Despite the headlines, college is still the surest way to a better lifetime earning. But a degree is more likely to pay off if you haven’t borrowed a small fortune to get it.
The Free Application for Federal Student Aid, or FAFSA, is an important step toward making college affordable. Applications for the 2023-24 school year open on October 1, and those who apply early have the best chance of getting more free money for school.
D. Gene Hester, who oversaw college enrollment and admissions at schools in Ohio and Oregon for more than a decade, recommends getting in line as soon as possible. While the federal government does not lack funding for need-based aid, colleges and states do.
“Do it this fall. There’s no reason to wait,” Hester says.
When you submit a FAFSA, you are applying for need-based aid, which can make a big difference in how you decide to go to school and how much debt you will face after graduation. Is. Every dollar you get in grants, scholarships, and work-study is something you won’t need to borrow from or from family.
Filing early also means you’ll be receiving financial aid offers from the colleges you apply sooner, Hester notes, giving you time to compare offers or resolve any discrepancies.
“It’s one of those things that you need to get out of the way,” she says.
Types of Assistance Covered by the FAFSA
The FAFSA is used to calculate your family’s expected family contribution, or EFC. Subtract the EFC from your school’s official cost of attendance to reveal your financial need; The completed FAFSA then serves as your application for financial aid to help fill that hole.
A full FAFSA unlocks need-based federal, state, and school aid as follows:
The current maximum Pell Grant award is $6,895; Any combination of grants, work-study and scholarships may cover some or all of the difference between the cost of official school attendance and your family’s expected financial contribution.
Great thing: This type of help doesn’t have to be repaid.
You must also complete the FAFSA in order to access federal student loans.
View Your Student Loan Debt Tally
After completing the FAFSA, you are also likely to be given subsidized federal loans; They are called financial aid because the government pays interest on them till you graduate. But they must be repaid like any other loan.
The FAFSA also serves as an application for non-subsidized federal loans, which are not bound by requirement. For freshmen, the amount is capped at $5,500 per year, but increases to $7,500 by junior year.
If you need to borrow more money than that amount, you can get a private student loan.
Any loan – whether it is subsidized or non-subsidized or private – becomes part of the debt you will have to face after graduation. A NerdWallet analysis suggests that the high school class of 2022 could face an average debt of about $40,000 by the time they graduate college.
And while student loan news is currently focused on President Joe Biden’s recent cancellation announcement, the administration has clarified that the allowance is tied to COVID relief and will not happen again.