FAFSA: What, When, How, And Tips To File and Submit!


What Is The FAFSA?

The FAFSA or Free Application for Federal Student Aid is a form you have to fill out to get financial aid from state and federal governments for college. If you’ll need loans to pay for college, I will share everything you need to know about the FAFSA.

Through the FAFSA, students across the country are granted millions in financial aid awards and scholarships to help them achieve their college goals.

Some colleges also use it to assess an individual’s eligibility for non-federal financial aid.

The FAFSA is known to be a lengthy application with many boxes that must be filled in. However, considering the potential for significant aid to help limit your student loans, it’s well worth the process. Don’t forget: it’s free. 

You must complete the FAFSA yearly to apply for aid. You can complete it for free via the web, mobile app, PDF, and paper versions. Arguably, the online application is the easiest, providing helpful pop-ups and tools to assist completion.

Am I Eligible For The FAFSA?

Many individuals are eligible for the FAFSA. At the minimum, you need to:

  • Be a United States citizen, U.S. permanent resident, or have an I-94 
  • Have a high-school diploma or GED
  • Enroll in an eligible degree or certificate program
  • Register with Selective Service
  • Have a Social Security number
  • Demonstrate financial need

The latter is hard to quantify precisely. There’s no set threshold on what defines financial need. 

Since the FAFSA is free, it’s worth applying to see if you can get financial aid. Remember: you miss 100% of the shots you don’t take.

Can Graduate Students Apply?

Yes! Graduate and professional students meet all of the minimum eligibility requirements and are thus able to apply. However, federal aid for graduate students usually consists of unsubsidized federal loans.

The biggest difference between filing as undergrad vs. graduate is that most graduate students file as independent. 

Independent vs. Dependent Applicants

Filing as an independent can help award more financial aid since your parent’s assets aren’t considered in calculations. However, the rules governing independence status are incredibly tight, designed to prevent people from finessing the system. 

To be considered independent, you must satisfy one or more of the following:

  • You’re 24 years old by the end of the year
  • You’re married
  • You have children or legal dependents
  • You’re studying for high-level education; graduate or doctoral programs
  • You’re in the military or are a veteran
  • You’re an orphan
  • A legal court has ruled or found the student to be an emancipated minor

There are other considerations as well which you can find on the student aid gov website.

For the most part, the FAFSA application remains the same for both independent and dependent applicants. Though, independents don’t have to note parental income. 

Should I Fill Out The FAFSA?

Yes. There is no downside.

The FAFSA is literally a free application for college students to get aid to pay for college. Let me repeat this. You put in an hour of your time, and you could get a $1,000 financial aid award. That’s a pretty good return on investment

After filing the FAFSA, even if you aren’t eligible for aid, you might still be able to get federal loans. The nice thing about federal loans is that you don’t have to repay them until after you graduate. Furthermore, you could get subsidized federal loans, which could help save you a lot of money down the road. 

How Does The FAFSA Work?

The FAFSA application takes your family’s income, assets, and other details. It then spits out one number called the Expected Family Contribution (EFC). The EFC is the number that the federal government and school use to gauge how much your family should pay for college.

The EFC formula is very complex and takes into account many factors including the state in which you live.

How the FAFSA relates to calculating the EFC

Knowing how the system works could save you thousands of dollars. Why?

The algorithm they use to calculate your EFC splits up parental and student asset contributions significantly. 20% of student’s assets are factored into the EFC, whereas only 12% of parents’ are factored

For example, if a family has $10,000 in a bank account under their student’s name and nothing else, then the FAFSA suggests the family can pay $2,000 for college. However, $10,000 under the parent’s name, would drop the EFC to $1,200.

This may create an incentive to move student assets to parent accounts.

However, you have to be very honest, careful, and factually accurate when making any moves like this. Doing anything to purposefully manipulate or shelter income from the government is fraud and illegal. And yes, there can be a hefty penalty.

What Is A FAFSA Asset?

Assets, according to the FAFSA, include:

  • Money in cash, savings, and checking accounts, CDs
  • Businesses
  • Investment farms
  • Other investments, such as real estate (other than the home in which you live), UGMA and UTMA accounts for which you are the owner, stocks, bonds, certificates of deposit, etc.

Assets do NOT include:

  • The home in which you live
  • UGMA and UTMA accounts for which you are the custodian, but not the owner
  • The value of life insurance
  • Retirement plans (401k plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.)

Wait, So Can I Earn/Save Any Money Without Hurting My EFC?


Income/asset protection allowance allows both the student and the parents to earn income and save money towards college and other expenses. In short, the FAFSA won’t count every penny you earn against you. 

If you know how the system works, then you can play it to your advantage. But as always, make sure you stay within the bounds of the law!

Income Protection Allowance

Depending on the number of people and college students in your family’s household and your filing status as independent vs. dependent, your family can earn different amounts of minimum income before it starts to affect your financial aid. For example, filing as a dependent student with no siblings and two parents would protect up to $23,760 of my family’s total income. 

All dependent students automatically have $6,840 in protection against student income. Thus, if a student made less than that, there would be no effect on the EFC. 

The table below shows the protection for dependent students. However, since there are so many more factors involved, the government has a document covering all protection allowances

Income protection allowance used in 2020-2021 EFC calculations

The key takeaway from this section is that while income protection allowance exists, it’s not worth trying to meld your income to fit the minimum protection requirements. 

However, unlike income protection, you can use asset protection allowance to your advantage. It’s also far easier to minimize your EFC through your assets.

Asset Protection Allowance

This version of protection applies to the assets as opposed to income. Asset protection allowance behaves in the same fashion as income protection does. However, asset protection varies by the number of parents and the age of the older parent.

For instance, if a dependent student has two parents, and the older parent is 45, their parents can have up to $5,500 worth of assets without penalty. 

As we mentioned earlier, student and parent asset contributions to the EFC differ significantly (20% and 12% respectively). Thus, taking the asset protection allowance and differing contribution weights into consideration, it’s best when parents are the owners of assets.

What Are The FAFSA Deadlines?

FAFSA deadlines vary by school and state. Generally speaking, the FAFSA opens up on October 1 and closes around June 30. 

Make sure to check your school’s deadlines to see the earliest date you can apply. 

What Is Renewal FAFSA?

Every year, you must submit the FAFSA to be considered for financial aid. Renewal FAFSA is a way to save time and effort upon reapplication.

The Renewal FAFSA takes a lot of information from the previous year’s FAFSA, carrying it over. Thus, you only need to update the financial information. 

What Do I Need To Fill Out The FAFSA?

Regardless of whether you are filing as dependent or independent, there are documents needed to fill out the FAFSA. Dependent students will also need to have almost all the below information regarding their parents.

  • Time: be ready to sit down for about 30 min to an hour
  • Social Security Number (SSN)
  • Tax return documents
  • W2 forms
  • Bank statements
  • Investment records (i.e., from Robinhood or WeBull)
  • Records of untaxed income (i.e., child support or interest income)
  • Schools you’re applying to or the one you attend

What Are FAFSA Tips I Should Remember?

Apply Early!

Some schools have limited financial aid, and some federal grants award on a first-come-first-serve. It’s not worth the risk of delaying your application to the last minute.

Also, by submitting early, you can learn about your financial aid award sooner. Consequently, this allows you to dispute your award if necessary.

An indirect benefit is that by finishing the FAFSA, you can stop stressing about it and continue focusing on school. Personally, knowing I have to complete the application is something that drives me to do it as soon as possible. Less stuff to stress about!

Be Accurate And Careful!

This sounds like obvious advice, but be mindful that there are over 100 boxes to fill out. A single mistake could lead to delays in your financial aid award and cause other, unintended problems.

Always check your numbers and make sure things make sense. 

For example, when entering total familial gross income, I noticed that my parent’s salaries didn’t add up anywhere close. I quickly realized that I had made a mistake inputting the wages, which would have caused some systematic mishaps. 

Be Thoughtful About Where Your Assets Live!

Remember that assets have different weights depending if they’re under the student or parent. Furthermore, there are ways to place assets into “non-asset” categories, further minimizing impacts. Here’s a checklist you should go through:

  • Max out retirement contributions; does not influence EFC
  • Equity investments on primary homes don’t count as assets

To delve deeper into the latter, say your parents have a 250k mortgage for their home. If your parents hold 50k in cash, then your EFC is expected to rise by about 5k. However, if your parents use that 50k towards the mortgage, then there would be no effect on your EFC.

But that doesn’t necessarily mean all parents should just pay off their houses early in order to show lower assets. First, assets don’t hurt that much. Secondly, you are losing liquidity that you might need in case of an emergency. Lastly, not all schools exclude home equity in their calculations for financial aid.

Note What Assets The FAFSA Counts And Doesn’t Count

It’s impossible to list out all the ways to maximize your financial aid award, but it’s possible to know what assets aren’t counted in the FAFSA formula. Like hinted above, retirement plans and home value don’t count. 

  • Family-owned small business
  • Retirement plans
  • Life insurance policies
  • The home you live in

Though, remember that the CSS Profile does count some FAFSA non-assets as assets (such as the net worth of your family’s home and small businesses). 

I think its safest to maximize retirement plan contributions and pay off your home if you are really concerned about it.  

Do You Have To Pay Back The FAFSA? Are There FAFSA Loans?

The FAFSA helps your eligibility for different types of financial aid. 

  • Grants (i.e., Pell Grant, Federal Supplemental Educational Opportunity Grants)
  • Scholarships
  • Work-study jobs
  • Loans (must be repaid)

Thus, the only financial aid that must be repaid is federal loans. These loans come in two types: subsidized vs. unsubsidized. 

Subsidized vs. Unsubsidized Loans

The difference between these two loans is pretty simple.

Subsidized loans are awarded based on financial need. The interest accrued on them through college is paid by the government, effectively negating the growth.

However, the interest on unsubsidized loans accrues and isn’t paid by the government.

The simple difference between the two can either mean saving or paying thousands of dollars.

How Can I Contact FAFSA Customer Service?

The FAFSA offers many contact methods, including phone calls, email, and live chat.

Their calling hours (ET) include:

  • Weekdays 8am – 11pm 
  • Weekends 11am – 5pm

You can give them a ring at 1-800-433-3243.

Frequently Asked Questions

Should I apply for aid if I think my family makes too much money?

Yes. Absolutely. The FAFSA is completely free and won’t hurt your credit score nor your academic eligibility. There’s nothing to lose by applying.

You miss 100% of the shots you don’t take.

I was incarcerated. Am I eligible for financial aid?

Incarceration limitations are complex and are expanded deeply on the FAFSA website

In short, if you’re arrested for drug-related or sexual offenses, then your eligibility will be permanently limited. For other cases, once you are released, most eligibility limitations end.

However, even if you were incarcerated, fill out the FAFSA anyway. Some grants might still be applicable. After all, it’s free and can’t hurt you in any way. 

Do my work-study earnings affect my eligibility for future financial aid?

No. Work-study earnings are removed from calculations involved in determining your eligibility. There is a separate box in the FAFSA application asking for your work-study earnings. Make sure to answer this prompt accurately.

Oh no! I made a mistake on my FAFSA. Can I still fix it after submitting?

Yes. If there are significant changes, such as an increase in the number of family members, you need to update your FAFSA accordingly. 

The only field you cannot change is your Social Security number. Make sure you have entered it appropriately!