Your Definitive Guide To The FAFSA

Suppose you just completed high school and are scanning some resources about college, fees, and financial aids. Pause your search and spare this article a few minutes of your time. You may have already prepared your college objectives and plans. Now you’re ready to proceed to the next step, and that’s applying to your chosen university or school. 

Earning a college education is a popular option for landing lucrative jobs, but it’s not without its costs! Over the past decade, tuition rose by 79% over inflation. Education costs have increased five times more since 1982. Therefore, approximately 40% of college-bound students will skip their first-choice school to favor a more affordable alternative

What has caused the cost to rise so rapidly? Lack of funding from local and state governments is one of the significant reasons behind steep increases in college costs. Universities and colleges are experiencing a loss of funding, which means tuition rates need to be raised. Add that to the stagnant earning capacity of households, which is a different issue altogether!

Students and their families may want to apply for financial aid through the Free Federal Application for Student Aid, or FAFSA, to help cover the costs of paying for college. Today, numerous states require high school graduates to file the FAFSA as part of their graduation requirements. The application process can be extra complicated when trying to determine how to pay for college.

Let’s take a look at the basics of FAFSA and dig deeper into its many features and application processes :

What Is FAFSA?
Where Can You Find the FAFSA?
Who Should Use the FAFSA?
When or How Do You Fill Out the FAFSA?
Easy Steps For FAFSA Application
What Happens After Submitting FAFSA?
Tips to Maximize Eligibility
Final Thoughts

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What Is FAFSA?

The short answer: FAFSA is an acronym for Free Application for Federal Student Aid and is a way for a student to apply for financial aid for college

So, let’s jump into one of the most vital aspects of the financial aid applications—the FAFSA (Free Application for Federal Student Aid). Most colleges and universities use the FAFSA to calculate financial aid packages, but they use it primarily to assess the federal financial aid you are entitled to receive.

The good thing is that it is relatively easy to fill out and only takes less than an hour to complete. As you read more on this article, you will get a view on how to proceed with the processing, the eligibility requirements, and some insightful tips to maximize your application. 

Once the FAFSA is submitted, you should receive a Student Aid Report (SAR) either electronically or in paper format. A Student Aid Report (SAR) includes your basic financial aid eligibility information and all your answers from the questions encrypted on the FAFSA. A student’s expected family contribution (EFC) is the most crucial section of their SAR and the primary determinant of financial aid eligibility. You can use it as a reference of how much your family can afford to sustain your education. 

Each year specifically on October 1, students like you become eligible to apply for the FAFSA. As soon as it is available, it’s highly recommended to fill it out immediately so that you do not miss any state- or college-specific deadlines and can plan the way you will pay for college. Financial aid awards may also be awarded to students who applied earlier than others in some schools. If you want to ask the question: When is the last day to apply for FAFSA? The answer is June 30 of the said academic year of your FAFSA application. 

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Where Can You Find the FAFSA?

Students can apply for financial aid online. A paper version, called the FAFSA in Pdf format, may also be filled out on a computer, printed, and then mailed. FAFSA mobile versions were rolled out in 2018 and will remain available once the 2021-2022 FAFSA opens on October 1. FAFSA completion rates should increase with the Department of Education’s mobile-friendly version. After all, almost all Americans own a cellphone, according to a Pew Research Center survey conducted in 2019.

The Education Department advises students and parents to use a single device to start filling out the FAFSA form, but they can complete it using a different gadget. Be mindful of the FAFSA 2021-22 deadlines and beyond if you’re planning to enroll soon!

The Origins of FAFSA

Throughout American history, financial aid policies have played a crucial role in helping individuals achieve their dreams.

The Higher Education Act of 1965 that President Lyndon Johnson signed into law in 1965 designated the U.S. federal government as the primary institution of student financial assistance. As a result of Title IV, the Educational Opportunity Grants (EOG) program was established.

The U.S. higher education has undergone a couple of changes since 1965, and financial aid policies also changed along with it. More financial aid policies and resources were introduced to strengthen student access to student loans, work-study programs, grants, and tax credits.

The National Center for Education Statistics (2015) indicated that almost 85% of new full-time students in the school year 2012-2013 were able to receive federal financial aid, with 46.5% enjoyed federal grants.

Most college students in 1965 went to college after graduating from high school and full-time. Financial aid primarily supported students who couldn’t pay for their education. Finally, the EOG program was divided into two in 1972. The first one became the FSEOG program or Federal Supplemental Educational Opportunity Grant, while the other one is the BEOG program, which has been renamed Pell Grant in 1980. Both programs hand out funds to students in a more straightforward manner.

The Middle Income Student Assistance Act, which was approved in 1978, changed federal financial aid policy dramatically by providing subsidized loans to all undergraduates, not considering their needs and qualifications. The Pell Grant eligibility expanded to middle-class students as well. After some years, the Pell grant was extended to include students attending community colleges or vocational schools in 1980. PLUS loans, Lifetime Learning Tax Credits, Hope and Hope tax credits were all introduced in the 1990s. Unsubsidized Stafford Loans were also introduced. All college students’ parents can apply for PLUS loans to cover all educational fees, even the living costs, regardless of financial need.

How Does FAFSA Work?

Annually, the Office of Federal Student Aid in the U.S. Department of Education allocates more than $100 billion, and awards it to more than 13 million students. Loans, grants, and work-study are all part of the financial aid package.

Learn about each one below:

Grants 

Grants are not to be repaid by students, especially if they can prove their financial needs. Federal Pell Grants are by far the most commonly awarded educational grants today.

Work-Study 

Participating colleges and universities provide students with paid part-time jobs through work-study programs.

Student Loans

Grants and scholarships have the advantage of being free, while loans must be paid back eventually. But federal loans tend to be a better deal than those offered by private lenders, and they tend to have better repayment terms. The federal government also provides Stafford Loans as a form of student loan for higher education. Family members with financial needs are eligible for direct-subsidized loans. Family members can apply for a direct unsubsidized loan regardless of their financial situation. All borrowers must, however, have reasonable credit histories to be eligible for direct PLUS loans.

The FAFSA, which the Federal Student Aid office administers, is the means to apply for all types of aid mentioned above.

RELATED FAQs:
How Do Grants, Loans, And Scholarships Differ?
How Do I Find The Best College Financial Aid For Me?

Students can use the FAFSA questions to estimate their financial needs and determine their Expected Family Contribution (EFC). Those are the college expenses the student and the parents, under federal rules, must pay out-of-pocket for each year. Those data are used to determine how much aid a student, what kind of aid he or she is eligible for by the federal government, state assistance programs, and colleges that the student is applying to.

In addition to receiving an acceptance letter from a college, students may also receive a financial aid package, in which each student will receive a package of grants, loans, and work-study offers. It’s important to note that different colleges offer different types of scholarships.

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Who Should Use the FAFSA?

Regardless of your financial status, it is wise to submit a FAFSA and consider your federal or school-based financial aid eligibility.

Students must complete the FAFSA to determine their financial needs. They must consider many factors besides their income and assets. Therefore, even if your family has assets totaling over a million dollars or your annual income sits at $300,000, there may still be financial aid available for you. To apply for federal financial aid, you need to understand the basic eligibility requirements. You can learn more about this later. 

Eligibility and Requirements

The Federal Student Aid website reports that most U.S. citizens and eligible non-citizens can receive college or vocational school financial assistance. Keeping track of the eligibility requirements for the programs and the steps to re-establish eligibility is essential.

A few general eligibility prerequisites include financial need, U.S. citizenship, or eligible non-citizen status, and active membership in a degree program at an accredited college or career school. There are additional requirements you must comply with to qualify for tuition assistance.

Eligibility Criteria

Students Who Have Parents Who Died During The Iraq Or Afghanistan War

An additional Federal Pell Grant or an Iraq and Afghanistan Service Grant could be available to you if your parent died due to military service in Iraq or Afghanistan after the events of September 11, 2001.

Non-U.S. Citizens

A permanent resident alien who is a green-card holder will be generally considered an “eligible non-citizen” and will be eligible for federal student aid if he or she meets the other essential eligibility criteria. 

Students With Disabilities

Suppose you are a student with an intellectual disability. In that case, you may apply for tuition funding based on different programs like pell grant, federal work-study programs, and Federal Supplemental Educational Opportunity Grant. 

Students Without a Home

Students who are homeless do not benefit from any financial aid. Nevertheless, homeless students can be funded for college if they qualify for government student aid.

Students Are or Have Been in Foster Care

Foster care students cannot receive financial aid specifically tailored to their needs. However, students who meet federal student aid requirements can still receive funds for college.

Students With Criminal Background

If you have been incarcerated, convicted of a drug offense, or have been subject to an involuntary civil commitment following incarceration for a sexual offense, your eligibility for federal student aid might be impacted significantly. 

RELATED:
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When or How Do You Fill Out the FAFSA?

If you’re wondering what the answer is for your question: “When is FAFSA due for fall 2021?” FAFSA deadlines are June 30, but you should process and comply well before that date. Don’t wait for the FAFSA deadline 2021 to come and start your application early. 

You will most likely receive the most aid if you apply for financial assistance as soon as possible before October 1 of the year you plan to attend college. This is because most colleges provide financial aid and scholarships on a first-come, first-served basis. You will be awarded financial assistance based on the date you submitted your FAFSA application. Before the FAFSA is available to college applicants, many families would wait until the IRS had given all the tax information to complete the form. However, since 2016 the FAFSA has been modified; this is no longer the case.

When filling out the FAFSA, you can now utilize your tax return from the prior-prior year. For example, the FAFSA application was available beginning October 1, 2019. If you planned on attending the 2020 classes, you must have used your 2018 tax return to complete your application.

Prepare all the documents before completing the FAFSA. Making this happen will improve efficiency and make the process more convenient. The FAFSA is not the only form to fill out when seeking institutional aid. Many colleges offer other forms and awards beyond the FAFSA. The CSS Profile is one example. To determine if your school provides financial assistance and how you can receive it, check with your school’s financial assistance office.

RELATED FAQ: What Is Financial Aid? How Do I Apply?

If your college contacts you with information requests related to financial aid, you should respond as soon as possible. In this manner, you will improve the amount of financial assistance you get and receive it on time. To know more about the financial aid available to you, contact your school’s financial assistance office.

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Easy Steps For FAFSA Application

It does take a long time to complete the FAFSA if you aren’t clear on the rules! Here are the basic steps for your FAFSA application:

1. Collect Your Information

To apply for federal financial aid, you need to fill out the FAFSA. Having all the documents and information on hand will help speed up the process. Here are the things you should have:

  • Your Social Security number
  • Your family household size and income
  • Your earnings (if applicable)
  • You have to list all of the colleges where you are applying.

2. Make a Federal Student Aid (FSA) I.D.

The next step is to generate an FSA ID, and you can do this through your mobile application. The FAFSA is completed with this identifier, and this is used and renewed yearly. Online creation is quick and easy and takes about 10 minutes. Parents’ FSA IDs are separate from those of their children.

3. Complete Student Information

Start filling out the student demographics section of the form you’ll be completing most likely during the upcoming school year. These sections require you to enter your personal information, like name, age, and birth date. You’ll also be asked to select which schools you intend to attend. Get into every college you’re thinking of attending so that you can get the most assistance. The dependency section asks you questions to assess whether you are your parents’ dependent so that financial aid may be available to you.

4. Encode Parent Information

The next step will be entering your parents’ information after completing the student section. This section still needs to be completed even if you do not live with your parents currently. This form asks for the contact information of each of your parents and other details.

5. Provide Your Financial Data

You then need to enter all your household’s financial details, including your income and your parent’s income.  You can make your FAFSA application online by using the IRS Data Retrieval Tool, which draws the desired data from your tax return.

6. Check Your FAFSA

Before clicking “submit,” ensure that the FAFSA is error-free. Verify that you entered the right school on the list and that your financial information is correct.

7. Sign and Submit Your FAFSA form

You can e-sign and submit the form once you’re sure all of the information is accurate. There you have it; you’re one step closer to getting tuition aid!

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What Happens After Submitting FAFSA?

A student aid report (SAR) will be provided once the FAFSA has been completed. The report is the applicant’s responses to the questionnaire and a federal EFC. If the applicant provides an email address, you can expect to receive this report sent by the Department of Education. But you can also request a postal mail if you prefer. 

Applicants should carefully review the SAR for any errors, as it summarizes all the information from the FAFSA. You will be able to make changes after you submit it. Families can update their FAFSA after two days.

The Department of Education verifies some FAFSA forms after they are submitted. More than 30% of people whose forms were picked randomly are asked to submit their information as part of a verification process.

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Tips to Maximize Eligibility

Your financial aid for your undergraduate education begins with the Free Application for Federal Student Aid or FAFSA. The type of financial aid and the amount of money you get may depend on how you file the FAFSA. To apply the following tips to make the most of your educational savings:

  1. File the FAFSA early.

It’s best to file the FAFSA as early as possible. It’s common knowledge among incoming students to know that the FAFSA must be filed by October 1 to avoid missing the state and college aid deadlines. More than a dozen states issue grants based on the first-come, first-served principle. At the same time, ten states have deadlines in December, January, February, or early March. In addition, some colleges’ application deadlines are early, and federal student aid may run out if other applicants have already secured them.

Furthermore, It has been said that students who file the FAFSA earlier could apply and qualify for more financial assistance. When an application for financial aid is submitted in October, students will likely receive twice as much grant aid as those who apply later in the year. To increase your aid eligibility, submit your FAFSA early in October.

  1. Check your deadlines.

The college application is divided into three types: Early Decision, Regular, and Early Action. There will be deadlines for financial aid from colleges, the state, the federal government, and scholarship deadlines. Stay on top of your time management skills so you can accomplish everything early and in an organized manner.

  1. Minimize income in the base year.

Financial strength is calculated using family income and tax records from the family’s base year. The base year refers to the prior-prior year. A student’s base year for the FAFSA in 2021-2022, for example, is 2019. Those students began filling out their FAFSAs on October 1, 2020.

It is wise to minimize income during the base year because the financial aid formula heavily weights income. During the base year, it is advisable to avoid realizing capital gains. To offset capital gains, try to match losses with the bonds, stocks, and other investments that need to be sold. By having losses that exceed earnings up to $3,000, you can reduce your adjusted gross income (AGI). The FAFSA will treat withdrawals from a Roth IRA as income, so you should avoid taking distributions from a retirement plan during the base year.

An increase in aid eligibility of about $3,000 for every $10,000 deduction from parent income.

If student income is reduced by $10,000, aid eligibility increases by $5,000.

  1. Know the terms.

When filling out the FAFSA form, it’s important not to jump to conclusions about a term’s meaning. Think about your answers carefully before finally answering the questions. Get yourself educated with the following tips when filling out the form:

  • Legal guardian: 

If your parents have not been appointed as your guardians by the state, they are not your legal guardians. If a court has not set someone your legal guardian, do not reply to this question.

  • Parent: 

It isn’t enough to say that your grandparents or parents support you with a lesser income. The information you gather from each parent, including stepparents, must meet specific criteria to be used.

  • Household size: 

If you live in a household with step-siblings or live with your parents and don’t live with the extended family, read the rules for details, including calculating the household size.

  • Attending college: 

Consider the total number of college students in your family during the academic year, including yourself, but do not include your parents in this figure.

  1. Review and check your work.

The adage is especially true when completing the FAFSA, “Haste makes waste.” As colleges attempt to get accurate information, errors are likely to cause delays, which may decrease your chances and opportunities of securing financial aid. Please remember the differences in sections for students and parents, use the names on S.S. cards, and double-check the Social Security numbers you provide. It can be very stressful if there are typos in a document.

  1. Don’t forget the school codes.

The FAFSA is the significant financial aid application most colleges use. For your chosen colleges to receive your information, you have to use the correct codes. You can later apply and add more colleges. However, you should ensure the schools you are most interested in getting your information ASAP.

  1. Consider dependents.

An individual who provides more than half of his or her support is described as a legal dependent. Support can take the form of money, gifts, loans, a place to live, food, clothing, a car, medical and dental care, and funds for educational costs. 

The question that asks about legal dependents other than a spouse should be answered “no” if someone else supports your child.  If you’re pregnant or expect to have a child within July 1 to June 30 of the award year, you can consider counting your child as your legal dependent and should be included as one of your household members. 

  1. Before submitting your FAFSA, you should…
  • Ensure that the form contains all the necessary signatures, including your own. In other words, if you don’t sign the document, you will still get a SAR, but not financial aid. 
  • Attaching anything to the form will result in it being destroyed when mailed. In the same way, you should not leave margin notes or comments. The school’s financial aid administrator must be contacted if there are unique family financial circumstances. 
  • Before mailing the form, make a copy for backup. It is possible to print out your FAFSA before you submit your application online. 
  • The earlier you fill out the form, the better.
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Final Thoughts

No matter how much money they make or how much they have accumulated in assets, families will benefit from completing the FAFSA. It is still possible to receive non-need-based assistance from the federal government even if you do not qualify for free money in the form of grants and scholarships. A federal student loan offers more favorable repayment terms than private loans and varies in interest rates.

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