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What Is FAFSA and How Does It Work?

The most important thing about prepping for college isn’t getting into the same school as your friends, making your dorm look like a hotel suite, or figuring out what classes to take—it’s finding the cash to pay for it. You want to get in and out of college without student loan debt, right? Right. And that’s why you need to know all the details about a form called the FAFSA.

What Is FAFSA?

The Free Application for Federal Student Aid (or FAFSA) is the form schools will use to decide how much money to offer you for college, and also what kinds of aid you qualify for. You can fill it out here.

But hold up—before you jump to the FAFSA website, you need to know a few things about how it works.

How Does the FAFSA Work?

The financial aid you can get by filling out the FAFSA falls into two main categories:

  • Student loans: This is money you have to pay back (plus interest). I want you to stay the heck away from these!
  • Scholarships and grants: There are a ton of different scholarships available through the FAFSA. And there are two main kinds of federal grants: the Pell Grant and the Supplemental Educational Opportunity Grant (SEOG Grant). All of this is free money—that’s the kind of financial aid you want.

FAFSA is used to figure out if you qualify for both kinds of aid, but I need to say this louder for the people in the back: Don’t go into debt to attend college. It’s totally possible to cash flow your education.

Get a new student loan rate from a Ramsey-trusted company in 10 minutes.

The reason I’m so passionate about helping you avoid student loans is because of the stress and problems I’ve seen them cause in the lives of so many young people (including my own life).

I’m one of millions of Americans who fell for the lie that you have to take out loans to go to college. I wound up with a ton of student loan debt—and a ton of regret. It’s all paid off now, but it took a lot of time and energy to knock it out. But with the FAFSA and the availability of so many scholarships and grants, plus other cash-flowing strategies, there’s no way debt should even be an option.

When Is the FAFSA Deadline?

The key dates for the 2021–2022 award year are October 1, 2020 (the first day to apply) and June 30, 2022 (the final deadline). That means the application is open now—so if you meet the requirements, go ahead and apply ASAP! Don’t wait. The sooner you apply, the better chances you have of getting aid.

Keep in mind that state financial aid deadlines vary, so head to the FAFSA website to find out each state’s exact requirements. You should also check for financial aid deadlines on your potential college’s website.

What Are the FAFSA Requirements?

Real talk: There are a few requirements you need to meet in order to benefit from the FAFSA form.

To get Federal Student Aid, you need to:

  • Be a U.S. citizen or U.S. national
  • Have a green card, an Arrival-Departure Record, battered-immigrant status, or a T-visa (if you’re not a U.S. citizen)
  • Have a high school diploma or General Educational Development (GED) certificate, or if you were homeschooled, have completed a state law-approved high school education program
  • Be enrolled as a student (or at least accepted) in an approved degree or certificate program
  • Be registered with Selective Service (this is only a requirement if you’re a guy age 18–25)
  • Have a valid Social Security number
  • Sign statements on the FAFSA form saying that you’re not in default on a federal student loan, you don’t owe a refund on a federal grant, and you’ll use federal student aid for your education ONLY1

Here's another reason you should fill out the FAFSA: There’s no income cutoff in order to be eligible for aid. A lot of students don’t fill out the form because they think their parents make too much money for them to qualify. That’s false! They look at all kinds of factors like the size of your family and your year in school, so go ahead—you don’t have anything to lose by trying, and you could wind up with some serious cash.

How to Fill Out the FAFSA:

I know the FAFSA form can be super confusing—but don’t let the unfamiliarity of the form stop you from filling it out. To make it easier, here’s the step-by-step process:

1. Make sure you have easy access to these things: 

  • Your Social Security number
  • Your parents’ Social Security numbers
  • Your driver’s license number (if you don’t have a driver’s license, skip this part)
  • Your parents’ federal tax information or tax returns that include IRS W-2 information (if you’re filling out the 2021–2022 FAFSA, you’ll need tax info from 2019)
  • Records of your parents’ untaxed income
  • Info on your parents’ cash, savings and checking accounts, investments, real estate, and any business or farm assets (if you’re not dependent on your parents, all of this info will need to be your own)

If all of these details makes you feel like you’re about to break out in hives, you can check out this FAFSA preview worksheet that gives an overview of the kinds of questions you can expect to answer on the official form.

2. Create an FSA ID. 

This is the username and password you’ll need in order to access, save, and electronically sign your FAFSA documents. You can create one here. If you’re a dependent, your parents will need their own FSA ID as well in order to sign your FAFSA form.

3. Start filling out the form on fafsa.gov. 

Don’t let this intimidate you—the prompts will walk you through it. If you don’t know what something means, click on the small blue circles with question marks or use the search bar on the FAFSA website.

There will be sections for you to fill out about your personal information and which schools you want the FAFSA to be sent to (you don’t have to decide on a school or even be accepted yet for the FAFSA information to be sent there). There will also be a section on parent demographics and financial information that your parents will need to fill out.

Note: You can also manually fill out a paper FAFSA form or fill it out using the myStudentAid mobile app—but for convenience and accuracy, the online form is probably your best bet.

4. Sign the form. 

If you’re a dependent, you and your parent need to sign the FAFSA form online using your FSA IDs.

5. Submit the FAFSA. 

There’s no need to print it out—it’ll be sent to colleges electronically. Now take a deep breath, because the hardest part is over (praise!).

Here’s What Happens After You Submit the FAFSA: 

  • The U.S. Department of Education will process your application, and you’ll get a copy of your Student Aid Report (SAR). This is just a summary of all the info you included on your FAFSA form, and it will include your Expected Family Contribution (EFC). Your EFC is based on your family’s income, benefits, etc.  
  • Your SAR is sent to all the schools you listed on your FAFSA form.
  • The financial aid office at each school you listed will figure out your cost of attendance (COA) at that school. Your COA includes tuition, fees, room and board, books and supplies, etc.
  • The financial aid office will then crunch some numbers to figure out how much need-based or non-need-based aid you could get.
  • Each school will send you an award letter with that info, letting you know if you’re eligible to get any scholarships, grants or loans. Which one of those do we not want? That’s right—loans.
  • It’s not guaranteed that every school you list on your FAFSA will send you an award letter, so it’s a good idea to contact the financial aid offices at your schools of choice to find out if there are any other requirements for getting financial aid.

Remember that grants and scholarships are your best friends here. Either kind of free cash is sweet. Definitely accept those right away.

Don’t Sign Up for Loans by Mistake

Listen, the award letter can be a confusing document. In fact, it’s something that’s caused a lot of stress for way too many people because of a common misunderstanding: People think they’re signing up for scholarships, and don’t realize they’re putting themselves on the hook for loans.

Don’t let this happen to you. Read the whole letter slowly and carefully—especially the fine print. Then, before you sign anywhere, make absolutely sure you’re only signing up for free money. Have your parents or someone else you trust look over your award letter to make sure you don’t set yourself up for years of debt.

Let me give you another tip about financial aid. You shouldn’t assume you’re going to get solid advice from your school’s financial aid officers, even though they probably mean well. As I’ve learned in my own conversations with people who work in financial aid, they usually think it’s impossible to attend school without taking out loans. But I’m here to tell you that it’s totally possible.

If you want more practical tips on going to school 100% debt-free (yep, you heard that right), check out my book Debt-Free Degree. I’ll walk you through a step-by-step plan for graduating without taking out a single loan so you can jump-start your life after college with nothing holding you back. You’ve got this!

Anthony ONeal

About the author

Anthony ONeal

Anthony ONeal is a #1 national bestselling author, financial expert and host of the popular online series “The Table” on his YouTube channel. He has appeared on Good Morning America, the Tamron Hall Show, the Tom Joyner Morning Show and the Rachael Ray Show, among others. Since 2015, Anthony has served at Ramsey Solutions, where he teaches young adults how to budget, live without debt, avoid student loans and build real wealth for their future. Learn More.

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