Seeking financial aid? Start with the FAFSA

Going to college is an important investment in your future. Research shows that, on average, college graduates earn $400,000 more than high school graduates during their careers.

While college poses a significant expense, financial aid can make higher education more affordable.

Wondering how much financial aid you might be eligible for? Read on to learn about the Free Application for Federal Student Aid (FAFSA), types of financial aid and how the information you include on your FAFSA determines the types and amount of financial aid you can receive.

What is financial aid?

Financial aid is money that helps you pay for college. Some financial aid is need-based (based on your income and assets). Other aid is merit-based, usually in the form of scholarships earned for grades, standardized test scores, sports, music or a specific area of study.

Some types of financial aid, such as grants and scholarships, are referred to as “gift aid.” This means that they typically do not need to be repaid, although they may have other obligations associated with them and certain exceptions. Other types of financial aid do need to be paid back, such as student loans.

Here’s a closer look at the some of the types of financial aid available:

• Grants: Grants can come from the federal government, state governments and colleges themselves. They are typically awarded based on financial need. Some states offer also offer grants to resident students. You don't usually have to repay grants, but a few situations could require repayment.
• Scholarships: Scholarships come from various sources, including state governments, colleges and private organizations. Even though you typically need to apply for scholarships separately, some schools may require FAFSA completion as part of their application process. Scholarships typically don't need to be repaid, but students likely need to meet certain obligations to keep them.
• Work-study: Campus work-study programs provide part-time job opportunities for students. While your financial aid offer will tell you if you’re eligible for work-study, you’re not provided with or guaranteed a job. You'll need to explore the university job board and apply just like any other job.
• Federal student loans: You could be eligible for federal student loans to help finance some of your education. To apply, you’ll need to complete and submit the FAFSA, sign a promissory note and complete entrance counseling.

What is the FAFSA?

The FAFSA is a form that college-bound students, as well as current college students and their families complete to apply for federal financial aid for a given academic year. It determines the type of aid — and how much — a family is eligible for.

Administered by the U.S. Department of Education, the FAFSA is also used by state governments, colleges, career schools and private organizations to help them determine whether a student is eligible for their own financial aid program.

Why fill out the FAFSA? For most families, it's not realistic to cover the entire cost of college out of pocket, through family savings, 529 savings or in-school payment plans. Many students need financial help through grants, loans or work-study. Even if you think you won't qualify for federal aid, it's still a good idea to fill out the FAFSA because states and colleges have their own financial aid to offer, and it's required for federal student loans.

The FAFSA went through a major update in 2023. The new simplified FAFSA asks fewer questions and is intended to be easier to complete for many families. It also imports your tax information directly from the IRS into the form, and its updated Student Aid Index (SAI) formula means more students may qualify for a federal Pell Grant.

When is the FAFSA deadline?

Usually, the FAFSA becomes available starting October 1 before the applicable academic year. However, it’s important to keep an eye on studentaid.gov to know when it opens in case there are any delays or changes.

The deadline to submit the FAFSA is more open-ended. The official deadline for federal aid is June 30, but individual states, colleges and private organizations have different deadlines, often much earlier. Some of them award their aid on a first-come, first-served basis.

You can find your state's deadline here. Schools typically list their deadlines on their websites. You can also contact your school's financial aid office to ask. The general recommendation is to submit your FAFSA as soon as possible after it becomes available.

It's important to note that you'll have to fill out the FAFSA every year you want to be eligible for aid. That means you would fill out the FAFSA four times during a standard four-year course of study.

How to fill out the FAFSA

Students and their parents or guardians each contribute their information through the FAFSA. Independent students don't need to include their parent or guardian's information but may need to include spousal information if married. Determine your dependency status before you begin.

The FAFSA will request important information from both parties — student and parent or spouse — also known as "contributors" on the form. If your parents are divorced, determine which parent should be the contributor.

Create an account on studentaid.gov, where you will each create an Federal Student Aid (FSA) ID that serves as your electronic signature when you submit the FAFSA online. You can create FSA IDs well ahead of the FAFSA opening date.

Then gather your financial documents and the other information you'll need to be ready when the form becomes available. Note the FAFSA uses two years’ prior tax information:

• Social Security number or Alien Registration Number (if you are not a U.S. citizen)
• Record of child support
• Current savings, checking and cash balances
• Records of investments, businesses and farm assets (if applicable)
• Records of untaxed income
• Records of any other assets
• A list of schools you'll submit the FAFSA to

Some states have their own financial aid form, but many allow access to it through the federal FAFSA website. Look for your state form's link when you fill out the FAFSA.

How your financial aid offer is calculated

After you submit your FAFSA, it generates your Student Aid Index (SAI). Calculated using the information you provided on your FAFSA, your SAI is an index number ranging from –1,500 to 999,999. A negative SAI indicates that you have a higher financial need. Colleges will use your SAI to help determine how much financial support you may need and to create a financial aid offer.

What happens after you submit your FAFSA form?

If you're accepted to the colleges you applied to, those schools' financial aid offices will create financial aid offers for you. These offers will include the school’s cost of attendance (COA) as well any need-based grants, scholarships, work-study and federal student loans that are being offered.

Figuring out the price tag of a particular school isn't easy because every financial aid offer may look different. The best way to understand the actual net cost of a college is to subtract all "gift aid" (grants and scholarships) from the COA. This can make it easier to compare your options.

Once you've made a decision about which college to attend, you can decide which financial aid you choose to accept from your chosen school. You are not required to accept all of it. Even after you’ve accepted your offer, make sure to check with the financial aid office to see what other forms or documents are needed to secure your funding.

Consider all your options to pay for college

Paying for college doesn't have to be daunting. Citizens is here to help you navigate your student lending options for today and the future. Learn about our private loan options for undergraduate students.