Here's What You Need to Do to Get More Financial Aid for College. It Could Hurt Your Finances if You Don't
Can you pinpoint one of the most important ways to qualify for financial aid for college? Here's one thing you can do, starting today!
Today, the Free Application for Federal Student Aid (FAFSA) opens. If you have a high school senior at home and plan to help him or her pay for college, you need to file the FAFSA. Even if you can fill an Olympic-sized swimming pool with all of your $100 bills, you should file the FAFSA. (Read: Even if you think you make too much money, you should file the FAFSA.)
Despite recurring advice from admission counselors and school officials, many families don't heed the filing-the-FAFSA-advice. Among fall 2009 ninth-graders who graduated from high school, approximately 65% of students reported completing a FAFSA and 24% did not file, according to the National Center for Education Statistics (NCES).
Further statistics from the survey showed that of the ninth graders who graduated from high school and reported not completing a FAFSA:
- 33% thought college would be affordable for them without financial aid.
- 32% thought they might not qualify for financial aid.
- 28% reported that they didn't want to take on debt.
- 23% didn't have enough information to complete a FAFSA.
- 22% didn't plan to continue their education after high school.
- 15% didn't know they had the option to complete a FAFSA.
- 9% thought the FAFSA forms were too much work or took too much time.
Of this group, 62% reported that they thought their family’s income was too high to file the FAFSA.
The fact of the matter is that everyone should file, no matter how high their income. We'll go over the reasons why in this article.
Why Should You File the FAFSA?
Let's take a look at the reasons you should file the FAFSA.
Reason 1: Your child can qualify for federal aid.
Many people believe that they can only qualify for federal student loans, which isn't the case. The U.S. Department of Education uses the FAFSA to determine your child's eligibility for federal student aid, including grants and work-study. Federal work-study is a way you can earn money while your child works a part-time on-campus job.
However, if you want your child to qualify for federal student loans, you do need to file the FAFSA. It's to your child's advantage to take out federal loans over private loans, which have higher interest rates and lack the consumer protections that federal student loans include. Federal student loans also have forgiveness options that private student loans don't offer.
Unfortunately, more than half of all students who took out private education loans were eligible to borrow more from the federal government than actually did. A full 30% of students did not use government-backed loans at all, according to American Banker.
Reason 2: You might need to file for other aid.
You may need to file in order to qualify for state, college and university grants. Sometimes, you might need to file it to qualify for private scholarships as well.
Colleges and universities use their own matrices to determine how much students will receive based on need. You never know their thresholds for aid, so file the FAFSA. You might be pleasantly surprised by the amount of aid you receive.
Reason 3: Financial situations change.
We saw it firsthand: The national unemployment rate hit 14.9% in April 2020, the highest rate seen since the federal government started tracking the data point in 1948. It led to an estimated 20.5 million Americans being temporarily or permanently out of work.
While we may not see numbers quite like that again, what happens if you experience a change in income? You’ll be glad you filed the FAFSA. You can always appeal if you file with a certain income level and it changes later.
Reason 4: You can gather just a few materials to fill it out.
It's really not hard and doesn't take that long to file the FAFSA — promise. Here's what you can gather in advance to fill it out:
- Your Federal Student Aid (FSA) account
- Social Security Number for both you and your student
- Driver’s license number (if you have one)
- Your 2020 tax records for the 2022–23 FAFSA form — you report your 2020 income information on this year’s form.
- Records of untaxed income, such as child support, interest income and veterans’ non-education benefits
- Your assets (money) from savings and checking account balances, investments and real estate
- List of the school(s) on your child’s list — you can list up to 10 schools at a time on the FAFSA
Reason 5: It (could) encourage your child to go to college.
If all you have to do to encourage your child to attend college is to file the FAFSA, why not do it?
Reason 6: Colleges use the CSS Profile with the FAFSA to understand your full financial picture.
The CSS Profile helps schools award non-federal institutional aid, and not every college requires it. However, filling out the CSS Profile does not take the place of the FAFSA. Rather, it is an additional application for non-federal financial aid.
Schools that require the CSS typically meet 90% to 100% of a family's financial need and package their financial aid with institutional grant money.
How Not Filing the FAFSA Can Hurt Your Finances
When you plan to help your child pay for college, it could hurt your finances if you don't file the FAFSA. Let's find out why.
Reason 7: You rely on yourself to pay for everything.
If you don't file the FAFSA, you don't give yourself the option to allow your child to take on federal student loans, grants and more. If you don't have the money to cover college expenses, you may pull from your regular budget, reach into your savings account or investments to cover college costs. What happens if you say bye-bye to all your liquid assets? It could wreak havoc on your finances and maybe even stymie your savings for retirement. (You should always prioritize your retirement over paying for college, but you might feel guilt or even stress over not paying for college.)
Reason 8: You could fall back on private student loans.
When you eliminate the FAFSA from your priorities, you and your students may revert to private student loans, which can negatively impact your student's finances later on, after they graduate. You want to make sure that your child takes advantage of the best student loan options.
File the FAFSA Starting Today
The FAFSA opens October 1! There's good news on the horizon for future FAFSAs, too. It'll go down from 108 questions to 36 questions next year.
Still not convinced you need to file the FAFSA? Talk to the admission counselors at the schools your child is looking at. They'll encourage you to do it, so get going!