Understanding college financial aid options can be overwhelming, especially if this is your first time exploring financial aid. Maybe you are a student facing the cost of college alone. Maybe you are a parent trying to help your child navigate the many options to pay for higher education. Understanding financial aid, its deadlines and all that goes with the process of covering costs for college can be enough to make your head spin. Here’s what you need to know about financial aid.
Getting started in the world of college financial aid
As with any of life’s big milestones, planning early for higher education expenses can help in the long run. Start saving well before college applications are even on your radar. Years before you or your student embark on a college adventure, you may consider education savings plans such as 529 plans. You can also set aside a few dollars each week to help your child(ren) build their savings.
High school counselors can be a great resource to ask questions and learn more about the process of college expenses and financial aid options. Never be afraid to reach out and seek assistance. They can help guide you on the path of paying for college.
Understanding the FAFSA and how it works
A first step in the process of college financial aid is completing the Free Application for Federal Student Aid (FAFSA®) form. The form captures your family’s financial situation in order to determine a student’s eligibility for available federal financial aid options, plus non-federal aid from your state or school, such as federal loans, federal work-study or school grants.
Although the form is lengthy with more than 100 questions, providing accurate information is important, as it determines your/your child’s eligibility for financial aid. Completing this first step helps students understand their financial future and other options for covering the costs of college.
Before each year of college, students should submit an updated FAFSA form to understand their eligibility for federal loans, grants or work-study options. In addition, there are many states and individual colleges or universities that use the submitted FAFSA information to award their own college financial aid options to students.
Upon submitting the FAFSA form, you’ll receive your Student Aid Report.
Reviewing your Student Aid Report
The Student Aid Report (SAR) is typically received within three days to three weeks upon submitting your FAFSA form. The SAR provides a glimpse at your eligibility for federal student financial aid with information such as your Expected Family Contribution (EFC), your estimated eligibility for federal student loans and Pell Grants, and if your application needs further verification. It will not provide the total financial aid you’ll receive. This is not a guarantee that aid will be awarded, but rather, provides an estimate of what your college or university may award you in financial aid.
Be sure to review the information in the SAR carefully. If you see any errors, do not fret! You can make corrections to your FAFSA form if needed for accuracy.
The SAR contains five key pieces of information including EFC, verification, data release number, loan summary and FAFSA changes.
- Expected Family Contribution (EFC)
Your EFC is a number that colleges and universities use to determine how much financial aid you’re eligible to receive. It is calculated based on a formula using the information you submitted in the FAFSA form.
If you see an asterisk next to your EFC, it means your SAR requires further verification. This process may be done at random to ensure the information on your FAFSA form is accurate. However, there are some schools that verify every student’s FAFSA information.
- Data Release Number (DRN)
A Data Release Number (DRN) is a four-digit number assigned to your application. It is helpful to have access to this number and to provide it when asking questions about your form.
- Loan summary
The loan summary on your SAR lists any of your outstanding federal student loans.
- FAFSA changes
You will have the chance to correct any information that was incorrect on your FAFSA form based on changes needed.
Upon being accepted to a college or university that is identified on your FAFSA form, the school will further calculate your eligible aid and send an award letter. This letter provides a clearer picture of the financial aid you’re eligible for at that particular school. The timing for receiving an award letter varies based on the school.
Avoid common FAFSA form mistakes when seeking college financial aid
While the process of paying for college can be overwhelming, avoiding these common mistakes when submitting your FAFSA form can help make the process go smoother
- Don’t be late! Financial aid can be limited and, at times, awarded on a first-come, first-served basis, such as federal work-study dollars, so don’t delay submitting your FAFSA form. While the federal deadline for completing the FAFSA for the 2022-2023 academic year may not be until 11:59 p.m. CST on June 30, 2023, it is advised to submit the form sooner rather than later. Application deadlines for state and institutional FAFSA deadlines may differ. These dates can be reviewed on the FAFSA website. By completing the form earlier, it also helps students and families prepare for what aid is coming and how much they need to make up the difference. Some schools have earlier deadlines and limited funds available. The FAFSA form opens on October 1.
- Accuracy of information. Entering correct information is critical for accurate reporting and financial aid eligibility results, including Social Security numbers and income (such as child support and assets like savings account balances). Inputting inaccurate information can hinder the eligibility for various aid. In turn, this could lead to missing out on available aid or the possibility that you’ll have to resubmit the form altogether for more accurate information.
- Identifying your school(s) of interest. Students can list up to 10 schools in the online version of FAFSA. It is recommended to identify schools on the form, even if there is only a slight chance you’ll attend. Changes can be made to this part of the form by logging into your FAFSA account. Understanding the financial aid you could receive might widen the pool of opportunities for schools you’d like to pursue if you know you can financially afford them.
- Don’t leave fields blank. While the form is lengthy featuring more than 100 questions, it is important to not leave too many fields empty as this can lead to miscalculating eligible financial aid or increase the likelihood of receiving a rejection requiring you to submit a new form. It is advised to enter “not applicable” in fields if needed. You can save the form and come back to it as often as needed (especially as you hunt down necessary details), so keep that in mind as you complete the form.
- Not completing the FAFSA yearly. The FAFSA form should be updated and submitted yearly for each school year as eligibility and individual circumstances may change. You may decide later down the road that it is necessary to use certain financial aid that you previously didn’t need.
- Not submitting the FAFSA form at all. Don’t be intimidated by the process. Be sure to complete the form even if you think you won’t be eligible based on your family’s income level. There is a perception that you might not qualify for financial aid or the process is too complex, so you choose to forgo the process. FAFSA isn’t just for loans but also institutional grants. Completing the form is free and you might be surprised at the financial aid offered.
Understanding college financial aid options and the FAFSA form, a big first step in the journey of paying for college, can be overwhelming. Financial aid can be applied toward tuition and fees as well as other room and board expenses. Students must achieve satisfactory academic progress to remain eligible for federal financial aid.
While the questions on the FAFSA form are plenty, don’t be afraid to ask questions about the overall process. Counselors at your school can assist with the process or direct you accordingly. Financial aid offices at specific higher education institutions are also a great resource for guidance. There is a help center on the FAFSA website, too.
There are many options to ensure higher education can be affordable, and attainable, for students. Check out our blog post on budgeting for college students to get ideas for other ways to save more money, reduce debt and make higher education possible.