FAFSA, Your Income, & You

Trisha Miller
Reading Time: 5 minutes

You’re thinking about going to college for the first time or it’s been a few years and you’d like to go back to school. Your first step towards becoming a graduate is to select a school and apply for financial aid. In the US there is one universal form that covers all potential students: the FAFSA. Let’s take a look at what the FAFSA is, how to qualify for aid, and what benefits you might be able to take advantage of.

What is the FAFSA?

The Free Application for Federal Student Aid is a form that students use to apply for financial aid. If the student qualifies, they may be eligible for grants, work-study programs, and student loans.

How Do I Qualify?

Any individual can apply for financial aid. It doesn’t matter if you’re a first time full-time or returning part-time student, degree seeking or not — you may qualify for some form of aid. Each student is examined according to their income status, dependent status, and current school enrollment status. This means that if you are living with your parents, working a part-time job, and are planning to go to school full-time you will receive different aid than someone working full-time, living alone, and going to school part-time. Every situation is unique. As such, it’s important to always file for the FAFSA before thinking about other types of aid. If you don’t, who knows what you could be missing out on.

What Info Do I Need to Provide?

When sitting down to file your FAFSA, make sure that you have all the appropriate filing information ready. Since the FAFSA calculates your need based on income, dependency status, and current enrollment status, you’ll need to obtain pertinent information related to each of these areas and have it ready. First, you’ll need to have tax information ready, usually from the previous year that you filed. If any other years are needed, the FAFSA will let you know. It’s important to have your tax forms right in front of you because the FAFSA will ask for specific figures that can only be found on certain lines of your tax return. These numbers should be entered exactly as they show on your form. If you did not make enough money to file your taxes, you can fill in that information accordingly.

Next, the form will enquire about your dependency status. If you are living at home and are financially dependent on your parents in some way, you may need ask your parents to file their tax information as well. As a rule of thumb, individuals under the age of 24 are considered dependent unless other certain criteria are met. Yes, this does apply even if you are living independently from your parents. However, these criteria vary slightly year over year.

You may be considered independent if you are married, have enrolled in the US armed forces, are (or were) an emancipated minor, or have children who are dependent upon you.

Lastly, you will be asked which school you are planning on attending and if you will be taking classes part-time or full-time. The form has a record of every school eligible for financial aid. Simply begin typing your school and it will pop up on the list. Then, you can select the rate at which you’d like to take classes.

What Does Income Have to Do With It?

The FAFSA is meant for those who are unable to pay for college themselves. If you or your parents make enough money to pay for classes without having to take out loans, the form will confirm this information and you may be ineligible for aid. It’s important to note the difference between income versus debt. You and/or your parents might have a decent annual income, but most of those assets could be tied up in debts. For example, if you are dependent on your parents who provide for their children and they are homeowners, they may not have a lot of free flowing cash to spend on schooling. Although their income looks fairly high, their expenses match their annual income.

In some situations, this may affect your ability to qualify for student loans. The FAFSA takes a look at your income and your parent’s income as a whole. Unfortunately, they won’t see the entire picture of monthly expenses for the applicant and their parents. The lump sum annual income number is what matters on this form. As such, the FAFSA may return with results that say you are unable to receive the full amount of aid due to you or your parent’s financial situation.

Again, every situation is different and the requirements may change year over year. This is why it is always a good idea to file no matter what. Situations that change over time may qualify for additional benefits that weren’t available at an earlier application date. In addition, many students look into grants, scholarships, and work-study programs to make up the difference.

What Can I Qualify For?

Grants: These are gifted sums of money that you do not have to pay back. The most popular grant, gifted through the FAFSA, is the Pell Grant. The Pell Grant is usually awarded to undergraduate students who have not received their first degree. In some cases it can be awarded to graduate students as well, but this is a bit more rare. Circumstantially, students may be eligible for up to 12 semesters of the Pell Grant.

Loans: Students may qualify for two types of loans or a combination of both. These loans fall under two categories: subsidized and unsubsidized. Subsidized loans are advantageous to students because all interest accrued while in school is paid for by the government. When you are done with school, interest on your payments will take effect going forward. Unsubsidized loans do amass interest while the student attends school. The student will be responsible for paying back this interest after they have graduated or left school.

Work-Study: In addition to calculating financial aid, the FAFSA determines eligibility for work-study programs. These programs allow for student to make money while they are in school. Commonly these earnings are used towards a student’s cost of education. These programs are also beneficial to students because individuals can be placed into jobs that align with their degree, giving them experience before they ever hit the workforce4.

What Happens When I’m Done?

The school that you selected on your form will be contacted and informed of your student aid eligibility status. If you qualify for aid, the funds will be distributed through your school and down to you. You will then be able to select exactly how much aid is necessary for you to attend school.

Completing the FAFSA is not only essential to many students who wish to pay for college, but it can also provide additional benefits that you may have otherwise missed. Even if you may think you won’t be eligible for any student loans, it’s still important to apply. Grants and work-study programs can negate a large portion of the cost of attending school. Once you have completed your FAFSA, congratulations! You’ve taken the first step towards going to school and earning your degree.

For more tips and guides, visit our student finance learning center.

Image sourcehttps://pixabay.com/

Keep Learning


Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on reddit
Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on reddit
Want a FREE Credit Evaluation from Credit Saint?

A $19.95 Value, FREE!

This site is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.com. This compensation may impact how and where links appear on this site.  This site does not include all financial companies or all available financial offers.
Want a FREE Credit Evaluation ($19.95 value)?
Subscribe & get a free credit evaluation from our #1 trusted partner, Credit Saint!
Pop Up