Financial aid. It’s a big deal for students seeking higher education.
Most individuals have probably heard about the Free Application for Federal Student Aid, commonly known as the FAFSA.
But what exactly is the FAFSA, and how does it help students receive federal and other financial aid?
Submitting the FAFSA allows students to be considered for the greatest amount of financial aid possible. It's also what many state agencies and universities use when determining the aid they will award. Types of aid, which include grants, scholarships, loans and work-study programs, come from sources such as federal funding, state funding, universities and private organizations.
Grants are considered “gift aid” because repayment is not required. A family’s financial situation and expected family contribution (EFC) determine this need-based gift. The EFC is determined when a student completes the FAFSA and the requirements vary based on the funding source — for example, federal, state or the university.
Scholarships are also considered "gift aid" and can come from governments, colleges, private organizations and other sources. Students can be awarded scholarships for many things including athletics, academics, subject interest and even volunteer work.
Loans are another type of aid but will require repayment with interest once the student is no longer considered at least a part-time student or is taking less than six credit hours. Federal loans are often safer, do not require a credit check and have a variety of repayment options. And in most cases, the interest rates are set lower than a financial institution or private lending company.
Work-study is part-time employment while in school. There are two types — the federal work-study program and university work-study. Federal work-study is based on a student’s financial need; many university work-study programs are non-need based.
The FAFSA 411
However, there is one date that is the same — and that is the date that applications can be sent in.
FAFSA applications can be sent as early as Oct. 1 for the following academic year. Universities often set a “priority consideration deadline” that is used when awarding limited funds. Applying early takes some of the stress out of the process, allowing ample time to gather and prepare documents, paperwork and numbers that are necessary for filing. Early completion also ensures that the applicant has the best chance to receive an optimal award package.
Who should file a FAFSA? The answer is every college-bound student, even students who do not believe they will be eligible for federal aid. Often, individuals underestimate eligibility and overestimate how much scholarship money they will receive. This is why it's important to file for federal aid as early as possible — even before applying for a particular university. Knowing eligibility might help in the decision-making process.
Even if the applicant doesn't qualify for federal grants, universities often use the form to determine grant and scholarship awards. The FAFSA is a must in order for students to receive any federal aid, such as a Pell Grant, a Supplemental Educational Opportunity Grant, a Direct Subsidized/Unsubsidized Loan, a Direct Parent PLUS Loan, and/or work-study.
The FAFSA may seem overwhelming, but don't let that hinder the process. Some of the questions may not be applicable to all families and many of the questions are easy to answer.
There have been some recent changes to the form, which prior applicants may notice.
First, the online data retrieval tool (DRT) has been updated for security purposes, and tax information will be hidden from view throughout the data transfer process. The data will still be pulled into the application, but applicants will no longer be able to amend the information.
Not all families will be able to use DRT. If parents are married and filing jointly, they will need to enter their earned income manually. When filing for the 2018-2019 academic year, the 2016 tax information will be used.
Second, a question for reporting IRA rollovers has been added to the form to determine whether untaxed funds were distributed. Those funds are included as income.
When in doubt, the FAFSA has a help and hints section for each question along with a FAFSA helpline. University financial aid offices are also available for answering questions as well and applicants can visit the federal student aid website to find help online.
Beyond grants and loans
Scholarships are another great way to cover the cost of higher education and there is an abundant amount of scholarships out there.
Besides universities, local organizations and businesses, foundations, clubs, chapters and more offer scholarships small and large.
Often times, a well-written essay is all one might need to be considered, while some scholarships are academic and interest-based and require grade transcripts and/or certain test scores such as the ACT or SAT. Also available are special scholarships based on nationality, class year (for instance, scholarships for high school juniors, seniors, etc.), community involvement, age groups, career fields, military involvement — the list goes on and on.
Most universities have a website page listing other scholarship sources, and there are many third-party websites that list hundreds of available scholarships as well.
When searching and applying for scholarships, be mindful of possible illegitimate awards. Some red flags to look for include solicitation of too much personal information, deposits or fees, limited time offers, free seminars, rewards without entries and guarantees.
Staying aware of these types of red flags will help protect applicants from scams.
Putting it all together
After everything is said and done, higher education doesn't have to create a large dent in the wallet. Utilizing and combining free resources such as grants and scholarships can make student loan amounts small or even non-existent in some cases.
Students can also lighten financial woes by finding university jobs that provide them with flexible schedules to work around their classes, and in many cases, degree-related work that will help them gain experience in their selected field.