Your child finally got that acceptance letter they were waiting for. As a parent, you’re thrilled they achieved this milestone. But now comes the hard part: how do you pay for college?
Completing the Free Application for Federal Student Aid (FAFSA) is an essential first step for incoming college students, but many students don’t do it. In fact, the National College Attainment Network reported that just 52% of the high school class of 2022 completed the FAFSA by July 1, up 4.6% from the class of 2021.
Why is that number so low? Many people misunderstand the FAFSA eligibility requirements, and don’t think they’ll qualify for financial aid. That’s a costly mistake; you could lose out on thousands of dollars in scholarships and grants or access to federal student loans if your family doesn’t fill it out.
Here’s what parents should know about the FAFSA and what you can do to help your child complete the application.
What Is the FAFSA?
The FAFSA is a form that students and their parents have to complete to qualify for most forms of financial aid. Colleges use the information that’s submitted to determine what financial assistance the student should receive, including need-based aid and non-need-based aid.
To calculate your family’s financial need, the FAFSA asks a series of questions about your assets, income and family size. After you submit the FAFSA, the information is used to determine your Expected Family Contribution (EFC).
Despite its name, the EFC isn’t how much you have to pay for your child’s education. Instead, it’s an index number that determines your child’s eligibility for aid and financial aid award.
There is no fee to complete the FAFSA, and it can be done entirely online in less than an hour.
After submitting the FAFSA, your child may be eligible for several forms of financial aid. Many different entities use the FAFSA to determine what aid is available, including:
- Federal government: The federal government issues $150 billion in federal aid each year. Assistance can come in the form of Pell Grants, federal work-study programs and student loans.
- State agencies: Your state will often use the FAFSA to determine financial aid eligibility. Some states offer their own scholarships, grants, work-study and student loan programs.
- Colleges: Many colleges and universities offer institutional aid in the form of grants or scholarships. They use the FAFSA to create your child’s financial aid award letter.
States and colleges have their own FAFSA deadlines. File the FAFSA early to maximize the amount of financial aid your family may qualify for.
Types of Financial Aid Issued Based on the FAFSA
Based on the information submitted in the FAFSA, you and your child may be eligible for one or more of the following forms of financial aid:
1. Grants
Grants are usually awarded based on your financial need. They’re a form of gift aid, so they usually don’t have to be repaid as long as your child continues to meet the grant’s requirements. Grants can come from the federal government, states or schools.
Federal Pell Grants are the most well-known grant program. The government issues Pell Grants to undergraduate students with “exceptional financial need.” For the 2022-2023 award year, the maximum Pell Grant award is $6,895.
2. Scholarships
While the federal government doesn’t offer scholarships, some states and many schools do. They may use the information in the FAFSA to calculate your child’s awards.
Scholarships are often merit-based, but some consider financial information to determine your award amount. Like grants, scholarships are a form of gift aid and don’t need to be repaid. They can range in value from small awards of $250 to large scholarships that cover the full cost of tuition.
To find scholarship opportunities, check out College Ave’s scholarship guide.
3. Work-Study Programs
By filling out the FAFSA, your child may qualify for a federal or state work-study program. With a work-study program, students with financial need can get part-time jobs related to their majors, and their earnings can cover a portion of their education-related expenses.
4. Student Loans
The FAFSA is essential if you think you’ll need to take out student loans. For undergraduate students and their parents, the following federal loans are available:
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| Loan Name | Borrower Type | Annual Maximum Amount |
|---|---|---|
| Direct Subsidized | Undergraduate students with demonstrated financial need | $3,500 first year $4,500 second year $5,500 third year and beyond |
| Direct Unsubsidized | Undergraduate students | $5,500 to $12,500 (based on year in school and dependency status) |
| Parent PLUS | Parents of undergraduate students | Up to the total cost of attendance |
FAFSA Eligibility Requirements for 2023
Most students qualify for some form of federal financial aid. Approximately 84% of first-time, full-time undergraduate students received aid in 2021, the last available data.
For 2023-24 award year, the following FAFSA eligibility requirements apply:
- The student must be a U.S. citizen or U.S. national.
- The student must have a valid Social Security number unless they are from the Republic of the Marshall Islands, Federated States of Micronesia, or the Republic of Palau
- The student must qualify for postsecondary education by earning a high school diploma or its equivalent.
- The student must be enrolled or accepted for enrollment in an eligible degree or certificate program.
You’ll notice that income isn’t mentioned; the FAFSA doesn’t have an income limit. Colleges will consider your family’s income and assets when determining the financial aid award, but a higher income doesn’t disqualify your child from receiving aid.
FAFSA for Parents: What You Should Know
As a parent, it’s important to understand how the FAFSA views college students in terms of dependency status. Few people can complete the FAFSA as an independent student; the majority of undergraduate students are considered dependent for the purposes of financial aid. Because students are usually dependent, parents play an important role in completing the FAFSA.
The FAFSA was designed to give the Department of Education and colleges an idea of your family’s financial status so they can calculate an appropriate financial aid package. Dependent undergraduate students are required to include the following information on the FAFSA:
- Parents’ tax return information
- Parental income
- Parental assets
One of the most important steps of the FAFSA for parents is creating a Federal Student Aid (FSA) ID. Even though your child is the one filling out the FAFSA, you’ll need your own FSA ID to serve as an electronic signature to confirm the information submitted.
Some parents hesitate to provide their personal information and income on the FAFSA. However, not giving your child that information can have severe consequences. Without your information, your child won’t be eligible to receive grants, student loans or other federal aid; the only financial aid they might qualify for is Direct Unsubsidized loans, which have annual and aggregate borrowing limits.
Keep in mind that the FAFSA is the student’s application for federal, state and some institutional aid not the parents. Parents aren’t obligated to pay for their child’s college education just because they submitted their income and assets. That information is simply used in the formula to determine your child’s award amount.
Frequently Asked Questions
What is the income limit for FAFSA 2023?
Many high school seniors don’t complete the FAFSA because they think their families make too much money to qualify for financial aid. However, the FAFSA doesn’t have an income cap. Most students qualify for some form of financial aid, including student loans.
How do I know if I qualify for the FAFSA?
If your child is a U.S. citizen or permanent resident, will earn their high school diploma and is planning to enroll in college, they qualify for the FAFSA regardless of your citizenship status.
What disqualifies you from getting financial aid through the FAFSA?
Your child can lose their eligibility for federal financial aid in the following scenarios:
- They failed to make satisfactory academic progress toward a degree
- Their status as an eligible noncitizen was revoked
- They haven’t earned a high school diploma or its equivalent
- They defaulted on existing federal loans
What are my financial aid options if I need more money?
If your child doesn’t receive enough financial aid another financing option to consider is private student loans.
Private student loan lenders like College Ave don’t use the FAFSA to determine your eligibility for a loan. Instead, they look at the student’s creditworthiness and income. In the case of undergraduate students that may not have an established credit history or income, parents can act as cosigners, or they can take out parent student loans to cover the cost of their child’s education.
Paying for College
Now that you know how the FAFSA works and the FAFSA eligibility requirements, you and your child can start the process to apply for financial aid. To get started, you can use College Ave’s guides on how to apply for FAFSA and when to apply for student loans for step-by-step instructions.
