Understanding the FAFSA, your key to qualifying for college financial aid  (2023)

What’s less exciting? Coming up with the money.

The average cost of attendance for a student living on campus at a public four-year in-state institution is $25,707 per year—or $102,828 over four years—according to the most recent figures from the Education Data Initiative. Out-of-state students pay $44,014 per year, or $176,056 over four years.

The good news: The Department of Education gives students and parents the opportunity to receive extra financial support.But you have to apply for it.

What is the FAFSA?

The Free Application for Federal Student Aid (FAFSA) form is used by the government and individual colleges to determine your eligibility for financial aid based on key tax and income information. Student aid is available in the form of:

• Grants: This is a type of financial aid that (in most cases) does not have to be repaid. Typically, you would only have to pay back a grant if you drop out of school or fail to meet the terms and conditions associated with your particular grant.
• Scholarships: Scholarships are another form of free money. They do not have to be repaid and can be awarded based on academic merit, financial need,special skills or interests, and more.
• Work-study: Many universities and colleges offer work-study programs that allow students to work part time for extra money to cover their educational costs.
• Federal student loans: Loans are debt that must be repaid, including interest. With the FAFSA, you may qualify for federal student loans, which come with lower, fixed interest rates and government protections that aren’t available through private lenders. Once you graduate, drop below half-time enrollment, or leave school, your loan(s) enters repayment.

Qualifying for financial aid is an annual process and the FAFSA must be filled out each academic year.

For the upcoming 2023–2024 academic school year, the federal deadline to submit your FAFSA is 11:59 p.m. CT on June 30, 2024. Any corrections or updates must be submitted by 11:59 p.m. CT on Sept. 14, 2024. However, each college and state may have its own deadline, which could be earlier. So it’s important to know which colleges you want to receive your form, as well as their corresponding deadlines.

“Some schools offer aid based on a first come, first served basis, so it’s important to check each school’s website and to submit the FAFSA as early as possible,” says Cindy Chanin, founder of Rainbow EDU Consulting, a California-based tutoring and college admissions consulting service. And note that once you start college, the process isn’t over:“Students need to apply for FAFSA every year they are enrolled in college, since eligibility may change from year to year depending on the university’s funds and the family’s financial situation.”

The FAFSA process and deadline

Experts say you should always complete and submit the FAFSA, regardless of your financial situation. “Students should know that completing a FAFSA is always in their best interest, even if they don’t think they’re eligible for need-based financial aid,” says Mary Banks, director of admissions consulting at Quad Education.

If it’s your first time completing the FAFSA (or you need a refresher), here are a few key steps you want to be mindful of:

Gather your important documents

The FAFSA requires that you submit a host of financial information so that the Department of Education and the colleges you’re applying to can determine how much aid you qualify for.

Chanin explains that unless the student is over age 24, serving in the armed forces, or married, the FAFSA considers them a dependent. So the student and parent(s) will need to share details about their income and assets to complete the form. “To answer these questions, families should have tax returns (this year’s and last year’s), profit and loss statements, W-2 forms, bank statements, investment records, and any other documents relevant to their finances and personal records, such as Social Security numbers and driver’s license information,” she says

Prepare a list of colleges you want to attend

Your FAFSA application will require you to list at least one college that you’d like your information to be sent to. Each institution has its own code; you can use the Federal School Code Search to find the colleges you want listed on your FAFSA form.

Create an FSA ID

Your FSA ID is the user name and password needed to log in to the U.S. Department of Education’s Federal Student Aid websites. It’s not required that you create an FSA ID, but it’s recommended that parents and students create a login to access their application, make corrections, and pre-fill saved information from the previous year on future applications.

Complete and sign your form

Once you’ve filled out the form and double-checked that everything is correct, you’re ready to submit. After filing, you’ll receive a confirmation email in the following days stating that your FAFSA is being processed, along with a summary of the information you entered on your FAFSA in a Student Aid Report (SAR).This is your chance to review your information once again and ensure that you didn’t make any mistakes.

Your SAR will also contain your Expected Family Contribution (EFC), which determines your eligibility for a Federal Pell Grant. Colleges also use this figure to determine your eligibility for other federal and nonfederal student aid.

Your FAFSA will be processed within three to five days if you submit it electronically. If you submitted a paper FAFSA, your application will be processed within seven to 10 days. It will then be sent to the colleges you listed, which will work to create your financial aid package, and eventually disburse those funds should you accept the package you’re offered.

“Based on your FAFSA, each college you apply to will provide an aid offer you can review and compare,” says Banks. “Students and parents should be aware that they’ll need to formally accept the school’s aid offer.” Banks also notes that if you’re offered any loans, you don’t have to accept the maximum amount—just the funds you need to cover educational expenses for the year.

Other ways to boost your college fund while you wait

The FAFSA is the primary way students receive aid for college, but it isn’t the only way to get money for school. There are countless private scholarships and grants you can apply for to help cover your educational costs and reduce the amount you may have to borrow later on.

There are several sources you can turn to for information about scholarships you may qualify for, including:

• Your university
• Your high school counselor or college admissions counselor
• The U.S. Department of Labor’s scholarship search tool
• Free online databases like Fastweb or Scholarships.com

“Winning awards you don’t need to pay back can help fund your education,” says Banks. “You may also be eligible for state financial aid, even if you’re not eligible for federal aid (often awarded through grants and scholarships that don’t need to be repaid). Your state grant agency will have more information about the aid and application process.”

The takeaway

Paying for a college education may be one of the biggest investments you make, but you don’t have to cover the full cost. There are several ways to make educational expenses more manageable—starting with federal aid. Any financial aid you receive, no matter how much, will reduce your out-of-pocket expenses and help save money in the long run.