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What Is FAFSA and How Does It Work?

Did you know you can get free money for college—the kind you don’t have to pay back? That’s right! And one of the first steps to seeing how much money you can receive for school—and where it will come from—is to fill out the FAFSA.

The FAFSA will show you how much federal, state or school funding you’ll be offered, as well as help you understand how much you need to save in your college fund.

But before we look more closely at what the FAFSA is and how this financial aid form works, remember: You (yes, you!) can pay for college without student loans. That’s why we’re going to talk about what the FAFSA is and why it’s so important.

What Is FAFSA?

You guys, filling out the Free Application for Federal Student Aid (or FAFSA) is such an important step to pay for college. This form collects information that colleges use to decide how much money to offer you for school—and what kinds of financial aid you qualify for. This one application opens the door to receiving federal, state and school financial aid. (In fact, I used the FAFSA myself to understand how much money I would need to earn in outside scholarships, versus how much money I could receive in grants.)

Quick note: Once you decide which college you’re going to attend and complete the FAFSA, you’ll need to review your financial aid package closely before accepting any financial aid. And if you do qualify for aid, make sure you know what to do to keep getting money each year.1

How Does the FAFSA Work?

When you fill out the FAFSA, colleges take your information—which we’ll look at more closely later—to figure out if you qualify for financial aid. Each school that accepts you will offer a different financial aid package, so it’s important that you understand the difference between the three most common types of aid: gift aid, work-study and student loans.

Gift aid (scholarships and grants): 

This is the financial aid you want the most because it’s free money. Consider it a gift from Uncle Sam (or your chosen university).


This is a part-time job that lets you earn up to a fixed amount of money stated in your award letter.

Student loans: 

This type of financial aid is borrowed money that you have to pay back . . . with interest. You want to avoid student loans at all costs!

A few more notes on gift aid: Most grants are awarded based on financial need, which is determined by your FAFSA application. Scholarships can come from all kinds of places, including your college, special interest groups, businesses and foundations. And while some scholarships are awarded based on information you share in your admissions application, others take more work and require you to submit additional applications, answer essays, and sometimes be interviewed.

And here’s an important tip: You can accept part of your package without accepting everything, so make sure you say no to student loans. Gift aid is what we’re looking for.

How the FAFSA Helps Determine Student Aid 

Here’s a quick rundown of how this form helps colleges decide how much money they can give you for school:

  • 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).2 Your EFC is based on your family’s income, savings, 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 information, letting you know if you’re eligible to get any scholarships, grants or loans. Remember which one we want to avoid? 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.

What Are the FAFSA Requirements?

Okay, it’s time to get into some details. There are a few requirements you need to meet in order to benefit from filling out the FAFSA form.3

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, General Educational Development (GED) certificate, be dual-enrolled in college classes, 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 between ages 18 and 25)
  • Have a valid Social Security number
  • Sign statements on the FAFSA form saying 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 ONLY4

Here's another reason you should fill out the FAFSA: There’s no income cutoff. 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 money.

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 form for the 2022–23 school year, you’ll need tax information from 2020)
  • 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 make you feel like your head is spinning, 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 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

Don’t let this intimidate you—the prompts will walk you through the form. If you don’t know what something means, click on the small blue ‘Help’ circle with a question mark or use the search bar on the FAFSA website.

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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 out the form because it’ll be sent to colleges electronically. So once you hit submit, take a deep breath—the hardest part is over (yay!).

When Is the FAFSA Deadline?

The FAFSA deadline is based on which school year the aid is for. And because a lot of financial aid is gifted on a first-come, first-served basis, you’ll want to submit this form as soon as you can once the application window opens.

The FAFSA form for the 2022–23 award year opened October 1, 2021, and will be open until June 30, 2023.5 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.

Don’t Sign Up for Loans by Mistake

Okay, the award letter can be a confusing document. In fact, it’s caused a lot of stress for way too many people because of a common misunderstanding: People think they’re signing up for scholarships, but they’re actually taking on student loans. Yikes!

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.

And let me give you one more tip about financial aid. Get to know your Financial Aid Officer. Having a good relationship with them can help ensure your scholarships go to the right places, and if you ever need a Cost of Attendance adjustment, they’ll be the one to take care of that. It’s easy to think that student loans are the only way to pay for school, but that’s simply not true. And the right relationships can help you navigate this journey without taking on debt.

Take The Next Step to Go to College Debt-Free

Keep in mind that applying for the FAFSA is just the first step in getting financial aid. I spent my high school years applying for scholarships and grants like it was my full-time job. But you know what? That grit paid off, and I graduated college owing $0 to anyone. With so many scholarships and grants available, plus other cash-flowing strategies, you can get ahead of college costs so debt is no longer an option. And it’s best to get on this sooner rather than later!

If you want more practical tips on going to school 100% debt-free—and if you want to understand the impact of student loans on your life after college—read Debt-Free Degree. This book will show you how to plan to pay for college without taking on debt.

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Kristina  Ellis

About the author

Kristina Ellis

Kristina Ellis is a bestselling author who believes no student should be burdened by loans. Drawing from her experience of earning over $500K in college scholarships, Kristina helps thousands of students graduate debt-free through her syndicated columns, podcast appearances, online courses and books. She’s a co-host of The Ramsey Show, the second-largest talk show in America, which reaches 18 million weekly listeners, and she appeared in the award-winning documentary Borrowed Future. Kristina has appeared on NBC News, Business Insider, Fox & Friends, USA Today and Yahoo!, where she’s shared practical, real-world strategies for going to college without debt. Learn More.

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