Your teen has done the work: They’ve aced their classes, spent every moment of their free time bulking up college applications with extracurricular activities, and narrowed down their top choice from various university pros and cons lists. Now comes the fun part: Figuring out finances for the next four years of their education. Luckily, there’s a simple way to maximize financial opportunities for your child’s college education. It’s called the Free Application for Federal Student Aid (FAFSA).
The cost of higher education can be extremely discouraging. According to the Education Data Initiative, the average cost of college has risen 141 percent over the last 20 years and continues to increase each year. At first glance (and maybe second and third), financing college seems impossible. But by taking time to understand the options available and taking proactive steps, you can significantly reduce the financial strain on your family.
What is FAFSA?
The Federal Application for Student Aid (FAFSA) is a critical tool for students seeking financial assistance for college. It is a form used by the U.S. Department of Education to determine eligibility for federal financial aid, including grants, work-study programs, and loans.
How Does FAFSA Work?
FAFSA is the first step in unlocking federal financial aid. By submitting this form, students provide information about their family’s financial situation, including income, household size, and other relevant data. Based on this information, the government determines a student’s Expected Family Contribution (EFC). This amount is how much the government expects the student and/or their family to contribute to the cost of tuition.
FAFSA eligibility also unlocks a variety of financial aid opportunities.
- Grants
These are typically need-based and do not need to be repaid. The Pell Grant is one of the most well-known, aimed at students from low-income families.
- Work-study
This program provides part-time jobs for students with financial need, allowing them to earn money to help pay for school-related expenses. Loans
There are two kinds of federal student loans.
1. Subsidized loans: These loans are based on financial need, and the government pays the interest while you’re in school.
2. Unsubsidized loans: These are not need-based, and the borrower is responsible for the entirety of the accrued interest
Who Can Apply for FAFSA?
Every student can (and should!) apply for FAFSA. A common misconception is that only students from low-income families should apply for FAFSA. In reality, the FAFSA is available to almost all students regardless of their family’s income level. Even students whose families may not qualify for large amounts of aid may still be eligible for loans or other assistance.
There are two types of students that can apply for FAFSA:
- Dependent students
These students are typically under 24 years old and rely on their parents for financial support. In these cases, the parents’ financial information is required to complete the application. - Independent students
These students are 24 years or older, married, a veteran, or have dependents of their own. These students only need to provide their own financial information.
When and How to Apply
The FAFSA opens each year on October 1. It’s important to apply as early as possible, as some financial aid programs are awarded on a first-come, first-served basis. Deadlines vary by state and school, but the federal deadline is typically in June.
You can complete the FAFSA online at the official website, fafsa.gov. You’ll need to create an account to sign in and complete the form. The process will require you to provide financial details from tax returns and other documents like your social security card.
After Submitting
Once the FAFSA is submitted, colleges use the information to determine how much aid the student qualifies for and create an award letter. This award letter will detail any grants, loans, or work-study opportunities the student has been offered.
Common FAFSA Mistakes to Avoid
- Missing deadlines
Missing the FAFSA submission deadline can mean missing out on crucial financial aid opportunities.
- Incorrect or incomplete information
Always double-check the form for financial data and personal details to avoid mistakes that could delay processing.
- Omitting parental financial information
As a dependent student, failing to include parents’ financial information can cause the application to be rejected. - Not reapplying every year
FAFSA is not a one-time process. The form must be submitted every year to continue receiving financial aid.
Additional Funding Beyond FAFSA
FAFSA is not the only way to finance college. There are multiple forms of financial assistance available, including:
- Scholarships
Many private organizations, schools, and community groups offer scholarships that do not need to be repaid.
- State-based programs
Some states offer additional financial aid opportunities for residents, such as grants or loan forgiveness programs. For example, Colorado has the College Opportunity Fund (COF), which provides a stipend to eligible undergraduate students that applies to in-state tuition costs.
- Private loans
Though not an ideal option due to high interest rates, there are many private loans available to students.
The FAFSA is a powerful tool in unlocking financial aid for your student. Consider it the magic key to college financing. Remember, the process may seem daunting at first, but the financial opportunities are worth the effort.
