FAFSA Made Simple: Your Comprehensive Financial Aid Guide

Written by Diana Flowers, Reviewed by Benjamin Fultz
https://www.snappywords.com/knowledge/fafsa-made-simple-your-comprehensive-financial-aid-guide

The cost of attending college continues to increase, having grown more than 135% from 1963 to 2021. The Education Data Initiative found that the average cost for a year of college is $36,436, including tuition, books, and living expenses. This price is even higher if you attend a private university, which averages $55,840 a year. Because of this, many students need financial aid in the form of loans, grants, and scholarships. One of the easiest ways to apply for this type of aid is through FAFSA.

What is FAFSA?

FAFSA stands for “Free Application for Federal Student Aid”, and it provides access to several types of federal financial aid for college and career schools. Essentially, it consolidates the application process for federal aid under one form, where students can access both grants and loans.

The idea of creating a federal source of higher education funding came about in 1965 under the Higher Education Act (HEA), signed into law by President Lyndon Johnson. The goal of this act was to provide equal opportunity to pursue higher education by providing a single avenue of federal funding. The HEA has been largely successful, though after the act’s reauthorization in 2008, data showed a disparity among races. BIPOC students take out more loans on average than white students, and fewer low-income families receive the aid they need. To address this, the FAFSA was revised as part of the Consolidated Appropriations Act of 2021 to reduce the number of questions from 108 to 36. These questions were seen as a barrier to receiving aid.

Types of Funding Available

The FAFSA is an easy and convenient way to apply for several different types of aid in one application, including:

• Pell Grant: This is a grant (meaning it does not need to be paid back) that is typically awarded to undergraduate students who demonstrate an exceptional financial need. For the 2023-24 school year, the maximum Pell Grant award was $7,395. For many students, factors such as expected family contribution and cost of attendance reduce the award amount. Around 34% of undergraduates are awarded a Pell Grant each year, with an average award amount of $4,491.
• Federal Supplemental Educational Opportunity Grant (FSEOG): This is another grant program for students demonstrating an exceptional financial need. Although this is a federal grant, it’s administered at the institutional level. However, not all universities participate in the program. Each participating institution receives a set amount of FSEOG funds. Once these are disbursed, the institution will not receive any more money until the following academic year. FSEOG awards are usually between $100 and $4,000 per student.
• Federal Direct Subsidized and Unsubsidized Loans:
  • Unlike a grant, these are federal interest loans (sometimes referred to as Stafford Loans or Direct Stafford Loans) for students who demonstrate a financial need. Rates change each year and are set by Congress. Currently, the interest rate is 5.5% for undergraduate students, and 7.05% for graduate students. The interest rate you receive when you’re approved is locked in for the life of your loan.
    • Direct Subsidized Loans: Subsidized loans are only for undergraduate students who demonstrate a financial need. Award amounts are determined by the institution. While you’re enrolled and for the first six months after you graduate, the federal government pays all the interest. However, after this period, you will be responsible for interest payments.
    • Direct Unsubsidized Loans: Unsubsidized loans are available to both undergraduate and graduate students, but the recipient does not need to demonstrate a financial need. Your institution will still determine how much you can borrow based on the cost of attendance and other sources of financial aid you may have. Unlike a subsidized loan, you are responsible for all interest payments, making these loans ultimately more expensive to pay off.
  • There are limits on how many loans you can take out, depending on a few factors. For example, a first-year dependent student can borrow up to $5,500 with no more than $3,500 in subsidized loans, while a first year independent student can borrow up to $9,500 with no more than $3,500 in subsidized loans.
• The Federal Work-Study Program: This program gives students an opportunity to work a part-time job while attending university. These can be either an  on- or off- campus job. Whenever possible, the employment will be related to your field of study, civic education, or community service. You will be guaranteed a set amount of hours to work, which you can then use to pay for your education.
• Direct PLUS Loans: These are loans specifically for graduate and professional students. However, though you are required to fill out and submit the FAFSA first, PLUS loans must be applied for separately. The interest rate on these loans is currently at 8.05% for the 2023-24 school year, and unlike other federal financial aid, like direct subsidized and unsubsidized loans, your credit history will be checked.
• State-specific aid: Many states offer their own grants and scholarships. Students can access these by filling out the FAFSA such as the Cal Grant or the The New York State Tuition Assistance Program (TAP).

When Can I Apply? 

There is a new FAFSA form each school year, which begins each year on July 1. For instance, if you’re applying to start college in the fall of 2024, you will choose the 2024–25 FAFSA form. Each FAFSA application must be completed for each year that you need federal funding. You will not be automatically re-enrolled, so you will have to reenter information and resubmit the form. The sooner you fill out the FAFSA, the better, so don’t delay! Many schools have a limited amount of funding, and they may allocate it on a first-come, first-serve basis. If you wait too long to apply, you may miss out on this aid.

• Federal deadline: The application window for completing your FAFSA form begins the October before the academic year. If you’re planning on attending college in the fall of 2024, you can start filling out an application as early as October 1, 2023. All applications must be received no later than June 30 of the year you want to attend (ie. you must submit by June 30, 2024 to qualify for aid for the school year beginning fall 2024.)School deadlines: There are also school-specific deadlines you need to be aware of. Your college or university may have its own deadlines for applying for student aid before June 30. You should check with each school’s financial aid page to see when this is. Though an institution can’t officially consider you for aid until you’ve been accepted as a student, it’s always a good idea to apply early.State deadlines: Since each state is able to award its own financial aid, grants, and scholarships to students, some may have their own deadlines. Find your state’s deadline and note this when starting the application process.

For the complete article and a Step-by-Step Guide to Completing FAFSA , please visit https://www.snappywords.com/knowledge/fafsa-made-simple-your-comprehensive-financial-aid-guide