Figuring Out the FAFSA (Free Application for Federal Student Aid)

Posted: July 29, 2017 | Author: Tessa Esplin | Read Time: 5 minutes

Riddled with unfamiliar terms to the new college freshman, the FAFSA (Free Application for Federal Student Aid) form can feel a bit overwhelming. Whether you are looking for scholarships or grants, applying for work study, utilizing cheap, forgivable federal loans or trying to gain an admissions edge, the FAFSA is a good idea for everyone to fill out.

What is the FAFSA?

FAFSA is a government program under the U.S. Department of Education and is the largest provider of student financial aid in the nation. At the office of Federal Student Aid, our 1,200 employees help make college education possible for every dedicated mind by providing funds for students.

The Federal Student Aid office provides more than $150 billion in federal grants, loans, and work-study funds each year to more than 13 million students paying for college.

Financial aid from the federal government to help you pay for education expenses at an eligible college or career school. Grants, loans and work-study are types of federal student aid. You must complete the FAFSA to apply for this aid.

You should never think that just because your family is well off you won’t receive aid, because even if you don’t receive federal aid, many schools use FAFSA to determine grants and scholarships.

What Will You Need to Fill Out the FAFSA?

Before you get started, you’ll need to gather these six things:

1. Your Social Security Number
2. Your Alien Registration Number (if you’re not a U.S. citizen)
3. Your most recent federal income tax returns, W-2s, and other records of money earned
4. Bank statements and records of investments (if applicable)
5. Records of untaxed income (if applicable)
6. An FSA ID to sign in electronically

If you are considered a dependent student (you are either under 25 or unmarried and your parents claim you as a dependent on their taxes), you’ll need to provide information about your legal parent(s) on your FAFSA application. This will include their most recent tax statements, social security numbers, and any other records of money earned or investments.

What Do All the Terms Mean on the FAFSA?

Here is a breakdown of terms found on the FAFSA:

EFC

The Estimated Family Contribution isn’t always what you will be receiving from your family, but a formula called Federal Methodology helps find out what they should be able to provide. It takes their income and how many people are in the house attending college, and gives you a number that both the federal and state government will use to find out how much aid you will be granted.

SAR

The Student Aid Report summarizes the information you provided on the FAFSA, and indicates the EFC.

IRS Data Retrieval Tool

This tool allows applicants who have already filed their federal income tax returns to prefill answers to some questions on the FAFSA by transferring data from their federal income tax returns. This saves time and helps in the verification process*, if chosen.

Work Study

An on-campus job where paychecks are given in the form of work study funds; monies are given by the federal government to eligible and selected student applicants. Eligible student applicants are notified early in the year and have a choice about which campus jobs they want to apply for.

Direct Unsubsidized Loan

Loans given to eligible students who are responsible for interest. If students decide not to pay loan interest while in school, they can defer it and it will accrue and be capitalized. This type of loan is typically offered to everyone, no financial need is required, and goes into repayment after a grace period (6 months after you leave school).

Direct Subsidized Loan

Loans given to eligible students in which the US Department of Education pays the interest while you’re in school as a full-time student, and for 6 months after you leave school (grace period). Offered to students who demonstrate financial need. These loans go into repayment after the grace period.

Parent PLUS Loan

Parents of a dependant student can take out a loan to help cover educational expenses up to the cost of attendance minus all other financial assistance. The loan cannot be passed onto the student after graduation.

Grants

Money for school you don’t have to pay back, usually given by the federal and state government, individual universities, and private funds. Offered to students who demonstrate financial need, grants can be renewed each year if the student meets required criteria.

*Verification

Occasionally, those who file a FAFSA will see an asterisk (*) next to their EFC. This means they have been chosen for verification. The verification process requires students to verify the tax forms they used to file their FAFSA, along with some forms verifying their dependent or independent status. This can change the original aid amount granted to a student, but changes won’t be drastic.

Loan Deferment

If you are experiencing financial hardships while in repayment of federal loans, there is an option to defer your loan and to take a payment break. If the loan is subsidized, your remaining balance will be the same when you start making payments again, but if it is unsubsidized or a PLUS loan, interest will continue to build while deferred.

Why Should You Fill Out the FAFSA?

One of the most common reasons students don’t fill out the FAFSA is because they believe their parents make too much money, so they won’t qualify. This misconception can lead to costly consequences, including missed money and missed opportunity.

Fill out your FAFSA application as soon as it’s available, which is typically in early January. Money is given on a first come, first serve basis.

Filling out the FAFSA may be a headache, but graduating with less student debt is worth it. It’s free to sit down with your family and complete the form once a year and your future self will thank you for it.

For questions about your application, contact SUU's Financial Aid Office.

Tags: Blog Financial Aid High School Campus Resources Parents

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