Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Free Application for Federal Student Aid (FAFSA)

What it is:

The free application for federal student aid (FAFSA) is a form filled out by college or graduate students who are eligible for government-sponsored financial aid.

How it works (Example):

Every year, a college or graduate student seeking financial aid must complete the FAFSA form found on the US Department of Education's website, www.fafsa.ed.gov. The form must be completed before the college year begins to receive financial aid for the upcoming school year. For every school year a student needs financial aid they will are required to complete a FAFSA before set deadlines in order to be considered.

Students looking to complete the FAFSA should know the deadlines set by a) the federal government, a) the college's state and c) the colleges the student may attend. Federal and state deadlines can be found here

Should a student fail to complete the FAFSA by the deadlines, they will not be eligible to receive financial aid for the upcoming school year and may only apply for financial aid for the following school year.

The FAFSA may take several hours to complete for students or their parents (if student is a dependent). Information and documents that will be needed to complete the FAFSA may include Social Security numbers of the parent(s) and student, driver's license numbers, previous year's tax returns, bank and investment statements, W-2 forms, and child support information. 

After the student has submitted the FAFSA, the student's financial information will be reviewed by the federal and state government education departments. The student's financial need will then be assessed based on the financial information, and a student aid report (SAR) will be sent to the student's family as well as the potential colleges they may attend. The SAR outlines the financial assessment and shows the expected family contribution (EFC), or how much the family is expected to contribute towards the student's education.

The college's financial aid office will then take this information and send the student a financial aid package which shows how much grant, loan or other financial assistance the school can offer the student.

Why it Matters:

Completing the FAFSA can be rigorous and time consuming, but it is the only way a student may be eligible to receive government-sponsored financial aid for college tuition and other college expenses. Financial ai offers may include Pell Grants, Perkins and Stafford Loans and eligibility to work in the Federal Work Study Program (FWSP)

Not every student will receive financial aid If departments reviewing a student's FAFSA decide there is not a significant financial need, they may not offer the student grants or FWSP eligibility. However, even students who don't display financial need may be offered federal student loans to help pay for their education -- so they should still be encouraged to complete a FAFSA each college year.

[InvestingAnswers Features: 7 Simple Ways to Pay Off Any Size Student Loan, 5 Ways to Save on College Tuition]