Your Ultimate Guide to Federal Financial Aid, the FAFSA, and More

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Federal financial aid: For many students, it’s the lifeline that funds their college degree.

In 2014-15 alone, federal student aid made higher education accessible for more than 2 million college students. That’s 86 percent of enrolled full-time students, according to the most recent data from the National Center for Education Statistics.

Here’s everything you need to know about applying for federal student financial aid and when you can expect to receive funding.

FAFSA: Your key to federal financial aid

The Free Application for Federal Student Aid (FAFSA) is the form that unlocks access to federal financial aid.

Completing and submitting a FAFSA is often the first step in applying and qualifying for federal student aid. Students should submit this form well ahead of the FAFSA deadlines for the school year. Doing so will help them establish or renew their eligibility for federal financial aid for that enrollment period.

Submitting a FAFSA is required for federal financial aid

Strictly speaking, filling out a FAFSA is not a requirement for attending college.

“A family is free to opt not to apply for financial aid and to not complete a FAFSA,” said Lynne Baker, the managing director of communications for the Illinois Student Assistance Commission.

However, as Baker pointed out, the “FAFSA is a requirement for almost all need-based financial aid and many scholarship programs.”

So, if you hope to secure any kind of federal financial aid to pay for college, from grants to federal student loans, you’ll need to submit a FAFSA each year.

Filing the FAFSA can be time-consuming and complicated. But if you don’t file the FAFSA, you won’t be eligible for any federal student financial aid. Even if you don’t plan to use this aid, skipping the FAFSA could mean losing out on aid from a variety of sources.

When should I file the FAFSA?

The FAFSA opens every year on Oct. 1 for the following school year. Students and parents usually have until that academic year ends on June 30 to file a FAFSA. So, for example, submissions opened on Oct. 1, 2017, for the 2018-19 FAFSA and will remain open until June 30, 2019.

That doesn’t mean you should put off filing your FAFSA, though. According to Baker, the earlier you file the FAFSA, the better.

“Students should file their FAFSAs as soon as possible after Oct. 1 of the calendar year prior to the year they plan to attend school,” Baker advised. “Filing as early as possible puts you in line for some aid, such as some state grants, that has limited funding and may be offered to eligible students on a first-come, first-served basis.”

Some states, colleges, and universities have their own deadlines to receive FAFSA information for additional, nonfederal aid. Check your college’s website or talk to the financial aid office to see when you must complete the FAFSA to meet these deadlines.

How long does the FAFSA take to complete?

“Many families decide not to complete the FAFSA simply because it is too complicated or they believe they make too much money to be eligible for anything,” Baker said. “Take the time to understand the FAFSA, the eligibility requirements, and how the information is used.”

The FAFSA also offers tools to simplify the filing process and prevent errors, Baker added.

If you’ve filed a FAFSA in the past, for instance, you can automatically input the information you provided in your previous FAFSA to your current application. Plus, the IRS Data Retrieval Tool can be used to automatically fill your FAFSA with relevant tax information.

Altogether, completing a FAFSA takes about an hour from start to finish, according to the official FAFSA site. Below is a timeline for submitting a FAFSA and getting your financial aid award:

FAFSA timeline

Evaluating your financial aid award letter

Once you submit a FAFSA, the next step is for your college to evaluate your need and put together a financial aid package.

This package is outlined in a financial aid award letter and will include a complete list of student aid offers. The federal student financial aid you can get will be listed in addition to state aid, institutional aid, and private student loans.

From there, it’s your job to evaluate the student aid you’re offered and decide which types you should use first and how much. Here are the basics of what you need to know about how federal financial aid is determined and awarded.

Types of federal financial aid

There are two main kinds of federal financial aid: need-based aid and non-need-based aid. The FAFSA information is run through a formula that determines a student’s ability to cover college costs and need for financial aid, as illustrated below:

FAFSA formula

The higher a student’s need for federal student financial aid, the more need-based aid they will be granted. The lower it is, the more likely it is that the student will qualify for little to no need-based aid.

Need-based aid: Grants, work-study, and subsidized loans

Need-based federal financial aid is designed to help students from low-income backgrounds enroll and stay in school. Some need-based aid is essentially free money you don’t have to repay. Here are the main types of need-based federal student aid.

Federal Pell Grants

Awarded to first-time undergraduate students, Pell Grants don’t need to be repaid. The maximum Pell Grant award was $5,920 for the 2017-18 school year.

Federal Supplemental Educational Opportunity Grant (FSEOG)

This award is administered by a college’s financial aid office but uses federal funds.

Not all colleges participate, but if yours does, it will use FAFSA information to determine if you qualify. FSEOG awards can range from $100 to $4,000 and don’t need to be repaid.

Federal work-study

Students work part time, and their pay is subsidized by the federal government up to a certain number of hours each semester. This form of aid acts as typical wages and doesn’t need to be repaid.

Direct Subsidized Loans

Direct Subsidized Loans have to be repaid by the student. They also carry an interest subsidy, which applies when a student is enrolled full time or otherwise defers their student loan payments.

During this deferment, interest charges are paid by the federal government rather than accruing and being added to the balance.

Non-need-based aid: Unsubsidized student loans

If you don’t qualify for need-based student aid or can’t cover all your costs with need-based aid alone, don’t worry. A few types of student loans don’t require a student to demonstrate financial need.

Direct Unsubsidized Loans

Undergraduate students might take out Direct Unsubsidized Loans, which operate under the same program as Direct Subsidized Loans.

Unlike Direct Subsidized Loans, however, Direct Unsubsidized Loans don’t have an interest subsidy. They do have higher federal student loan limits, though, as well as the lowest interest rates and fees of any federal student loans.

PLUS Loans

There are two types of PLUS Loans: Parent PLUS Loans, which are available to parents of undergrads, and Grad PLUS loans, which are available to graduate students.

Parents and graduate students can borrow PLUS Loans up to the college’s cost of attendance not covered by other forms of student aid. But be warned: PLUS loans have higher interest rates and loan fees.

What if you don’t qualify for need-based aid?

Maybe you haven’t qualified for much financial aid in the past or don’t think you’ll receive federal aid for the coming school year.

Even so, it’s worth the time to file. In fact, the complexity of the FAFSA is actually a reason you should file, Baker said.

“The formula used to determine financial aid eligibility is very complex,” Baker pointed out. “The way to determine how assets may impact eligibility is to complete the FAFSA.”

It’s possible you’ll qualify for aid you might not have expected. The only way to know for sure is to file and see what you’re approved for. That’s especially true for first-time filers or filers whose income, dependent status, or other relevant factors have changed recently.

Your FAFSA information “may also be used by schools to determine eligibility for institutional financial aid,” Baker said. “So if you don’t file a FAFSA, you might not get the opportunity to be considered for [need-based institutional aid] or partially need-based institutional aid.”

That means not filing your FAFSA could keep you from being considered for scholarships and similar programs.

What if you don’t plan to use federal aid or student loans?

Let’s say you don’t think you’ll need federal aid or loans because you or your family can afford to pay for college out of pocket.

Well, filling out a FAFSA every year is still a good idea.

It gives you access to federal student loans and other resources to help cover costs. Even if you don’t plan to use them, you might encounter unforeseen financial hardships or unexpected problems that could leave you reliant on federal student aid.

Maybe a parent becomes unemployed and is no longer able to cover college costs. Or perhaps a medical emergency means your family’s financial resources are needed elsewhere. By filing your FAFSA, you can ensure your access to federal student loans if you need them.

If you don’t file a FAFSA, by the time you realize you need to take out federal student loans, it might be too late. It’s better to file your FAFSA and have the option to take out federal student loans than to need the opportunity and not have it.

As you get ready to pay for college, remember there are plenty of federal student aid options for you to explore. Make sure you take the time to review all of them and fill out the FAFSA to see what you qualify for.

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1 Important Disclosures for College Ave.

CollegeAve Disclosures

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.

(1)All rates shown include the auto-pay discount.  The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.

Information advertised valid as of 11/08/2019. Variable interest rates may increase after consummation.

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3 Important Disclosures for Discover.

Discover Disclosures

  1. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit for any applicable reward terms and conditions.
  2. View Auto Reward Debit Reward Terms and Conditions at
  3. Aggregate loan limits apply.
  4. Lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest interest rate offered on the Discover Undergraduate Loan and highest interest rates offered on Discover student loans, including Undergraduate, Graduate, Health Professions, Law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable Margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 2.50% as of July 1, 2019. Discover Student Loans will adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Please visit for more information about interest rates.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

4 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).

  1.  Rates are as of July 1, 2019 and include auto-pay discount. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment. Variable rates may increase after consummation.

5 Important Disclosures for Citizens.

Citizens Disclosures

Undergraduate Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of November 1, 2019, the one-month LIBOR rate is 1.80%. Variable interest rates range from 2.90% – 11.16% (2.90% – 11.01% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.

Citizens Bank Student Loan Eligibility: Borrowers must be enrolled at least half-time in a degree-granting program at an eligible institution. Borrowers must be a U.S. citizen or permanent resident or an international borrower/eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For borrowers who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank- participating school. 

Please Note: International Students are not eligible for the multi-year approval feature.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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