“I don’t want any financial aid”…said no one ever.
Well that is the path you’ll go down if you don’t file the Free Application for Federal Student Aid, commonly known as FAFSA. It is estimated that $2.3 billion in federal aid was left on the table in 2017 by students who did not file. Many parents think they make too much money to get any aid and choose not to file the FAFSA. Actually, anyone making $250,000 or less can qualify for aid, and that’s 95% of Americans. I’m not suggesting that a household making $150,000 a year is going to get their tuition fully funded, but they will be offered a Federal Direct Loan. You probably remember these as the Stafford loan, and that the interest rates are much lower than private student loans. On some of these loans, the interest doesn’t start until after you graduate. Saving money on high interest loans is like a mini scholarship in and of itself.
It is a good idea to file even if you aren’t going to take any loans. Many schools will look at a student’s FAFSA before awarding any aid including merit aid. Some admissions departments are even more likely to accept a student who has completed the FAFSA because it shows the student is more likely to attend college. Financial aid officers may be more likely to award a school-specific scholarship to a student who is just outside the need-based financial aid formula, but still could use some assistance with tuition. Some states even award aid that is not based on need at all, but will not award the aid without a FAFSA on file.
It’s a good idea to file the FAFSA even if you end up not qualifying for aid, because a year may come where circumstances find you in a different financial position. Some common reasons a FAFSA award can change are:
- Parental Separation
- Parental Death
- Sibling Attendance
- Loss of Job
- Selling of an asset like a business or property
These changes could have big effects on your need for aid, but if you don’t have a previous FAFSA on file, these circumstances may be hard to prove.
Bottom Line: There is no downside to filing the FAFSA!
Authored by PJ Horan