Updated November 9, 2015.
This free application can lead you to a wealth of financial aid, and filling out the FAFSA is now easier than ever.
More than 85% of undergraduate students receive some form of financial aid. To get your share of most of that aid, you must first file the federal government’s Free Application for Federal Student Aid, better known as the FAFSA. It determines eligibility for all federal aid programs, from Pell Grants to student loans. It determines eligibility for most state and collegiate-based aid programs. And, it even indirectly determines eligibility for some merit-based aid, since many schools reserve their own (limited) scholarships for students who don’t qualify for need-based funds.
How much you’re eligible for will depend on the financial and personal information you provide on the FAFSA. Federal processors evaluate the data, determine your family’s ability to pay, and then tell you how much you and your family should contribute toward college, aka your Expected Family Contribution.
The form has been simplified greatly in recent years, but it can be still be a little intimidating; however, it’s well worth the effort to fill it out and easy to do if you take it step-by-step. And don’t forget, it’s free to file, so you have nothing to lose.
You can pick up a FAFSA in your guidance office by mid-November or online at fafsa.ed.gov; right now, you can’t file it until January 1 of the year in which you plan to start college (that’s January 1, 2016, for those who hope to start college in September 2016), but FYI that's going to change soon, with FAFSA filing for 2017 starting in October 2016. A little confusing at first glance, yes, but this change should more closely align the financial aid process with the admission process, which enables students and families to make better decisions overall (and sooner). In any case, you should file as soon after the filing date as you can, since a great deal of financial aid is delivered on a first come, first served basis. Money is awarded until it runs out; late filers might get nothing.
Unfortunately, many students miss out on financial aid opportunities because they fail to meet the filing deadlines. The best financial aid awards (those heavy on grants and lighter on loans) are generally given to the earliest applicants.
Gather your papers
To make sure you’re one of the early birds who receives the most aid possible, work with your parents to start collecting the necessary financial records. To get organized, you might try putting your paperwork and information into two folders:
Folder 1: Income and Expense Information
Again, right now all income and expense data come from the prior year (2015 for the 2016/2017 award year), but here's another FYI: that's also going to change soon, with families using "prior-prior" year data—aka data from two years ago—to align with the new earlier FAFSA submission dates. But that's then. This is now!
Here’s the financial information you’ll need to collect:
- Taxable income for both parents and student, including wages, pensions, capital gains, interest, dividends, annuities, unemployment compensation, alimony received, rent collected, and business income.
- Non-taxable income for both parents and student, including workers’ compensation, welfare benefits (excluding food stamps), housing and food allowances, child support received, untaxed Social Security benefits, untaxed income from pensions and annuities, veterans’ non-education benefits, tax-exempt interest income, deductible payments made to a retirement plan (such as an IRA or Keogh), and earned income credit.
- Expenses such as U.S. income taxes paid and child support paid.
Folder 2: Asset Information
You must report the net worth of all these assets as of the date you sign the form, so before you record any totals, be sure your family pays off all its bills and pays down any consumer debt, like credit card balances.
- The value of cash, savings, and checking accounts held under the names of parents and the student.
- Net worth of all the parents’ and student’s investments (except for retirement plans), including stocks, bonds, CDs, money market funds, mutual funds, commodities, trust funds, education IRAs, state-based college savings plans (except pre-paid tuition plans), and real estate holdings (rental property and second homes). You need not include the equity in your family’s primary residence.
- The net worth of any family business and/or farm (excluding farms that are principal residences).
In completing the FAFSA, be as accurate as you can. Mistakes will cause your application to be returned. These errors may include giving monthly amounts instead of yearly amounts, writing in the margins, checking the ovals (rather than filling them in).
If a question or two seems confusing, call the federal student aid hotline at 800-4-FED-AID, or ask a guidance counselor or financial aid administrator. Many colleges now have toll-free numbers for exactly that purpose. If a question still proves troublesome, explain your problem in a letter to the school’s financial aid administrator. Note: you’re less likely to make mistakes if you apply online. FAFSA on the Web includes worksheets, online help, detailed instructions, and a built-in editing tool that helps prevent errors and reduces rejections. You can also get an idea of what the process entails, plus an estimated aid package, using the FAFSA4caster.
Once you’ve gathered all of your financial data, the FAFSA is pretty straightforward. It should take about an hour to fill in. Answer each question unless the FAFSA specifically tells you it’s a step you can skip.
Let’s review each section:
Student demographics and eligibility
These questions cover your basic personal information (name, e-mail address, permanent address, Social Security number, date of birth, permanent phone number, citizenship status, marital status, and optional driver’s license number), plus some other basics, such as:
- The student’s educational plans and high school
- The highest level of education completed by the student’s mother and father
- The student’s state of legal residence
- The types of aid for which he or she wants to be considered (work-study) (To maximize your chances for receiving aid, you should indicate a willingness to accept loans and work-study. You can always change your mind later.)
- Registration for the Selective Service (military) (If you’re male, age 18–25, you may use this section to register. In most instances, male students must be registered to receive federal student aid.)
- Drug offenses (If you’ve never been convicted of a drug offense, simply check the “No” box and move on. If, however, you do have a past drug-related conviction, you will not be considered for federal aid; however, you may still receive state or institutional aid, so it's still worth filing the FAFSA.)
This is the part where you add the colleges (up to 10) you'd like to send your FAFSA results to. Good news: you fill out the FAFSA only once regardless of how many colleges you’re considering! You'll be asked if you intend to live on campus, off campus, or with parents too; this helps aid administrators better determine their cost of attendance.
To make sure your data goes to the correct school, make sure you know each school’s federal school code. Most publish their FAFSA codes online and with their application for your reference, but you can also search for and add them manually through the FAFSA online.
These questions address the student’s dependency status. Students who meet one of these criteria may be considered an “independent” student and your eligibility for financial aid will be determined without consideration of your parents’ income and assets.
You’re independent if you are:
- 24 years old by December 31 of the award year
- A graduate or professional student during the award year
- Married (or separated)
- A parent or have other dependents who currently receive more than half their support from you
- An orphan or a ward of the court
- A veteran of the U.S. Armed Forces
Schools may also determine dependent status based on unique living circumstances, such as being raised by grandparents. Ask your school if you are unsure of your own “dependency” status.
Parent demographic information
In this section dependent students must provide information about their parents’ marital status, Social Security numbers, number of household members (including the number who will be enrolled in college), and more. Each of these elements affects the calculation for your Expected Family Contribution (EFC), so answer the questions carefully. For example:
- Older parents are expected to contribute less since they are closer to retirement.
- Parental contribution is divided by the number of students in college.
- If the parents are divorced or separated, include only the financial data on the parent with whom the student lives for the greater part of the 12 months preceding the date of the application. If that parent has remarried, the student must include that stepparent’s income and asset data as well. Note: some colleges request information on the “other” natural parent and may expect a contribution from that parent as well.
Parent tax information
These questions ask you about your parents’ tax filing status. Again, try to complete tax returns before you tackle the FAFSA. You can also transfer filed tax information online, making the FAFSA much easier to complete!
Parent financial information
The FAFSA then rolls into the key determinants of your aid as a dependent student: parental income and assets. The EFC calculation is based primarily on the family’s adjusted gross income (AGI); however, it is designed to reflect the financial strength of the household, so it counts untaxed income as well. Be exact in your numbers—and above all else, truthful. The FAFSA now collects your parents’ Social Security numbers to make it easier for the Department of Education to verify income reported on the FAFSA with the Internal Revenue Service (IRS).
Many people think the “net worth” of their assets will eliminate them from aid consideration but this is not necessarily the case. Remember, the FAFSA takes many financial considerations into account, and parents may have sheltered assets. It behooves every family to file!
Student tax information
Now it's time to talk about your tax filing status—which tax return you will file and whether you have already completed this tax return. If at all possible, complete your return before you tackle this part of the FAFSA. Much of the information is the same, such as your adjusted gross income, U.S. income tax paid, and number of exemptions.
Student financial information
Some of these questions cover student income and assets, and dependent students may find they are not relevant. In this case, enter “0.” Keep in mind an unanswered question can get your FAFSA returned with a “request for additional information.’’ This will hold up the processing of your form and could jeopardize the amount of funding you will receive.
Sign and submit
Finally, students (and parents) must sign and date the form. In doing so, they certify that (if requested) they will provide information (for example, a copy of their tax return) to verify any recorded data. They also declare that they are not in default on any federal student loans and promise to use any federal student aid for educational purposes only.
If the form was completed by someone outside your immediate family, that person must sign and date the form as well. There is nothing wrong with getting help with your FAFSA; however, the Department of Education wants to know—that way it can clear up innocent misunderstandings, as well as detect patterns of fraud.
Note: never mail your tax return with your FAFSA. Processing centers are only interested in the financial data you provide on your FAFSA. They have paper shredders that destroy any income tax returns included in the envelope. Also, don’t mail your tax return to a college or university unless requested.
What happens next?
Within two weeks of submitting the FAFSA, students/families will receive a multi-part document called a Student Aid Report (SAR). If you recorded an e-mail address on your paper FAFSA or you filed your FAFSA online, you will receive an e-mail that links you to your SAR online.
The SAR lists all the information you included on your aid application and tells you how much money you’ll be expected to contribute to college costs. This is your EFC (Expected Family Contribution). The information will also be sent electronically to the schools you designate and your home state’s scholarship agency (as well as the state agency of every school on your list).
Review your SAR very carefully. If there are any mistakes (for instance, if a $500 has become a $5,000) send the correction back to the processor immediately. It is now up to the college financial aid administrator to take all this information, determine your eligibility for student aid, and develop your financial aid package.
Have a question about filing the FAFSA?
It's important to ask questions about your FAFSA as you have them—it's is a complicated document, and you should certainly clear up any confusion you may have to ensure you fill it out correctly.
Don't have a financial advisor on retainer? Start by asking the financial aid services office at the school(s) you or your student is planning to attend (or already attending). They are there to help! You can also pose your questions to FAFSA directly here.