With 70 percent of colleges too expensive for most Americans, it’s little surprise that many students turn to financial aid to help get them through. Whether you qualify for grants or have to settle for federal loans, you need to fill out the Free Application for Federal Student Aid (FAFSA) to get government help covering your education costs.
The good news is that there are no FAFSA income limits for 2018. You can fill out the FAFSA no matter your economic situation and see if you qualify for some financial aid.
What types of federal student aid are available?
While there are no overall FAFSA income limits, the type of aid you’re eligible for, and whether you qualify for need-based financial aid, will depend on your family’s finances.
Even if you don’t think you qualify for need-based aid, though, it makes sense to fill out the FAFSA to see if you can get non-need-based aid. You have to complete a FAFSA each year to keep receiving federal student aid.
Here are the types of federal financial aid you can obtain as a result of filling out the 2018 FAFSA:
Federal Pell Grant
This is free money for school that doesn’t have to be repaid. The amount you receive depends on your financial need and the cost of attendance at your school. Amounts for Pell grants change annually. For 2017-18, the maximum Federal Pell Grant award was $5,920, while the limit for 2018-19 will be announced in the coming year.
Pell grants are only available to undergraduates, and you can only receive them for 12 semesters.
Federal Supplemental Educational Opportunity Grant (FSEOG)
Undergraduates with “exceptional financial need” can qualify for an additional $4,000. Pell Grant recipients receive priority over other students. However, while the government provides enough money for each participating school to cover all its eligible students, that might not be the case with the FSEOG.
Check for other grants, including those for future teachers or for the children of fallen U.S. service members, to see what you might qualify for.
Direct Subsidized Loan
If you have financial need, and grants aren’t covering the cost of school, a federal subsidized loan can help close the gap if you’re an undergraduate. The government usually pays the interest on the loan while you attend school — as long as you are enrolled at least half-time — and during your student loan grace period, which usually runs for six months after you leave school.
Your interest rate depends on the rate Congress sets for the school year. Rates are reviewed annually, and each new school year results in a new subsidized loan, based on the information used to update your FAFSA on an annual basis.
Direct Unsubsidized Loan
This financial aid program is not based entirely on economic need. You can receive an unsubsidized loan for any amount up to the year’s limit or your school’s cost of attendance (whichever is less), regardless of whether you’re an undergraduate or a graduate student. When you borrow using this program, the government won’t pay any of your interest, so it will accrue and be added to your loan amount if you don’t make interest payments while you’re at school.
You can see the aggregate loan limits from the Department of Education below:
Direct PLUS loan
Graduate or professional students can take these loans, as can parents of undergraduate students. The interest is unsubsidized, so the borrower is responsible for the total cost of the debt. Interest on PLUS loans is higher than the interest charged on Direct subsidized and unsubsidized loans. The maximum you can borrow is based on the cost of attendance at the school, minus all the other financial aid you receive.
Participating schools also offer government-funded part-time jobs for qualifying students with financial need. This program is available for undergraduate and graduate students alike. In many cases, the work you do should be related to your course of study or involve community service.
You can expect to earn at least federal minimum wage. However, there are times that you can be paid more, depending on the skills needed for the job, as well as the funds the school has available.
Figuring out your financial need with the FAFSA
The point of the FAFSA is to help schools figure out your need. That’s right: The school determines what kind of federal financial aid package you get.
How much you need is decided by comparing your Expected Family Contribution (EFC) with the cost of attendance at your school.
Expected Family Contribution (EFC)
The EFC is calculated using a formula that is set by law. Financial aid offices use the information included on your FAFSA to determine how much your family can reasonably be expected to pay to cover your education expenses. Some of the items taken into consideration include:
- Your family’s income (taxed and untaxed) and your family’s current assets.
- Any benefits (such as Social Security and unemployment) you or your family receive.
- Size of your family.
- How many siblings you have attending college during the school year.
Once your EFC is determined, it’s subtracted from your school’s cost of attendance.
Cost of attendance
When you fill out your FAFSA, you specify which schools you want the information sent to. Each school has its own cost of attendance, based what you would pay to attend the school for two semesters.
In some cases, though, you might seek a certification rather than a degree. Such a program might last a different length of time. Pay attention to the period covered to understand your financial aid award better.
The total cost of attendance for a year includes your tuition and fees, as well as your room and board. It also includes what you can reasonably expect to pay for books, supplies, loan fees, eligible study-abroad programs, and transportation. Finally, your cost of attendance estimate can also include an allowance for child care and disability costs.
Need-based and non-need-based financial aid
Once the school has your FAFSA, it can put together an aid package. You might be offered a combination of need-based and non-need-based options.
For example, your cost of attendance is $18,000 for the year, and the EFC formula indicates that your family should be responsible for $14,000 of that amount. Your need-based aid maximum would be $4,000. It might be offered to you in the form of grants, subsidized loans, and/or work-study.
Of course, even though your EFC is $14,000, it doesn’t mean that your family can actually afford to pay that amount of money.
That’s where the non-need-based aid comes in. You might be offered an unsubsidized Direct loan, and you might need to take a PLUS loan as well. Your EFC doesn’t determine your non-need-based aid. Instead, it looks at your cost of attendance and subtracts all the other aid you have, including your need-based aid, any merit-based scholarships you obtained from the school or private sources, and all other sources of aid.
So, if your cost of attendance is $18,000, and you receive $4,000 in need-based aid, and you have a merit-based scholarship amounting to $6,000, your non-need-based total is $8,000. You might be offered a combination of non-need-based aid up to that amount.
Each year, you should fill out the FAFSA to determine your financial aid eligibility, since it can change. When I went to college as a freshman, I wasn’t eligible for any need-based aid. However, my sister started college when I was a sophomore, and that made a difference, allowing me access to Work-Study program funds.
Fill out the FAFSA
Head over to the Department of Education website to start your FAFSA application. The chart below can help you gather needed documentation before you begin.
While you don’t need one to fill out the FAFSA, it can be a good idea to create a Federal Student Aid ID (FSA ID). Your FSA ID can make it easier to find your application once it’s started, as well as to access other information about financial aid throughout your college career. You can quickly pull up your student aid reports, as well as keep track of your Direct loan servicers.
If you have your information together, it’s possible to complete your application in 30 minutes or less. Plus, starting in spring 2018, the Department of Education plans to make it possible to fill out the FAFSA using a mobile app.
You can also use the FAFSA4caster tool to estimate your potential financial aid before you even start your application, so you can get an idea of where you stand.
FAFSA applications open on October 1 for the following year. It’s best to apply as soon as possible, since some of the money is handed out on a first-come, first-served basis. The earlier you apply, the better your chances of getting the help you need for school.
In the end, the FAFSA can be a big help as you look for the funds to pay for college. It’s a good starting point to see what financial aid you qualify for.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, 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 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 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.
* 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 PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 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. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 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.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|4.04% – 13.04%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.12% – 10.98%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|4.92% – 10.01%7||Undergraduate and Graduate|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|