How Much Money Will the FAFSA Give Me? Understanding Federal Aid Eligibility

The Federal Student Aid office distributes about $120.8 billion to students every year through the FAFSA, which stands for Free Application for Federal Student Aid. But how much money can you expect to receive from filling out the FAFSA?

The answer depends on a number of factors. There are several different types of federal student aid available, including loans, grants, and the work-study program, and the information you provide on the FAFSA helps schools determine how much aid to offer you.

Here's what you need to know about the amount you can expect from the FAFSA.

What is the FAFSA and how does it work?

Completing the FAFSA is an important step in securing money for your higher education costs, since you must fill out a FAFSA form to be eligible for any federal student aid. Without completing a FAFSA for each year you attend college, you won't be eligible to receive any federal aid for your education.

This can lead to some confusion, since many people mistakenly believe the FAFSA itself grants or denies students federal aid.

“Think of the FAFSA like a tax return with information that colleges use,” explains Jack Wang, a wealth advisor at Innovative Advisory Group. “Each college then calculates how much aid to offer, if any.”

The FAFSA requests information about your personal and financial situation, and, if applicable, that of your parents or legal guardian. Based on the information you provide on the FAFSA, the schools that accept you will extend you a financial aid offer. You'll receive a letter from each school that details how much and what forms of aid you're eligible to receive.

See Also: How To Compare Financial Aid Award Letters: What To Look For

The types of aid you may receive can include federal student loans, grants, and work-study funds. Student loans are funds that you must repay after you graduate, leave school, or drop below half-time enrollment. Grants are funds that don't have to be repaid. And the work-study program offers part-time jobs to students with financial need.

Current private student loan rates

How much money can you get from the FAFSA?

Each type of federal student aid has different eligibility requirements and maximum award amounts. Here are the limits for the most common types of federal student aid:

The amount of money you're eligible to receive can depend on your financial need. All students, regardless of need, are eligible for Direct Unsubsidized Loans and graduate PLUS loans, and parents of all students, regardless of need, are eligible for parent PLUS loans.

However, Pell Grants, Direct Subsidized Loans, and work-study jobs are only available to students with financial need. For this kind of aid, the level of need can determine how much money you receive.

Read More: FAFSA Income Limits and Eligibility

Factors that determine your FAFSA award

There are several factors that schools use to determine your financial aid award. To calculate your specific federal financial aid offer, the financial aid office at your school will use:

• Your cost of attendance (COA): This amount includes an estimate of your tuition and fees, as well as added costs such as food, housing, books, supplies, and transportation, among other expenses.
• Your Student Aid Index (SAI): Previously called the Expected Family Contribution (EFC), this figure is determined by the information you provide on the FAFSA, like your income sources, assets, and any benefits you or your parents receive, such as Social Security or unemployment. The SAI is calculated by totaling the financial resources your family has, then subtracting the minimum amount necessary for your family's annual living expenses. The SAI ranges from -1,500 to 999,999. A lower SAI indicates greater financial need.

Your school's financial aid office will determine your eligibility for need-based aid by subtracting your Student Aid Index from your cost of attendance. This figure will indicate your financial need.

To determine how much non-need-based aid you can get, your school subtracts any other financial aid you may have received from your cost of attendance.

Tips for maximizing your FAFSA award

You can ensure that you get the maximum amount of FAFSA money you're eligible to receive by taking the following steps:

Fill out the FAFSA early

Completing the FAFSA is necessary to secure federal financial aid, and the earlier you register for the FAFSA, the better, as certain awards are first come, first served. Starting sooner also offers some buffer room in case you need to make any changes or correct mistakes.

Start thinking about FAFSA reporting in early high school

Jack Wang wishes more students and parents understood that planning for FAFSA should occur earlier than many families might expect. “The FAFSA is like a tax return; families report what has already happened,” Wang explains.

Specifically, the FAFSA wants income and asset information before you might be thinking about college.

“The first year that is reported on the FAFSA covers spring of sophomore year through fall of junior year of high school,” says Wang. This means families may want to start planning for the FAFSA as early as their student's freshman year of high school.

Minimize your taxable income

Since schools use the taxable income and assets that you report on the FAFSA to determine your eligibility for need-based aid, it's important to think through what financial moves you make during the FAFSA reporting years.

This is something families can overlook, according to Wang. “Maybe a family has an old 401(k) that they cash in to pay for kitchen renovations. What they forget is that cashing in a 401(k) shows as income, which goes on the tax return, and eventually goes on the FAFSA,” he says.

Correctly report your financial information

Accurate reporting of your income and assets is the only way to ensure you receive the aid you're eligible for. And the Federal Student Aid office takes incorrect and fraudulent financial information seriously. If you receive financial aid based on false financial information, you'll have to pay back the money you received and may face fines and penalties.

The good news is there are a number of assets you're not required to include on the FAFSA. You don't need to report the following:

• Equity in your primary home
• Life insurance values
• ABLE accounts
• Retirement plans, including 401(k) plans, pension funds, annuities, non-education IRAs, etc.

Double-check your FAFSA answers

There are some common mistakes that can derail the processing of your FAFSA. It can be easy to transpose digits in your Social Security number or make a spelling mistake while you're typing quickly.

Wang also cautions that it can be very easy to miss the prepopulated extra 0 in some FAFSA financial fields. “Entering a number sometimes does not override the zero there,” Wang says. “Instead, it adds a zero to the number entered. For example, entering $100 can mistakenly be entered as $1,000.” This could lead to a mistaken reporting of your financial information.

Explore state and school-based aid programs

Your state of residence and the schools you apply to may also have financial aid that you could be eligible for. Make sure you look into these aid programs to determine your eligibility.

What to do if your FAFSA award isn't enough

Your FAFSA award may not cover all of your educational expenses. There are several ways to bridge the gap between your financial aid award and the cost of attendance:

• Appeal the financial aid decision: You can appeal the award decision from your school if you believe you should be eligible for a more favorable financial aid package. You should be able to provide a reason to justify your request for more aid, and you'll likely need to include supporting documentation. For example, you may consider appealing the decision if your family has experienced something like a job loss or unreimbursed medical expenses.
• Apply for scholarships and other funding sources: There's no limit to the amount of money you can receive through scholarships or private grants. Taking the time to find and apply for these funding options can be an excellent way to pay for your education.
• Consider private student loan options: Although private student loans don't have the borrower protections offered by federal student loans, they can offer a way to cover the difference between your federal aid award and the cost of college. Remember to carefully compare rates and terms to ensure you choose the best lender for your circumstances.

Check Out: How To Take Out a Student Loan