What is FAFSA? Everything You Need to Know in 2021

February 16, 2021

One of the biggest concerns that students (or parents, depending on who’s paying) have when planning their higher education is the financial burden of pursuing a college education.

This is why programs like FAFSA are so important for students in need of financial aid.

But, what is FAFSA exactly?  FAFSA stands for the “Free Application for Federal Student Aid” and is an application that helps determine a student’s eligibility for financial aid.

NEIT FAFSA FAST FACTS

Whether you are a student or a parent, you should get familiar with the FAFSA and how it can be beneficial to you.

To help you sort through the mountains of information online, we’ve put together this guide that answers the most common questions about FAFSA.  So, if you’re curious about what FAFSA is and how it can help you, read on!

About the FAFSA (Free Application for Federal Student Aid)

FAFSA is the form that you need to fill to apply for federal financial aid from the government. Every year, the U.S. Department of Education offers over $120 billion in grants and loans to millions of students who file for the FAFSA.

Almost all universities and colleges have an in-house office that uses the FAFSA to determine students’ eligibility for financial aid (and how much aid they would get). Once filled up, the form is the point of reference for your financial aid package and expected family contribution.

As a parent, you worry about paying for your child’s college education, irrespective of your financial situation, how much you earn, or how much you have saved up over the years. According to a survey, only 45 percent of parents took the FAFSA route (even though 74 percent worried about paying for college).

The federal student aid asks you about your financial information, tax returns, and other important things to determine your financial aid eligibility.

Who Should Fill Out the FAFSA?

If you plan on going to college in the next academic year, it’s time to start filling out the FAFSA. As mentioned above, getting federal student aid is a great way to organize your finances and prepare to pay for your college education.

You can use the FAFSA to apply for federal grants, work-study programs, and loans. Colleges in most states also use your FAFSA information to award non-federal aid.

Listed below are a few reasons why applying for federal aid to pay for your school or college education is a good idea:

  • Most federal work-study programs require the FAFSA.
  • If you don’t apply, you won’t qualify!
  • The FAFSA isn’t meant only for low-income groups.
  • Even if you are financially well-equipped, you can be eligible for federal student aid.
  • Most merit-based scholarships will require the FAFSA to determine your scholarship amount.
  • Federal loans are easier and cheaper to payback compared to private student loans. After you submit the FAFSA, you qualify for low-interest federal loans.

Where Does One Get the FAFSA Form?

Now, let’s get down to business. How can you apply for federal aid from the Department of Education for the next academic year? There are three ways to go about it:

  • Head to fafsa.ed.gov and apply online.
  • Use the myStudentAid mobile app (available for download on both iTunes and Google Play).
  • Fill out the FAFSA form by hand and mail it to the address provided.

In case you need any help in filling out the form, you can go to StudentAid.gov/completefafsa or call 1-800-433-3243.

It is better to fill out the FAFSA using method #1 or #2 since these options make it easy for you to do so. While filling out the form, you need to create a federal student aid ID or FSA ID for yourself. One of your parents also needs to create this ID.

Documents Required for the FAFSA

If you are a dependent student, the FAFSA will collect your (and your parents’) personal and financial data and deliver it to colleges where you have applied.

Your FSA ID (refer to the section above) will enable you to apply for financial aid and serve as the formal (legal) signature, too. You can use the Federal School Code Search tool to find the federal school code for every college you intend to apply to.

What is FAFSA

Here’s the complete list of documents you will need:

Personal

  • Your social security number
  • Your parents’ social security numbers
  • Your driver’s license number
  • Your Alien Registration number (for non-U.S. citizens)

Financial

  • Federal tax information
  • Records of untaxed income
  • Other financial holdings
  • Details of your savings accounts and investments

Head to the official FAFSA website to get more information about the documents you need to complete the FAFSA formalities.

How to Fill Out the FAFSA Form?

The official website is your one-stop-shop for all things FAFSA. Once you log in with your FSA ID, you will need to enter your details and answer a list of questions that determine your dependency status.

Next up, you need to furnish all the relevant details about your parents along with your financial data (income, assets, investments, tax forms, etc.). If you are applying this year, you should enter the financial information from the 2018 tax year. The website’s built-in IRS Data Retrieval Tool will help you automatically pull out the relevant data.

The next step is to list all the schools or colleges that you wish to apply to as a student. You can enter up to 10 colleges and universities in this application.

The best way to ensure that the process goes smoothly is to keep all this information handy before starting the application procedure online. You can also enter some details and save your progress online and continue later.

Check out these handy tips for completing the FAFSA online.

FAFSA Deadlines

The deadline for a student to submit their FAFSA is June 30 (midnight). However, certain states or colleges may have their specific cutoff times and dates for financial aid application. You can find more information about this on the Federal Student Aid deadlines website. Alternatively, you can get in touch with your financial aid office.

Ideally, you should submit the FAFSA as soon as it opens for filing – which is on October 1. The Department of Education allows you to submit the form between October and June, but it is best to do so at the earliest.

Types of Aid Offered Through the FAFSA

The FAFSA offers various types of financial aid packages to students applying for a college education in the forthcoming academic year. Here’s a quick look at all of them:

Federal grants

Grants refer to non-repayable money. Federal grants for college education are per the students’ needs and depend on your FAFSA results.

Scholarships

Your school may offer you a scholarship, which also refers to money that you will never need to pay back. In most cases, you earn a scholarship on merit. If you have done exceedingly well in academics, athletics, or other fields, you could be eligible for a scholarship from your school.

A scholarship might require you to maintain stellar academic progress to keep receiving the aid in some cases.

Work-Study Loans

Your federal student loan could include work-study provisions, which means you can earn and pay back this money by working part-time on campus. Get in touch with your financial aid office for more information about these programs and the related repayment options.

Federal Student Loans

The federal government offers a wide range of subsidized and unsubsidized student loan options that help students pay for college. In the case of a student loan, you are liable to pay the money back to the federal government with interest.

Wondering how to get financial aid or which kind of aid package would be ideal for you? Head to our Financial Aid Overview page for help.

How is the Financial Aid Calculated?

Okay, so you need financial aid to pay for college. But how will the authorities determine how much money you are eligible to receive as aid? Well, it depends on these four factors:

  • Your year in school
  • Your enrollment status (part-time or full-time)
  • Cost of attendance (COA)
  • Expected family contribution (EFC)
Apply for FAFSA

COA refers to the actual cost that you would incur for going to a particular college for one year. This cost of attendance includes your tuition, study material, supplies, boarding, and other expenses. The COA may differ from school to school.

Your Student Aid Report (SAR) lists the EFC. Make sure all the information you entered in your FAFSA is correctly reflecting on the SAR.

The expected family contribution is the amount of money that the federal government expects your family to afford for one year. The FAFSA assumes that 20% of your assets and 5.64% of your parents’ assets are available for spending in a year.

For financial aid calculation, subtract the EFC from the COA. This is roughly the amount that you will need in the form of aid. As mentioned above, since the cost of attendance varies from college to college, every college will individually calculate and determine the aid amount.

How Long Does It Take to Get the FAFSA Money?

Complete the FAFSA well before the June deadline, get your SAR, notify the colleges that you wish to get financial aid, and complete any additional requirements that they may have. Once you have successfully gone through this entire cycle, schools and colleges will send you a financial aid award letter along with (or after) the acceptance letter.

The time between your application submission and the receipt of your financial aid award letter may range from a few weeks to a few months. Once you get the letter, you must accept or deny the aid before the deadline.

FAQs

How long does the FAFSA take?

The FAFSA process could take anywhere between a couple of weeks to a few months, depending on how soon you complete all the requirements and how much time it takes for the financial aid letter to reach you.

Who Qualifies for FAFSA?

To qualify for FAFSA, you need to:

  • Be a U.S. citizen, or an eligible non-citizen (A permanent resident or a U.S. national)
  • Have a social security number
  • Have a high school diploma or GED certificate
  • Be enrolled/accepted in an eligible degree/certificate program

Does FAFSA check your bank accounts?

Since it’s a form, FAFSA doesn’t check your bank account. But the form requires you to complete a set of information regarding your assets, including checking and savings accounts. If your FAFSA is picked for verification, you might have to present the documents as proof that the amounts you entered were accurate.

Can the FAFSA cover full tuition?

No, you will not be able to cover all your school or college tuition costs with the FAFSA. Remember, it is a financial aid instrument designed to help you cover some or a large portion of your college education expenses.

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