I know, FAFSA seems like this big, scary looming task. There are a ton of questions. You need tax records. And the deadline is approaching, but you keep hearing, “Do it early!” Earlier than what? I get it, FAFSA is intimidating. It’s a huge document that you can’t even read over before you began to complete it. You won’t even know how complicated or simple yours will be until you start. I’m still encouraging you to start! And to get the ball rolling, here’s a simple break down to help you understand the FAFSA.
Understanding the Basics
FAFSA is an acronym for Free Application for Federal Student Aid. Don’t get suckered by for-profit companies with deceiving URLs. The official FAFSA website is: FAFSA.ed.gov
Make sure your student creates an account and files a FAFSA for the “2015-2016” school year.
To re-enter the FAFSA and to make corrections you will need to create a password.
To sign and submit the FAFSA, both parent and student will need to create a 4-digit PIN. Keep your password and PIN in a safe place. You will need these to complete the FAFSA every year.
Understanding the Formula
FAFSA is the form used to assess a family’s EFC (Expected Family Contribution). The government uses a formula, that takes into consideration the following factors:
-Number of dependents in each household
-Yearly household income
-Number of family members who will be enrolled in college
-Value of available assets
-Student’s yearly income and assets
The SAR (Student Aid Report ) is a transcript of what was entered on the FAFSA and what the EFC is for the Student. Need-based scholarships will want to see the SAR to help them determine if a student is eligible for their funds.
You might have to provide proof of accuracy (your tax transcript) to the college or university prior to your student’s aid being released.
Understanding Types of Aid
Completing the FAFSA allows students and parents to access the following types of financial aid. Not every student will be eligible for grant money, but loans are offered, in different amounts, to everyone.
Pell Grant Money– This money is first-come-first-served. If it is awarded it is completely free and does not have to be repaid. Given that the family’s EFC stays the same throughout the course of one’s college career, this money will be made available, but the amount can vary.
Subsidized Student Loans– These are the best types of loans because the interest that accrues is paid by the federal government while the student pursues full-time study in college. This lowers the amount of debt that needs to be repaid after graduation.
UnSubsidized Student Loans – These are more traditional student loans. The interest will accrue during full-time study and students are expected to repay all principle and interest. The upside of federal loans are that they have lower interest rates than private student loans.
Parent Plus Loans – Keyword here, “Parent.” This loan offer is the only one that holds parents responsible for its repayment. The government will offer parents this option when the family qualifies for little or no grant money. The perk is that the interest rate is lower than private loans.
Work-Study – This form of aid is unique because it is not a loan, grant, or scholarship. Work-study is financial aid that students can earn through hours worked on-campus or at a local non-profit organization. Students will receive their aid in the form of paychecks in exchange for their service at their work-study job.
Do you still have lingering questions about the FAFSA? Write yours in the comments section below, and I’ll get back to you with an answer!