by another school. Sometimes the difference of the offer can be quite significant ranging from a few thousand dollars to double-digit thousands of dollars. 

How does FAFSA determine how much aid I can receive?

Financial aid officers will determine your Cost of Attendance (COA) at the school. This includes tuition, fees, and room and board; basically, the costs detailed in the section above, “ What are the costs of college?”.

With this Cost of Attendance, they use the data you reported on your FAFSA to calculate the Expected Family Contribution (EFC).

The EFC is what federal aid officers expect you and/or your family can pay out-of-pocket for attending school to cover the COA. This considers the whole picture: family size, number of family members in college at one time, the state you live in, and more.

After that, the financial aid office will calculate how much need-based aid they should give you.

They use a simple formula

Cost of Attendance (COA) – Expected Family Contribution = Financial Need

The ‘financial need’ number represents the maximum need-based aid you can receive.

This includes grants, loans, and federal work-study positions.

Who is eligible to receive federal student aid?

Every student who is a U.S citizen or an eligible noncitizen can receive federal aid and state grants. You should keep in mind that you can be eligible to receive federal aid even if your parents are not U.S citizens or permanent residents. Accordingly, FAFSA includes a few questions about the student’s citizenship status.

If you recently became a U.S citizen, then you should contact the Social Security Administration (SSA) to make sure your citizenship status is correctly associated with your Social Security Number. 

You are considered an eligible noncitizen if you meet one of the following requirements:

  • A U.S permanent resident with a Permanent Resident Card (I-551), also known as a green card.
  • A conditional permanent resident with a Conditional Green Card (I-551C)
  • An eligible noncitizen with an Arrival-Departure Record (I-94), granted by the Department of Homeland Security showing any of the following designations “Refugee, Asylum Granted” Parolee or Cuban-Haitian Entrant.
  • The holder of a valid certification issued by the Department of Health and Human Services showing a classification of Victim of Human Trafficking.
  • A citizen of the Freely Associated States (the Republic of Palau, the Republic of the Marshall Islands, or the Federal States of Micronesia).
  • A Canadian-born Native American under the terms of the Jay Treaty.
  • Battered Immigrants-Qualified Aliens and their children, as issued by the Violence Against Women Act. 

How Can I use the IRS Data Retrieval Tool for my FAFSA Application?

Students and families alike can save a lot of time if they use the IRS Data Retrieval Tool, called DRT, to transfer all their tax information to the online FAFSA application. You can also do this on the myStudentAid mobile app.

To use this tool, you should electronically fill out your income tax returns from the prior year two to three weeks before completing the FAFSA. If you filed your tax return via mail, then you should wait at least eight weeks before using the tool.

Under the financial information of the FAFSA, you will see a ‘Link to the IRS’ section, where you can click and prefill the form with the prior tax year details. When you do this, you will be transferred to the IRS website. After you transfer the information, you will be sent back to the FAFSA application.

Common Mistakes that you should avoid when completing the FAFSA application

  • Don’t skip FAFSA. Many people lose the opportunity of having federal or state funding for school, just because they missed the deadline for the application.
  • Don’t forget to be an early bird. The sooner you apply for financial aid; you will have more chances of getting money and other programs.

FAFSA is entirely FREE. So don’t make the mistake of going to paid sites and go directly to the official gov website or the myStudentAid mobile app.

Fill out your application carefully. This way, you will avoid delays and revisions. Double-check your social security number, names, household sizes, dependency status, etc.

Listing retirement investments and annuities as investments.

Your family will not need to register these as assets.

Listing the wrong household for students living with divorced parents . Using the incorrect household’s financial information can be a huge mistake. If it’s a situation where you spent an equal amount of time with both parents, then you should list the one with the lowest wages and assets. On the other hand, if you spent the majority of the time with just one parent, then you should list that household.

Do not miss out on the opportunity to apply for FAFSA. This kind of help is not exclusively for students who can’t afford college, since this is also a tool for colleges to know if you qualify for any sort of financial aid, including assistance that’s not need-based.

The Department of education has a FAFSA worksheet that you can use to familiarize yourself with the required documentation and questions.

How can I get more help to complete my FAFSA?

You can contact the financial aid office at the college (or colleges) you plan to attend. There you will receive more in-depth information about your specific aid options. You can also check out the official ‘FAFSA Help’ website to clarify your doubts.

Do not feel overwhelmed about this process. It is easier than it looks. Also, remember that this process is entirely FREE, so watch out for scams of any kind.

Gradehacker is here to help you. Feel free to contact us if you need more information about the whole FAFSA application process. We understand that FAFSA can be complicated and hard to understand, but hopefully this article can guide you through the process.

Have you still not bought your college textbooks? Check out our article on the 7 Top Websites to Find Free College Textbooks in 2020.

Are you worried about paying off student loans? Check out our article on how to Pay Off Your Students Loans Without Feeling Broke.

Sergio Guevara

Sergio Guevara

Sergio Guevara has been an avid essay writer and researcher for Gradehacker since 2018. He has helped countless non-traditional students with a plethora of subjects like literature, nursing, and history. Now as the head of the Client Success Team he’s constantly involved with SEO-driven content that can make the life of both non-traditional and traditional college students much easier. You can find him on LinkedIn

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