Understanding FAFSA and How to Apply for Federal Financial Aid

By Staff Writer Published on December 22, 2017

Understanding Federal Financial Aid

As tuition costs have risen over the years, so has student financial aid. Millions of undergraduate and graduate students rely upon at least one form of federal aid in order to pay for their education.

What is FAFSA?

FAFSA stands for Free Application for Federal Student Aid. It is the application that all students must fill out in order to determine which types of aid they qualify for and for how much. Students across the United States can fill out the application annually to reflect their current situation and needs.

The form is used to calculate how much money you and your family can put toward your education according to your financial situation and other determining factors. The amount determined is called the Expected Family Contribution. Based on that amount, and other factors, your FAFSA will determine how much aid you are eligible for.

More than 1,300 employees work at the office of Federal Student Aid, which is a part of the U.S. Department of Education (DOE). They work together to manage the student financial assistance programs, as the Federal Student Aid office this is the country’s largest provider of financial aid.

What Types of Aid Does FAFSA Offer?

Federal funds are available for student use through many different programs, and over 13 million students per year receive some form of federal student aid each year. Most federal student aid breaks down into three categories.

  • Grants/scholarships: Grants typically do not have to be repaid unless the recipient prematurely withdraws from school. Grants are awarded based on financial need, and scholarships are based on merit.
  • Loans: Loans are considered borrowed money, which means recipients must pay back loans along with any accrued interest.
  • Work-Study: Work-studies are available at certain schools that participate in the federal program. They offer part-time employment through which students can earn money to pay for school.

Funds cover expenses related to your education such as tuition, room and board, fees, transportation, books, supplies, etc. Depending on your background and current life situation, you may qualify for several forms of aid.

What Do I Need to Apply?

Before starting the application, it’s important to gather a few documents that contain information you’ll need to fill out the form. If you are a dependent, include all of the information for your parents as well.

You will need:

  • Social security card/number
    • If you are not a U.S. Citizen, you will need your alien registration number.
  • Driver’s license number
  • Federal tax information. You can also use tax returns including IRS W-2 information.
    • If you are married, you’ll need your spouse’s tax information as well.
  • Records of any untaxed income.
    • This includes child support, veterans noneducation benefits interest income, etc.
  • General financial information.
    • Include information on cash, bank accounts, stocks, bonds, real estate (not including your residence), investments, etc.

Note: you do not need to, and should not, mail any of these documents to the student aid office.

How Do I Apply for FAFSA?

Students should submit their FAFSA as soon as they are able because federal aid is limited. You can find deadline information on the student aid government website.

The form can be filled out on the FAFSA website. If you have never applied before, you’ll want to obtain an FSA ID, this will allow you to sign the form electronically. If you complete this step before beginning the application, the process will be easier and more straightforward.

The FAFSA form includes many questions regarding your family situation, financial status (and that of your spouse and/or parents if applicable), the schools you may attend, etc. The questionnaire will also ask you to address your educational background and plans.

Between three days to three weeks after submitting the form, you will receive a Student Aid Report (SAR). Review this report to make sure you didn’t make any mistakes on your FAFSA. This is the form that schools will use to calculate your aid.

Your SAR will be shared with colleges you listed on the application as well as state higher education agencies in the states in which those colleges are located.