Guide to the FAFSA

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FAFSA Guidance & Other Financial Aid Options

The FAFSA, or Free Application for Federal Student Aid, allows students to apply for federal grants, loans, and work-study programs. The federal student aid program distributes $120 billion in aid for college students annually. By filling out the FAFSA every year, students learn about their financial aid options. 

Filling out the FAFSA often seems intimidating. However, most people spend less than one hour completing the form. Understanding the process and the documents required for the FAFSA also helps students complete the form and learn about their eligibility for aid. 

Federal aid may not cover all college costs. In addition to federal aid, many prospective students search for scholarships, grants, and fellowships to pay for school. Researching these free sources of money helps students limit their borrowing and avoid high student debt. 

College students complete the FAFSA as the first step in securing financial aid. In this guide, we walk through the process step by step.

What is FASFA?


  • What is the renewal FAFSA?

    Students submit the FAFSA every year while they attend college. The renewal FAFSA simplifies the process by automatically populating the form with information from the previous year. Applicants either update any financial information for the current year or submit a new FAFSA form for each year.


  • How do I make corrections to my FAFSA after submission?

    Applicants correct or update their FAFSA form any time before the annual deadline at the end of June. Students log into the FAFSA website with their FSA ID, select “make FAFSA correction,” and update their information. Students often also contact their school’s financial aid office to appeal their financial aid award.


  • What is the Expected Family Contribution (EFC)?

    The expected family contribution includes the total amount a student’s family contributes toward their college expenses. For dependent students, the EFC includes their parents’ expected financial contribution. For independent students, the number lists their expected contribution. Students appeal their EFC if their circumstances change. For example, job loss, death, or divorce often affect the EFC.


  • What does Cost of Attendance (COA) mean?

    The cost of attendance includes all costs associated with enrolling at a particular school. The COA combines tuition, fees, estimated textbook and supply costs, and the cost of living. This number varies by school. Private schools, for example, typically charge higher tuition rates than public institutions.


  • What is a Student Aid Report (SAR)?

    The cost of attendance includes all costs associated with enrolling at a particular school. The COA combines tuition, fees, estimated textbook and supply costs, and the cost of living. This number varies by school. Private schools, for example, typically charge higher tuition rates than public institutions.


  • What is a Student Aid Report (SAR)?

    After filling out the FAFSA form, applicants receive a student aid report. The SAR lists the student’s expected family contribution based on the financial information submitted in the FAFSA application. The SAR also shows the student’s eligibility for federal student aid programs.


  • Do I have to pay back the FAFSA?

    Students who take out federal loans after filling out the FAFSA must repay those loans. Student loan repayment terms vary by the type of loan and the borrower’s unique circumstances. However, the FAFSA also qualifies students for grants and work-study programs, which recipients do not repay.


  • Does the FAFSA pay full tuition?

    Federal aid covers tuition costs for qualifying students. The FAFSA uses the cost of attendance and a student’s expected family contribution to award aid. Undergraduates and graduate students use federal grants, loans, and work-study jobs to pay for their tuition costs.


What Types of Financial Aid Can You Get with the FAFSA?



The FAFSA qualifies applicants for federal grants, student loans, and work-study programs. This section introduces the different types of financial aid students receive by filling out the FAFSA.


  • Federal Grants

    Federal grant programs provide money to students with no obligation to repay the award. Prioritize grants before taking out student loans. Both undergraduates and graduate students qualify for federal grants. However, some programs, like the Pell Grant, only award funds to undergraduates. Federal grants like the TEACH Grant also require a service obligation. 

    This section introduces federal grants, including the eligibility requirements and maximum annual awards.

    Federal Pell Grant

    The Federal Pell Grant program awards funds to undergraduates who demonstrate exceptional financial need. Eligibility depends on the student’s expected family contribution, the cost of their school, and their enrollment status. Recipients also cannot hold a bachelor’s or graduate degree. In the 2021-2022 academic year, recipients receive a maximum of $6,495.

    FSEO Grants

    The Federal Supplemental Educational Opportunity (FSEO) Grant supports undergraduates with exceptional financial need. The federal student aid program distributes FSEO funds to participating schools, which administer the program. Recipients receive up to $4,000 per year based on their financial need, available funds, and their other sources of financial aid.

    TEACH Grants

    The Teacher Education Assistance for College and Higher Education (TEACH) Grant provides up to $4,000 per year for educators in eligible programs. Applicants agree to teach in a low-income school or high-needs field after graduation. If recipients do not meet the service obligation, then they repay the grant as a loan.

    Service Grants

    The Iraq and Afghanistan Service Grant provides financial aid for the children of service members who died in Iraq or Afghanistan. Eligible applicants include students under 24 years old or enrolled in college at the time of the parent or guardian’s death. Students can receive up to $6,495 for the 2021-2022 award year.


  • Federal Loans

    Federal student loan programs lend money to eligible students. While some programs, including Direct Subsidized Loans, require financial need, others do not. With a subsidized loan, the federal government pays interest during school and deferments.

    Both undergraduate and graduate students qualify for federal loans. Students who take out federal loans qualify for loan forgiveness and deferment programs. Fill out the FAFSA and exhaust your federal loan options before turning to private loans.

    Direct Subsidized

    Undergraduates who demonstrate financial need qualify for Direct Subsidized Loans. With a subsidized loan, the federal government pays interest while the borrower attends school, during a six-month grace period after leaving school, and during any loan deferment periods. Subsidized loan borrowers currently pay 2.75% interest.

    Direct Unsubsidized

    Direct Unsubsidized Loans do not require students to show financial need. Borrowers pay interest starting when they take out the loan. Currently, undergraduate borrowers pay 2.75% interest on unsubsidized loans, while graduate and professional borrowers pay 4.30% interest.

    PLUS Loans

    Parents, graduate students, and professional students qualify for Direct PLUS loans. The U.S. Department of Education issues PLUS loans to parents and graduate students who pass a credit check. PLUS loan borrowers can take out loans up to the cost of their school’s attendance minus other forms of financial aid.


  • Work Study

    The federal work-study program connects income-eligible students with part-time jobs. Schools administer the work-study program and place work-study students in on-campus and off-campus roles that support their school or serve a public interest. Both part-time and full-time undergraduates and graduate students qualify for the program.

    In their work-study jobs, students earn at least the minimum wage. Students receive either an hourly or salary pay, depending on their degree level and job. Work-study recipients receive an annual award after filling out the FAFSA. Students cannot earn more at their job than their work-study award.


How to Fill Out the FAFSA



College students fill out the FAFSA every year to qualify for federal loans and other student aid. This section walks through the process of setting up a FAFSA account and filing the FAFSA.


  • Setting Up Your FAFSA Account

    New users create an FSA ID, or a username and password, to fill out the FAFSA. The FSA ID also lets users digitally sign their FAFSA form. Parents can create their own FSA ID to sign applications; however, parents should not create an FSA ID for their child.


  • Gather Required Documents

    Applicants provide certain information to fill out the FAFSA, including a Social Security number, federal income tax returns, and bank statements. Dependent students also provide financial information for their parents. Applicants submit information on any investments or untaxed income to determine their financial need.


  • School Selection

    FAFSA applicants enter school codes to indicate which schools should receive their student aid report. The form provides a look-up feature if applicants do not know the school code. Students can list up to 10 schools on their FAFSA and send their student aid report to additional schools after submitting the form.


  • Student and Parent Demographics

    Dependent students provide information about their parents, including parental income, on the FAFSA. The application requires information about legal parents, including stepparents. Visit the FAFSA site for details on determining the legal parent. 

    Independent students do not provide information about their parents.


  • Financial Information

    The FAFSA determines a student’s expected financial contribution based on their income and their parents’ financial information for dependent students. The FAFSA requires tax returns, W-2 statements, bank account and investment information, and untaxed income information. The IRS Data Retrieval Tool transfers tax information onto the FAFSA application.


  • Submitting Your FAFSA

    After filling out the FAFSA, students either sign electronically with their FSA ID or send the form by mail. The federal student aid program analyzes the FAFSA application to create a student aid report (SAR). Electronic filers receive their SAR within a few days, while paper filers often wait several weeks.

    Applicants need to submit the FAFSA by the last day in June. Colleges and states sometimes set earlier deadlines.


FAFSA Appeals



The SAR lists a student’s expected financial contribution and their eligibility for federal aid. Recipients should review the SAR for any errors and correct or update their FAFSA. For example, if the student’s parents divorce after submitting the FAFSA, applicants resubmit to receive a revised expected family contribution. 

If a student’s circumstances change due to job loss, an income change, or the death of a family member, they often file an appeal. Students who experience high medical expenses, increased childcare costs, or a change to their dependency status also usually revise their FAFSA. 

While students appeal mistakes in their FAFSA form with the federal student aid program directly, appealing a financial aid award often means contacting their school’s financial aid office. Since colleges administer the federal financial aid program, they help students request additional aid.

Benefits of Federal Loans over Private Loans



Federal loans offer several benefits compared to private loans, including loan forgiveness programs, the option to defer payments, and lower interest rates. Learn more about the benefits of federal loans over private loans.

Deferred Payments
Federal loans qualify for deferred payments, which let borrowers pause their loans for up to three years. For subsidized loans, interest does not accrue during a deferment.
Lower, Fixed Interest Rates
Compared to private loans, federal loans offer lower interest rates. In addition, fixed interest rates allow for predictable monthly payments that do not increase because of rising interest rates.
Subsidized Interest
With a subsidized federal loan, the federal government pays interest while the borrower attends school and during a six-month grace period after graduation.
Tax-deductible Interest
Borrowers often deduct their student loan interest payments on their federal income taxes with a maximum deduction of $2,500 per year.

Managing FAFSA Loans and Repayment



Borrowers with federal student loans must repay their loan on schedule. Many federal borrowers qualify for loan forgiveness or cancellation programs. For example, the Public Service Loan Forgiveness Program (PSLF) forgives the remaining balance after 120 monthly payments. The federal student aid program also discharges loans for disability or death. 

This section introduces loan repayment options and loan forgiveness programs. Different loans use different repayment policies, so carefully research your options.

FAFSA Loan Repayment Plans

  • Standard Repayment Loan

    Qualifying Loans
    • Direct Subsidized Loans
    • Direct Unsubsidized Loans
    • Subsidized and Unsubsidized Federal Stafford Loans
    • PLUS loans
    • Consolidation Loans
    Repayment Length Up to 10 years
    Payment Terms Payments depend on how soon you plan to pay off your loans.
    Eligibility Eligible borrowers include all individuals with federal student loans.

  • Graduated Repayment Plan

    Qualifying Loans
    • Direct Subsidized Loans
    • Direct Unsubsidized Loans
    • Subsidized and Unsubsidized Federal Stafford Loans
    • PLUS loans
    • Consolidation Loans
    Repayment Length Up to 10 years
    Payment Terms Payments begin lower and increase slightly every two years.
    Eligibility Eligible borrowers include all individuals with federal student loans.

  • Revised Pay As You Earn Repayment Plan (REPAYE)

    Qualifying Loans
    • Direct Subsidized Loans
    • Direct Unsubsidized Loans
    • PLUS loans
    • Consolidation Loans
    Repayment Length Up to 25 years
    Payment Terms Each month, you pay 10% of your income or your combined income with your spouse. After 20-25 years, the remaining balance qualifies for forgiveness.
    Eligibility Eligible individuals include Direct Loan borrowers with approved loans.

  • Extended Repayment Plan

    Qualifying Loans
    • Direct Subsidized Loans
    • Direct Unsubsidized Loans
    • PLUS loans
    • Consolidation Loans
    Repayment Length Up to 25 years
    Payment Terms Borrowers elect either fixed or graduated payments.
    Eligibility Eligible individuals include Direct Loan or Consolidated Loan borrowers with debt exceeding $30,000.

FAFSA Loan Forgiveness

  • Teacher Loan Forgiveness

    Eligibility Loans
    • Direct Loans
    • FFEL Loans
    Conditions Many borrowers who teach at a low-income elementary or secondary school for five consecutive years qualify to receive up to $17,500 in loan forgiveness.

  • Public Service Loan Forgiveness

    Eligible Loans Direct Loans
    Conditions

    In the Public Service Loan Forgiveness Program (PSLF), after students make 120 qualifying payments, the remaining balance qualifies for forgiveness.

    Only payments of the full month’s amount made while working at a qualifying employer and received no later than 15 days after the due date qualify for PSLF.

    Qualifying employers include federal, state, local, and tribal government agencies, including many nonprofit agencies, the U.S. military, public schools and colleges, and child and family service agencies. You must work at least 30 hours per week. Graduates can work for two qualified employers part time as long as their work meets the hour requirement.

  • Closed School Discharge

    Eligibility Loans
    • Direct Loans
    • FFEL Loans
    Conditions Many borrowers who teach at a low-income elementary or secondary school for five consecutive years qualify to receive up to $17,500 in loan forgiveness.

  • Public Service Loan Forgiveness

    Eligible Loans
    • Direct Loans
    • FFEL Loans
    Conditions If your school closes during your enrollment or soon after you withdraw from enrollment, you may qualify for partial loan forgiveness.

  • Total and Permanent Disability Discharge

    Eligible Loans
    • Direct Loans
    • FFEL Loans
    Conditions Borrowers with total and permanent disability may qualify for loan forgiveness.

  • Discharge in Bankruptcy

    Eligible Loans
    • Direct Loans
    • FFEL Loans
    Conditions If you file for bankruptcy and the bankruptcy court determines that loan repayment would cause “undue hardship,” you may qualify for loan forgiveness.

  • Borrower Defense Repayment

    Eligible Loans
    • Direct Loans
    • FFEL Loans
    Conditions If you took out loans to attend an institution that commits fraud, you may qualify for loan forgiveness.

  • Death Discharge

    Eligible Loans
    • Direct Loans
    • FFEL Loans
    Conditions If you die before paying off your loans, your family members will not need to pay them off.

  • False Certifications of Student Eligibility or Unauthorized Payment Discharge

    Eligible Loans
    • Direct Loans
    • FFEL Loans
    Conditions If someone steals your identity and takes out loans in your name or if a school authorizes loans for a program you do not qualify for, you may qualify for loan forgiveness.

Defaulting on Your Student Loans



When borrowers do not make their monthly student loan payments, the loan goes into default. Most federal loans go into default after 270 days of nonpayment

Defaulting on loans comes with serious consequences. Lenders report defaults to credit bureaus, which harms the borrower’s credit scores. Borrowers must repay the full unpaid balance of the loan plus interest immediately, which creates a financial hardship. 

With loans in default, borrowers cannot take out additional student aid and the lender can garnish the borrower’s wages or withhold federal tax refunds. Avoid default if possible and work with your lender to minimize the risk of defaulting on your loan.

Resources

Federal Student Aid FAFSA Edvisors NASFAA Resources for Students and Parents
The official Federal Student Aid website contains a wealth of information about student loans and other types of student financial aid provided by the federal government. Consult this resource for information about federal student aid or financing your education. The online version of the FAFSA enables you to submit your application for financial aid. The FAFSA website also contains helpful information about the application process. Edvisors provides several resources dealing with federal loans and federal aid in general. The site covers essential information about paying for college. Edvisors also offers guidance for paying off your loans and applying for scholarships. The National Association of Student Financial Aid Administrators (NASFAA) offers guidance on topics like filling out the FAFSA, college affordability and transparency, and state financial aid programs on their site.
Portrait of Genevieve Carlton

Genevieve Carlton

Genevieve Carlton holds a Ph.D. in history from Northwestern University and earned tenure as a history professor at the University of Louisville. An award-winning historian and writer, Genevieve has published multiple scholarly articles and a book with the University of Chicago Press. She currently works as a freelance writer and consultant.

See more articles by Genevieve

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