How Does the FAFSA Work?
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By Mark Kantrowitz

October 13, 2020

The FAFSA is a financial aid application form provided by the U.S. Department of Education. Before you apply for financial aid for college, it is Important to understand how the FAFSA works.

What Is the FAFSA?

The FAFSA is the Free Application for Federal Student Aid. It is used to apply for financial aid from the state government and most colleges and universities, in addition to financial aid from the federal government.

Financial aid includes grants and scholarships, student employment and federal student loans

A handful of mostly private colleges require a supplemental form, the CSS Profile, to apply for their own financial aid funds. These colleges must still use the FAFSA for federal and state financial aid.

The FAFSA must be filed every year, since it covers only one year of financial aid funds. 

Who Can File the FAFSA?

Undergraduate, graduate and professional students may file the FAFSA to apply for financial aid to pay for postsecondary education.

Eligibility depends on the student’s citizenship and ability to benefit from a college education. Students must have a Social Security Number (U.S. Citizens) or Alien Registration Number (permanent residents). 

Eligible students must have a high school diploma or the equivalent. Male students must have registered with Selective Service. Financial aid eligibility may be limited for students with drug convictions and for incarcerated students. 

Federal student aid is limited to eligible colleges and universities that have a Title IV institution code, also known as a Federal School Code. These colleges and universities are accredited and have signed a program participation agreement with the U.S. Department of Education. 

Eligible colleges and universities include 4-year, 2-year and less-than-2-year institutions that offer degree or certificate programs. These include Associate’s degrees and certificates, not just Bachelor’s degrees. Eligible institutions include public, private non-profit and private for-profit (proprietary) colleges and universities. 

At least one eligible institution must be listed on the FAFSA.  

Some forms of financial aid require the student to be enrolled on at least a half-time basis. The student must maintain satisfactory academic progress.

When Is the FAFSA Due?

FAFSA application season begins on October 1 for the academic year that begins the following fall and ends at the end of the academic year or June 30, whichever comes sooner. Thus, students have 21 months to file the FAFSA, but it is better to file the FAFSA sooner, before financial aid funds run out.

Several states have very early FAFSA deadlines for state grants and other state financial aid funds. More than a dozen states award their financial aid on a first-come, first-served basis. At least ten states have deadlines in December, January, February or March.

Some colleges and universities have even earlier deadlines. Some colleges have two financial aid deadlines, a priority deadline and a regular deadline. 

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What to Do Before You File the FAFSA

The student and parent should each obtain an FSA ID before filing the FAFSA, so they can sign the online FAFSA electronically. Parental information is not required for students who are considered to be independent students.

File your federal income tax returns at least three weeks before filing the FAFSA (eight weeks if filing tax returns on paper) to enable use of the IRS Data Retrieval Tool. The IRS Data Retrieval Tool transfers income and tax information from your federal income tax returns into the FAFSA.

Gather other documents you will need to file the FAFSA, such as your Social Security Card, W-2s and 1099s, and bank and brokerage account statements.

How Do You File the FAFSA?

There are three ways to file the FAFSA:

  • Online at fafsa.gov
  • Using the myStudentAid FAFSA app, which comes in Apple and Android versions
  • Using a paper version of the FAFSA, which you can obtain by calling 1-800-4-FED-AID (1-800-433-3243)

More than 99% of applicants file the FAFSA online using the FAFSA web site.

There may be two versions of the FAFSA available, one for the current academic year and one for the upcoming academic year. Make sure you file the FAFSA for the right year. 

There are eight steps to the FAFSA:

  1. Student Demographic Questions
  2. School Selection
  3. Dependency Status
  4. Parent Demographic Questions
  5. Parent Financial Information
  6. Student Financial Information
  7. Sign and Submit
  8. Confirmation

Print or save a copy of the confirmation page, as it provides proof of the date and time you submitted the FAFSA.

A few days to a few weeks after you file the FAFSA, you will receive a student aid report (SAR) that includes your expected family contribution (EFC). Review the SAR and correct any errors.

The EFC is used to calculate your financial need, which affects the amount of financial aid you will receive. The EFC is not the same as the amount you will pay or borrow for college, which is the net price.

Your FAFSA may be selected for verification, especially if you did not use the IRS Data Retrieval Tool. Respond to the verification requests promptly, as procrastination can lead to delays in the receipt of financial aid. 

The college financial aid office may send you a financial aid award letter that lists the types and amounts of financial aid you will receive. 

If your ability to pay for college is affected by special circumstances, such as changes in income since the prior-prior year or differences between your family’s financial situation and typical families, appeal for more financial aid.

For more information about the FAFSA, see our Complete Guide to Financial Aid and the FAFSA.

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