Free Application for Federal Student Aid

Last updated: June 14, 2013 by

Escalating college costs and an uncertain economy make paying for college a struggle for families from all walks of life. But there’s a whole plethora of different student aid available to help students financially.

Whether you’re enrolling in college for the first time or returning to school after a period of time off, you should first apply for federal student aid – even if you think you don’t qualify for financial aid; you’ll be surprised by the amount of aid for which you qualify.

What is Federal Student Aid?

Federal student aid comes from the federal government, specifically U.S Department of Education. It’s money that helps a student pay for education expenses at a postsecondary school.

It is the largest source of aid in America, providing over $178 billion in grants, work-study, and federal loans for students attending four-year colleges or universities, community colleges, and career schools.

Trends in Student Aid 2011

Source: Trends in Student Aid 2011 by College Board

The Free Application for Federal Student Aid (FAFSA) is used to apply for most state loan, grant and need-based scholarship programs, in addition to the federal loans and grants.

This is the first step in getting aid for college!1 This free application will ask for your demographic & financial information to determine the amount you and your family are expected to contribute to your college expenses.

The FAFSA is not only used to get federal financial aid, but also state financial aid. When you submit the FAFSA to the US Department of Education, they forward the information on the form to the respective school(s) of your choice which in turn will determine your aid eligibility.

Some private colleges and universities may use the CSS/PROFILE®2 to determine a student’s eligibility for non-federal student aid such as institutional scholarships, grants, and loans.

Who Gets Aid

Eligibility for federal student aid is based on your financial need and on several other factors. The financial aid administrator at the college(s) you plan to attend will determine your eligibility.

To be eligible for aid, you must3

  1. be a U.S. citizen or eligible non-citizen with a valid Social Security Number (SSN),
  2. register with the Selective Service4 if you haven’t already. You can register online at, or call 1-847-688-6888,
  3. exhibit financial need (except for certain federal loans),
  4. have a high school diploma or a General Education Development (GED) certificate,
  5. maintain satisfactory academic progress in college,
  6. certify that you are not in default on any federal student loan, and
  7. certify that you will use federal student aid only for educational purposes

Do note that these are general criteria for most people to be eligible for federal aid. Each specific program has its own unique requirements for eligibility, so read up on the specific aid you want to apply.

Types of Aid

Typically, there are four (4) types of federal aid: grants, scholarships, work-study and federal loans. Each of which is a special funding that can be used to pay for your education expenses, including tuition, books, housing, and other fees.

  1. Federal Grants

    These are monetary aid awarded to college-bound students based solely on the basis of financial hardship. Students who are awarded grants don’t need to pay back the money to the government, which is always a plus point in anyone’s book.

    One of the most popular college grants is the Pell Grant – special federal fund for very needy students to attend college. The current maximum award is $5,550.

  2. Federal Work-Study Program

    Formerly known as College Work-Study Program, the FWS program assists students in finding on or off-campus work to finance their own education while in college.

    It entails a bit more effort on the part of the student, yes, but at least it provides a way to help ease the burden of paying for college. FWS jobs also provide an opportunity for the students to build networks and start sharpening work skills as well.

  3. Federal Student Loans

    These loans come in two flavors: subsidized and unsubsidized. When your loan is subsidized, the government will take care of paying your interest expenses while you are still in school. For unsubsidized loan, you are responsible for all of the interest that accrues.

    Federal loans offer borrowers many benefits not typically found in private loans. These benefits include low fixed interest rates, income-based repayment plans, loan deferment and forgiveness options. As such, you should first exhaust these alternatives before considering a private loan.

    Most federal loans come with a grace period of six (6) months during which you are not required to make payments. This “grace period” allows you to get financially settled, select your repayment plan and determine the amount of income you need to put toward your student loan each month.

  4. Scholarships

    Scholarships, on the other hands, are federal or state funds awarded to deserving students who demonstrate high achievement in areas such as academics, athletics, music, art, or other fields.

    Although scholarships are also a form of financial aid, they are not part of the FAFSA process. Scholarships must be sought out and applied for individually – usually includes an essay, student résumé, and letters of recommendation.

    Similar to grants, the majority of scholarships require no repayment as long as you keep “your end of the deal”.5

Though federal grants and loans differ in eligibility requirements and whether they have to be repaid, the application process for both is essentially the same.

In addition to loans and grants, the federal government also offers a series of tax benefits for students (and their parents) to help offset the high cost of college education by reducing the amount of their income tax.

Apply for Aid

The FAFSA is a lengthy form, and somewhat complicated – especially for students who are applying for financial aid for the first time. The good news is that under the Obama Administration, the FAFSA has been simplified.

While the process may seem overwhelming at first, it really is quite straightforward. Below are the step-by-step guide to walk you through the process of applying for FAFSA.

  1. Prepare all the documents needed to apply, including income tax returns and W-2 forms (and other records of income). Here’s a full list of what you need.
  2. If you don’t already have one, apply for a Federal Student Aid Personal Identification Number (PIN). Go to to get yours. This PIN serves as your electronic signature on your FAFSA application.
  3. Find your school code(s): you will need this information so that your FAFSA filing can be sent to the school(s) of your choice. You can find a school’s FAFSA code on their financial aid website or on
  4. You can fill out the FAFSA in two ways: on paper6, or electronically. To obtain a paper copy to fill out, you can call 800-4-FED-AID or contact the school office. If you would like to fill out the FAFSA online, you can do so by visiting its official website at
  5. Starting in February 2012, you have the option of automatically retrieving your federal tax information from the IRS and having it transferred straight into your FAFSA using the IRS Data Retrieval Tool.
  6. Complete the FAFSA between January 1 and June 30, but it is advisable that you finish your FAFSA as soon as January 1 to stay one step ahead of deadlines.
  7. After you apply, you will receive a Student Aid Report (SAR) - the result of your FAFSA. Review the SAR to see where you stand as a potential aid recipient and to correct (if any) errors contained within. Assuming all information is correct, the SAR will contain the Expected Family Contribution (EFC)7 which in turn will be used to determine how much aid you’re entitled to.
  8. If you were chosen for verification, dont panic. At least ⅓ of FAFSAs are selected at random for verification. If you are selected for verification, you may be required to complete a verification worksheet.
  9. Review the award letter from the school that offer you admission, which will show what kind of aid and how much money you will be eligible to receive. If you are a first-time applicant, compare the award letters from schools to see which one will best suit your needs; taking into consideration its affordability.
  10. If you have any questions about the aid being offered, contact the financial aid office of the school(s) that sent you an award letter. They will give you more details on the aid you have qualified for.

The U.S. Department of Education offers a full simulation of the actual FAFSA process using FAFSA4Caster that gives you an early estimate of what types of student aid you might qualify for and the award amount for each.

Take note: One of the biggest mistakes new students make is assuming that they only need to submit their FAFSA application once. In reality, you need to renew your FAFSA every year you wish to receive financial aid.

  1. The FAFSA is available in Spanish. From the main page at click on the link at the top right hand corner that says Espanol. []
  2. CSS/Financial Aid PROFILE® is the financial aid application service of the College Board. []
  3. See the complete list of eligibility requirements. []
  4. If you are a male born on or after Jan. 1, 1960, are at least 18 years old, and are not currently on active duty in the U.S. Armed Forces, you must register with the Selective Service System to receive federal student aid. []
  5. Keep your Grade high. Most merit based scholarships require a GPA of 3.00 or higher, which is a B average []
  6. It is recommended to file your application online as this can result in faster processing and fewer returns due to handwritten errors. []
  7. Cost of Attendance – Expected Family Contribution (EFC) = Financial Need []

Even Upper-Middle Class Americans Feel the Sting of Student Debt

Last updated: August 12, 2012 by

Student loans are quickly becoming the next big bubble that could pop sometime in the future – especially when even the richer members of our country are starting to squeal “uncle” when they realize just how much debt they’ve accrued. Recently released federal data shows that families earning around $94,535 to $205,335 a year saw… Read more »

Canada’s Rural Medical Practitioners Get Loan Forgiveness; Nearly Half of Ours Graduate with Six-Digit Debt

Last updated: August 7, 2012 by

Canada’s government announced on August 5 that family doctors, nurses and nurse practitioners that choose to work in rural communities with populations of 50,000 or less will be eligible for partial student loan forgiveness in 2013. In the meantime, 49% of our own American medical graduates will graduate $100,000 or more in debt. Their counterparts… Read more »

Should Student Loans be Abolished in the First Place?

Last updated: July 24, 2012 by

In our previous post, we discussed a few points on why the government should not pull itself away from the student loan industry. Here is the other side of that argument: Grants are Enough to Cover Low-Income Families The whole point here hinges on who is qualified for student aid. Critics of federal loans note… Read more »

A Few Key Student Loan Statistics to Wrap Your Head Around

Last updated: July 19, 2012 by

OMB Watch, a nonprofit organization dedicated to transparency, accountability and democratic participation in government, has released list of statistics highlighting the progression of student loans throughout American history.1 Key points include: Tripling of tuition in private institutions ($10,144 average in 1981 compared to $28,500 average in 2011-2012) Quadrupling of tuition in public institutions ($2,242 average… Read more »

Your Student Loans Are Ripe for the “Political” Picking

Last updated: July 14, 2012 by

Okay, so interest rate cuts for federal student loans were extended for one more year. This is undoubtedly a good thing for America’s students battered by a weak job market, but are the people responsible for these cuts really interested in your future? The recent student loan bill (which included increased budget for transportation infrastructure)… Read more »

The True Costs of a Watered-Down Education

Last updated: July 9, 2012 by

Steve Postrel, in a recent post on the StrategyProfs.net1, argues that the reason too many students seek degrees and get into debt is because high school just doesn’t offer the same quality of education that it used to. Postrel points out that the “dumbing down” of education in America over the last decades forces students… Read more »

U.S. ED Data: For-Profit Colleges Worst in Preparing Students for Jobs

Last updated: July 5, 2012 by

If you ever thought that for-profit colleges viewed their students as walking cash-cows instead of potential workers, then you could probably be right. A recent study of 3,695 educational programs in 1,336 institutions was conducted by the United States Education Department (ED).1 The results shows that for-profit colleges ranked among the worst in preparing students… Read more »

Why the Government Must NOT Exit the Student Loan Industry

Last updated: June 26, 2012 by

A professor from Ohio University, Richard Vedder, suggests that the government get out of student loans altogether1 and just focus on more grants for low-income students. Sounds good on paper, but relying too heavily on grants adds a lot of problems to the equation: Short-Term Shock on Government Budget The first and most significant effect… Read more »