How Does the FAFSA Work?

The Free Application for Federal Student Aid (FAFSA) is a foundational part of sourcing financial aid for college and career school students. 

This form helps you understand your eligibility for federal financial aid, from grants and scholarships to student loans and work-study. Many states also use your FAFSA information to determine your eligibility for state-funded financial aid programs.

If you’re wondering how the FAFSA works, here’s a detailed guide on how to apply and a quick look at what’s changing in the 2024-25 academic year. 

How does the FAFSA work? 

The FAFSA is the U.S. Department of Education's formal application to apply for higher education financial aid. The information provided on your FAFSA helps schools determine whether you qualify for certain federal aid options. 

If you’re a dependent student, you’ll need to provide your personal and financial information as well as a legal parent’s or guardian’s. Most undergraduate students are considered dependent students, with few exceptions. 

Once your FAFSA is processed, you’ll receive a Student Aid Report (SAR). The SAR is an overview of your submitted FAFSA responses. It gives you a chance to spot mistakes on your application, and make corrections if needed.

Your FAFSA is then sent to the schools you listed on your application. Each school reviews your FAFSA data and determines the aid programs you’re eligible for, including award amounts. 

The amount of financial aid you’re offered is calculated based on:

• The school’s published cost of attendance
• Your enrollment status 
• Any existing financial aid you’ve received
• Your year in school 
• Your financial situation

Who should fill out the FAFSA?

All students who qualify for federal financial aid are encouraged to fill out the FAFSA. Basic eligibility requirements include:

• Being a U.S. citizen or eligible noncitizen
• Having a valid Social Security number 
• Proving that you qualify for higher education (having a high school diploma or General Education Development certificate)
• Enrolling, or being accepted, as a regular student into an eligible higher education program
• Maintaining satisfactory academic progress during school
• Certifying on your FAFSA that you’ll only use aid awards for school, you don’t have a federal Direct Loan in default, and you don’t owe money on a past federal student grant
• Be enrolled at least half-time for Direct Loan eligibility
• Demonstrate financial need to quality for need-based aid

Despite what many people think, there are no FAFSA income limits that prevent high-earning families from applying. That’s because the FAFSA can unlock non-need based financial aid programs, too. 

What type of financial aid can I get?

The information you provide on your FAFSA is reviewed to determine your eligibility for various types of college and career school aid. 

The financial aid categories include grants, scholarships, federal work-study, and federal student loans.

Grants

Grants are a form of financial aid that typically doesn’t need to be repaid if you fulfill the requirements of the program. Note that most federal grants are awarded to students with financial need. For example, the Pell Grant is a need-based grant that offers a maximum award that varies by year. For 2023-24, the maximum award is $7,395.

Scholarships

Scholarships don’t need to be repaid, which makes them an excellent option for student aid. Although the Department of Education doesn’t offer a federal scholarship program, nonprofit organizations, schools, state agencies, and private sponsors may evaluate your FAFSA for need- or merit-based scholarship eligibility.

Learn More: How To Get a Scholarship for College

Work-study

Federal work-study offers financial aid in the form of part-time employment on or off campus. It’s available to undergraduate and graduate students, including students enrolled in school part-time. 

The program guarantees that you'll earn at least minimum wage, but your hours are capped so you don’t exceed your award amount for the year. Not all schools participate in this program, so be sure to check with your school’s financial aid department. 

Federal student loans

Federal student loans are fixed-rate installment loans under the William D. Ford Direct Loan program. Eligible students with financial need may receive subsidized loans, while unsubsidized loans are available without need requirements.

Graduate students and parents of dependent undergraduates can also apply for Direct PLUS Loans for additional aid. PLUS loans require a credit check, and if you have adverse credit, you’ll need to meet extra requirements.

Federal student loan benefits include income-driven repayment plans that could offer a $0 monthly payment, loan forgiveness, and extended repayment relief options.  

How to submit the FAFSA

If it’s your first time registering for the FAFSA, start with the following steps:

1. Decide how you’ll file: You can submit an application online at StudentAid.gov, or by filling out the printable FAFSA PDF. You can also call 1-800-433-3243 to request a paper application. If filing online, you and your parents should create a Federal Student Aid (FSA) ID, which is used as your digital signature.
2. Gather your documents and information: This includes your Social Security number, federal tax information, and driver’s license number. If you’re a dependent student, you’ll also need this information from your parents or legal guardian. 
3. Fill out the application: Whether you’re submitting an electronic or paper FAFSA, the form offers guidance on how to answer questions, if you need help.
4. List your schools: You’ll need to provide each school’s federal school code or its name and address.
5. Sign and submit your FAFSA: After completing the application fields, you, and a parent if applicable, must sign the FAFSA. Make sure to submit it by the deadline.

Updates to the 2024-25 FAFSA

The FAFSA Simplification Act introduces major changes to the financial aid process and how aid eligibility is determined, starting with the 2024-25 FAFSA. 

A few major changes include:

• The use of a new Student Aid Index (SAI) to measure a family’s ability to pay for college, which will replace the Expected Family Contribution (EFC) calculation 
• Expanded access to federal Pell Grants 
• A definition change for family size so it’s aligned with data on tax returns 
• A more streamlined application with fewer questions to answer  

FAFSA application deadline 

Generally, you can submit your FAFSA as early as October 1 of the year preceding the academic year you need aid for, and as late as June 30 of that academic year. 

• For the 2023-24 school year, the FAFSA deadline is June 30, 2024. 
• For the 2024-25 school year, the FAFSA is available starting in December 2023, not October 1. The deadline is June 30, 2025. 

Keep in mind that different states and colleges might have their own FAFSA deadlines for determining state-based or school-funded financial aid. You can find state deadlines on StudentAid.gov, but you should also check with your school’s financial aid office for its official deadline. 

Renewing your FAFSA 

You need to submit a new FAFSA for each academic year that you want to apply for financial aid. However, after filing your first FAFSA, renewing it each year is much easier.

After logging in to your StudentAid.gov account, some information from the previous year will be autofilled for your convenience. The fields you’ll typically need to update are financial information, like new income, tax information, and other personal information if it’s changed. 

You can also start a new FAFSA from scratch if you prefer. 

What if I’m not eligible?

If you don’t meet basic eligibility requirements for federal financial aid, but need help paying for school, you have some options, including:

• Apply for third-party scholarships: Scholarship programs aren’t only offered through federal or state agencies. There are thousands of scholarship aid opportunities through private companies and organizations, professional associations, and nonprofit groups. Start your scholarship search through sites like College Board and Fastweb.
• Find a job: Seeking paid employment while in college is a common way students help pay for their school expenses. In 2020, 40% of full-time undergraduate students were employed, according to the National Center for Education Statistics. 
• Find private student loans: Private banks, credit unions, and online lenders offer their own loan programs to help students finance their education. Rates, terms, and repayment plans vary between lenders, so always compare a handful of offers before moving forward.