It’s that time of year when many of us (me included!) are burdened with completing the FAFSA for our college bound kiddos. The first time I heard the term I had no idea what the acronym stood for, or what exactly it was meant to accomplish. I just knew it was NOT going to be fun…or so I’d heard! So, what is it and why is it important? FAFSA stands for Free Application for Federal Student Aid and is meant to determine a student’s eligibility for receiving student financial aid.
For those who qualify, the office of Federal Student Aid, provides grants, loans, and work-study funds for college or career school. This government department is the largest provider of financial aid in the nation and provides more than $120 billion in aid to over 13 million students each year.
Grants: Assistance based heavily on financial need, this financial assistance doesn’t have to be repaid.
Loans: A loan funded by the federal government to help pay for education. A federal student loan is borrowed money you must repay with interest.
Work-study: A federal student aid program that provides students part-time employment while enrolled in school to help pay your education expenses.
The general eligibility requirements for receiving some form of financial aid are that the student must enroll in an eligible degree, demonstrate a need for financial assistance, and must be a US citizen or eligible non-citizen. If these requirements are met, families can file the FAFSA as early as October 1st each year and it’s recommended that you file as soon as possible. Important: You have to fill out the FAFSA form each year your student is in school in order to remain eligible for federal student aid.
How Do I Apply? Visit www.fafsa.gov to get started
What Happens Next? Once you’ve submitted your FAFSA application, the form will be processed in 3-6 weeks and you’ll be given your Expected Family Contribution (EFC). The EFC is calculated from the data you provided in the FAFSA and is the amount you are expected to be able to pay for your child’s college. This number is then used by the college to determine how much financial aid you should receive. Once your aid is calculated by your school(s) of choice, you’ll receive notification of your aid – which is usually called an award letter. The timing of this award letter depends on when you complete the FAFSA and when your school determines the award – another reason to file the FAFSA ASAP!
How Do I Get My Money? The Financial Aid office at your student’s school will explain how and when your aid will be paid out and if additional paperwork might be required.
Having just completed my third year of applying, I can assure you it’s not as daunting as you might think. The first year was definitely the hardest, but once you have all the data gathered, it makes each year thereafter a little less labor intensive.
Denise Wilson is a Registered Paraplanner at Wealthquest, a Cincinnati-based financial planning and wealth management firm that offers a full range of financial services under one roof, for one simple fee.