If you’re a student headed to college, your financial aid award might seem like an act of fate. Who applies and gets federal student aid and how much can feel like a mystery.
In reality, however, it’s not. The Federal Student Aid Office reviews nearly 20 million financial aid applications a year. And like many government processes, federal student aid determinations are based on objective requirements, guidelines, and formulas.
At this point, you might be asking, “Do I qualify for financial aid?” The answer could be more predictable than you think.
Here are some key eligibility requirements you should know about.
1. Basic financial aid eligibility criteria
Start by reviewing and understanding the basic eligibility criteria for federal student aid. Here are the basement-level requirements you must meet:
- You must be a U.S. citizen or an eligible noncitizen and have a valid Social Security number.
- You must have a high school diploma or GED certificate.
- You must be enrolled or accepted as a student in an eligible degree or certificate program.
Many college students will easily satisfy the above criteria for financial aid. However, if there’s a specific requirement you’re unsure you meet, take some time to understand the fine print.
For residents who aren’t U.S. citizens, for example, your eligibility might depend on your specific immigration or visa status.
The Federal Student Aid Office provides the following flowchart that outlines the requirements and walks you through each criterion (click the image to view it in its entirety):
You can find more details about basic eligibility criteria on the Federal Student Aid Office website.
Note that the above guidelines are the general requirements you must meet. The process for qualifying for financial aid and receiving federal grants, scholarships, and student loans includes several more steps.
2. Complete and submit a FAFSA
The Department of Education requires that students file a Free Application for Federal Student Aid (FAFSA) to receive financial aid. It’s a form through which you provide details about your financial situation, your family circumstances, your college, and other information needed to verify your need and eligibility for financial aid.
In return, you’ll receive the following benefits:
- You’ll satisfy the requirement of filing a FAFSA to be eligible to receive some of the $120 billion it grants in aid each year.
- You’ll definitively answer the question “Do I qualify for financial aid?” A few weeks after filing a FAFSA, you’ll get an award letter outlining whether you qualify.
- You’ll have more options. You might be surprised to find that you qualify for assistance. Or you might you might wind up needing to rely on federal student loans, which also require a filed FAFSA.
The FAFSA also includes a section where you sign a certification that indicates:
- You do not hold any federal student loans currently in default.
- You do not owe any funds on a federal student grant.
- You agree to use federal student aid funds exclusively for educational expenses.
If you don’t meet those requirements, you likely won’t be eligible for financial aid. However, you can work to rehabilitate federal student loans and repay federal grants you owe to regain eligibility.
3. Maintain satisfactory academic progress
If you’re already in college, you must maintain satisfactory academic progress (SAP). In other words, the federal government requires students to do reasonably well in school, according to the following measurements:
- You must earn at least average grades, defined as a GPA of 2.0 or higher.
- You must pass and complete at least two-thirds of the credits you attempt each semester.
- You must stay on track to complete your degree in six years or less for a bachelor’s or three years or less for an associate’s.
If you lose eligibility because of unsatisfactory academic progress, you can work to regain it. But you’ll be better off getting good grades, passing your classes, and staying on track for graduation.
These actions will ensure you remain eligible for all forms of federal student aid, including grants and student loans.
4. Demonstrate financial need
Filed your FAFSA? Here’s why that’s such an important step: The Federal Student Aid Office uses this information to determine your financial need.
Need-based financial aid is valuable because it provides free assistance to students. Here are some types of need-based financial aid:
- Federal Pell Grants: This aid helps students who demonstrate “exceptional financial need” and don’t have a bachelor’s or professional degree cover educational costs. Pell Grants range up to $5,920 for 2017-18, and they don’t need to be repaid.
- Federal Work-Study: This program subsidizes eligible students’ wages with federal funds, which can make it easier for qualifying students to find work. Work-study aid does not need to be repaid and may be used as the student chooses.
- Subsidized Direct Loans: These are loans, so they’ll need to be repaid. However, the interest on the loans is subsidized by the Department of Education, so the balance won’t accrue while you’re in college.
The above aid is based on need. But what exactly makes you “needy”? The government uses the following formula:
Overall, the lower your family’s income is, the more likely you are to receive need-based aid. You also might be eligible for need-based aid if you’re attending a more expensive school or if you have a sibling who’s also in college.
The best way to find out is to file a FAFSA. However, some juniors or seniors in high school might find it useful to estimate their financial need ahead of applying for financial aid.
- The FAFSA4caster, from the Federal Student Aid Office, is a helpful tool to get a snapshot of the aid you’re eligible for, with estimates that can be customized by your COA.
- You can use the EFC Calculator from College Board to get an actual dollar estimate of your EFC.
Explore non-need-based student loans
If you don’t qualify for need-based aid, there are other forms of federal student aid you might qualify for. You can get this aid even if your income or your family’s income exceeds the maximum to qualify for need-based financial aid.
Specifically, aid that isn’t need-based takes the form of federal student loans. You’ll face federal student loan limits that put a ceiling on the total amount of student loans you can borrow.
- Direct Unsubsidized Loans allow undergraduates to borrow up to $12,500 a year, depending on their completed credits and dependency status.
- Direct Graduate Loans are offered to students in graduate or professional programs, allowing them up to $20,500 a year in federal student loans.
- Grad PLUS Loans offer funding beyond the $20,500 cap and any other aid granted, up to the cost of attendance.
- Parent PLUS Loans can be used by parents to borrow for their child’s education, up to the college’s COA minus any other financial aid granted to the student.
The rules that govern federal student aid can feel like an obstacle keeping you from the money you need for college. But when you take the time to understand the requirements to qualify for financial aid, you can untangle the mystery.
Understanding whether you can get student aid and how much will help you confidently plan for college costs.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.23% – 13.23%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 10.11%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|