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FAFSA® 101: Everything You Need to Know

Sep 07, 2021 | By: Ascent
Categories: Blog, For Students, For Cosigners

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Filling out the Free Application for Federal Student Aid (FAFSA) should be your first step when it comes to applying for financial aid for college. The FAFSA can give you a boost toward furthering your education by providing you with opportunities to qualify for grants and subsidized and unsubsidized federal loans, based on your financial needs. 

If you don’t fully understand the FAFSA and what documents you may need to complete it, this FAFSA 101 crash course is a great place to start. Read on for some helpful tips and resources you may need to apply for financial aid with confidence before your federal or state deadline. 

 

What is the FAFSA?

The FAFSA (Free Application for Federal Student Aid) is a government form that helps determine your eligibility for federal aid. Schools and the government use the FAFSA to determine your eligibility for federal aid, including federal student loans, grants, and scholarships. Many of the questions are populated directly from you or your family’s federal tax forms, and you can even transfer your tax information directly from the IRS. 

There’s a common misconception that if your parents make too much money, you won’t qualify for any financial aid at all, but that’s not true. Completing the FAFSA can help you qualify for grants and federal student loans you can’t find anywhere else. According to NerdWallet, students and families who were eligible for the Pell Grant but didn’t submit the FAFSA missed out on $2.6 billion in free financial aid.

It is critical to understand the FAFSA deadlines to ensure you don’t miss your opportunity to apply for federal aid. 

 

What are federal student loans?

Federal student loans are loans provided by the government and made possible through the Federal Direct Loan Program. With federal student loans, you borrow money directly from the Department of Education at a fixed interest rate. 

The benefit of taking on federal student loans is you don’t need to start making payments until after you graduate, leave school, or drop below half-time status. 

There are also four types of federal student loans: Direct Subsidized Loans and Direct Unsubsidized Loans. Direct Subsidized Loans are need-based and available to undergraduate students who meet certain criteria. Direct Unsubsidized Loans are available to undergraduate, graduate, and professional students no matter what their financial situation may be.

Something to keep in mind is that unsubsidized loans begin accumulating interest immediately, so depending on your financial circumstances you may want to consider making payments while in school. Making a minimum payment on your federal student loans each month can go a long way in chipping away at your debt. You can also check if you are eligible for temporary relief options like income-based repayment and deferred repayment plans

Another federal option is called a Direct PLUS Loan (often called a “Parent PLUS Loan”). This loan is granted to the parents of undergraduate students and has a similar application process as the FAFSA. 

Federal student loans are the first place you should look for financial aid to pay for college, but they may not cover the full cost of tuition, room and board, and other expenses. If you’ve exhausted your options for federal aid and you need help covering your remaining college expenses out of pocket, school loans from a private lender can help you fill the gap in costs. Private lenders like Ascent offer a variety of cosigned student loans and student loans with no cosigner for qualifying student borrowers.

 

Benefits of the FAFSA

While the primary benefit of the FAFSA is to provide you grants and federal loans, there are some additional reasons to apply. Some schools, states, and outside organizations offering scholarships or grants may ask for your FAFSA information to help determine if you’re eligible for other types of aid.

Since some grants and scholarships are first-come-first serve or have early deadlines, the earlier you fill out your FAFSA, the sooner you can submit it to other organizations asking for these details. The FAFSA application opens on October 1 every year, so applying early can improve your chances of being awarded additional grants and scholarships.

It is important to note that federal loans are not the only type of federal aid offered for students. The Pell Grant is a common type of federal grant for undergraduates, and is usually awarded to undergraduate students who display exceptional financial need. More importantly, the Pell Grant doesn’t need to be paid back. Students must fill out the FAFSA form every year in order to stay eligible for federal student aid, including the Pell Grant.

Knowing your potential sources of financial aid is an important aspect of your financial wellness journey. Be sure to look into local, state, and national resources for financial aid, as well.  

 

When should I Complete the FAFSA?

The FAFSA opens every year on October 1 and the deadline for filing your FAFSA is June 30. This means that you could potentially complete the full academic year before submitting the FAFSA form – but by waiting you could miss out on receiving financial aid for each school term and opportunities to qualify for money from other sources that require your FAFSA information. 

While the federal deadline is the same each year, your school and state may have different deadlines, sometimes as early as three months before the June 30 deadline. If you learn one thing from the blog post today, it’s to make sure you submit your FAFSA application as early as possible. Colleges distribute a finite amount of money, so making sure you are aware of these deadlines is critical to ensuring you have a chance to secure aid. 

 

What will I need to fill out the FAFSA?

To fill out the FAFSA, you need to provide certain information about yourself along with some information about you or your parent’s finances (if you’re claimed as a dependent on their taxes). According to the Federal Student Aid website, you might also need:

  • At least one college or university you plan to attend to receive your information. You can find their school code from the Federal School Code Search. 
  • Your Social Security Number or Alien Registration Number. 
  • Your federal income tax returns, W-2’s, and other income records.
  • Bank statements and investment records (if applicable).
  • Records of untaxed income (if applicable).
  • A Federal Student Aid (FSA) ID. For more information on how to create an FSA ID account.

 

How to Complete the FAFSA

Once you’ve gathered the necessary documents and created your FSA ID, head over to the official student aid website and start the application process. The on-screen prompts will guide you through each step of the application process. 

After you’ve answered the questions about your finances and family, you’ll be asked to list the colleges where you have applied or intend to apply for the upcoming school year, and add their school codes. If you haven’t yet decided on which school you plan on attending, list any possibilities. You can update your FAFSA later if you change your mind, but you do need to list at least one to complete your application. Once you’ve supplied all necessary details, double-check the information you entered and submit your FAFSA.

 

What happens once I’ve submitted the FAFSA?

After you’ve submitted the FAFSA, you may have to submit additional verification information or financial aid forms. It’s a good idea to contact the school you plan on attending to check if they need any additional information. 

Once your FAFSA has been processed, you’ll receive a Student Aid Report with information about the aid you can potentially get from your school. The actual amount of aid you receive depends on the college or university you plan to attend.

After your college acceptance letters start to roll in, the school will send you information about your financial aid award package. This will list the number of grants and federal loans you are eligible for, along with any work-study opportunities. If your financial situation has changed, your award package may not accurately represent those changes, so be sure to contact the financial aid office at your school to make an appeal and know what your options might be.

 

FAQs About the FAFSA

What happens if I miss the FAFSA deadline?

Even if you miss the federal FAFSA® deadline on June 30, you should submit the form as soon as possible. Any applications submitted after the deadline will be still considered for funding with any money left over after all applications received on-time are reviewed. Whether you submit late or not, make sure to note the deadline and submit the next year’s as soon as possible.  

Will I get more federal aid if I finish the application as early as possible?

Finishing the application early will potentially help you receive more federal aid from more sources, as your school may reward scholarships and other need-based aid to those who apply first. It also gives you more opportunity to appeal, if you feel that you deserve more financial aid than you were rewarded. If you wait too long, the funding may be gone.

Can federal aid fully cover my entire tuition?

It is possible for federal aid to pay for all of college, but this varies by student and their unique financial situation. There are many factors when it comes to determining federal aid, which makes it unlikely that federal aid will fully cover your tuition. If you find your financial aid amount isn’t enough to cover all your school-related expenses, you can apply for other scholarships, opportunities and private student loans, such as Ascent’s undergraduate loans and graduate student loans.

 

Stay Up-To-Date with the Best Student Loan Information

Ascent is honored to be recognized as the best private student loan for 2021 by Forbes Advisor and NerdWallet, and is committed to providing students with more opportunities to finance their education. In addition to our student loans and scholarship opportunities, we offer free financial wellness resources to set students and their families up for financial success during college and beyond.

Ascent Student Loans is determined to provide students with the information they need to make their college dreams a reality. Stay in touch with our blog to find the latest in college finance news.

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