More than 20 million students are enrolled in the nation’s approximately 6,900 accredited, post-secondary educational institutions — colleges and universities, graduate schools, and career and professional schools. Average tuition and room and board for in-state students at four-year public schools is about $16,000; at four-year private schools, the total is approximately $40,000. Costs at the country’s most elite post-secondary institutions are approaching $60,000 a year.
And yet, a college education is more affordable than those numbers suggest. Financial aid, in the form of grants, scholarships, loans and work-study programs, is widely available from different sources, giving families from diverse economic backgrounds the ability to manage college’s exorbitant costs. In fact, about two-thirds of full-time undergraduate students and three-fourths of graduate students in the country receive some form of financial aid.
Who is Eligible for Student Aid?
Federal Student Aid, which is part of the U.S. Department of Education, is the largest provider of student aid in the nation. It offers more than $150 billion per year in grants, loans and work-study funds to more than 15 million students.
Under Title IV of the Higher Education Act of 1965, Federal Student Aid is responsible for developing and processing the Free Application for Federal Student Aid (FAFSA), which is used by the federal government and most colleges and universities to determine the eligibility of a student applying for non-merit-based financial aid. Filing a FAFSA form, therefore, is the first step in applying for more than 90 percent of aid money. (Merit-based aid, which accounts for the other 10 percent, is awarded based on talent.)
By filing a FAFSA, students learn whether they are eligible for need-based aid, such as Pell Grants, Perkins loans, federal work-study and subsidized Stafford loans; or other aid, such as unsubsidized Stafford loans and PLUS loans for graduate students.
All applicants must:
- Be a U.S. citizen, national or eligible non-citizen
- Have a valid Social Security number
- Have a high school diploma or GED
- Be registered with the U.S. Selective Service (males 18-25)
- Not owe refunds on federal student grants
- Not be in default on student loans
- Not be guilty of the sale of illegal drugs while federal aid was being received
How Do I File a FAFSA?
The FAFSA consists of approximately 130 questions related to the student’s and parents’ assets, investments, income, taxes paid, household size, and number of dependent students in the family attending college or graduate school. Several items are not included on the application, including retirement funds, annuities, life insurance or pension funds.
A student is considered a dependent and must include parental information on the FAFSA until he or she:
- Turns 24 years old
- Enrolls in a graduate program
- Gets married
- Becomes an orphan or ward of the court
- Becomes a veteran of active military service
- Has one or more dependent children
The FAFSA requires detailed information about a family’s finances. In order to verify the accuracy of submitted information, the Department of Education and college financial aid offices may request copies of income tax returns, W-2 statements, 1099 forms or other documentation. Families refusing to supply required documentation risk being denied any form of federal student aid.
On the FAFSA, students also identify the schools to which they are applying.
When Do I File a FAFSA?
Prospective college students and their parents should fill out the FAFSA between Jan. 1 and March 15 of their senior year of high school. Some schools may have February deadlines. The Department of Education recommends that the form be filed online, although a printed version is available. Since some aid is provided on a first come, first served basis, students should submit their FAFSA as early as possible.
What Happens Next?
Upon receipt of the FAFSA, a federal processor examines the information and enters it into the Federal Methodology (FM) formula, a complex analysis that determines a student’s Expected Family Contribution (EFC) — the dollar amount that a student and/or family should be able to pay toward the Cost of Attendance (COA). If the EFC is less than a college’s COA, the student qualifies for need-based financial aid (COA – EFC = Need). Thus, a student may qualify for need-based aid at one college, but not at another.
Within three weeks after submission, the student will receive a Student Aid Report (SAR), which is a summary of the FAFSA. This information also is forwarded to all of the schools to which a student has applied, as well as to state agencies that award need-based aid.
Each school correlates the FAFSA information with other criteria to determine need, and then lists scholarships, grants, loans and/or work-study programs available. A final aid package is sent to the student in an Award Letter. Aid packages often vary widely from school to school.
For each year that a student plans to attend college, he or she must fill out a new FAFSA. Each institution is likely to have its own deadline. If FAFSA is filed online, answers from the previous year will be filled in automatically, and only updated tax and financial data will need to be added.
Students and their families are advised to file as early in the year as possible, even if they haven’t filed their federal tax returns yet. Tax figures can be estimated and amended later. The online FAFSA can pull information from the Internal Revenue Service (IRS).
It is important to fill out the FAFSA accurately and carefully, as any errors or omissions can delay processing or cause a student to miss out on financial aid. The Department of Education advises that it typically takes one to two hours to complete a FAFSA.
Like taxes, the FAFSA can be completed without professional assistance. However, some people hire a FAFSA preparer to provide advice, consultation and review of their application. These companies are not affiliated with the Department of Education, and while some firms are honest and reputable, students and their families are advised to be wary of those who charge for filing a FAFSA.