What does it mean?
The FAFSA is the Free Application for Federal Student Aid. This is the financial aid form that students must complete to become eligible for any federal college financial aid programs, including federal student loans and work study. Many states used it to distribute state-based financial aid. The majority of colleges require it for any institutional awards as well.
Students can complete the form starting October 1 of their senior year in high school. You need to be careful that you complete the correct form since there are two forms available from October 1 to July 1. One is for students to use during the current year and the other is for the upcoming year.
How does it affect how much you pay for college?
When students complete the FAFSA, they are assigned an Expected Family Contribution (EFC). This is the amount of money the student and family are expected to pay for college. Most financial aid programs, government and college based, use the EFC to determine need and award financial aid. Therefore, the lower your EFC, the less you are expected to pay for college. However, keep in mind that most colleges are unable to meet 100% of student’s EFC.
Because of the way the EFC is calculated, most people aren’t likely to be able to make changes that will dramatically reduce their EFC. However, there are a few simple strategies that can make a difference if families implement them before January of their student’s sophomore year. That’s because this is the year’s tax return the FAFSA uses to calculate your EFC. If you wait until your students senior year, you will have far fewer options for minimizing your EFC.
Where can you learn more?