October 1 of each year marks the date that the FAFSA (Free Application for Federal Student Aid) becomes available. Students who wish to receive any form of student loan or grant from the federal government must complete and submit it. Most states and colleges also require completion before schools offering aid and formulating a financial aid package. Even some scholarship foundations and other private grantees will ask for the FAFSA.
The financial aid process can feel somewhat mysterious for both students and their families. The first step is to complete the form. It is available on the StudentAid.Gov website and can be submitted online or mailed. If sent in electronically, the Department of Education processes your application in about three days, and then makes the information available to all of the schools you chose to list on the form. Each school then uses the information you documented on the FAFSA to determine how much aid you are eligible to receive if you attend that school. Aid can be a combination of subsidized loans, unsubsidized loans, grants, and scholarships.
To determine a student’s financial package, the financial aid office evaluates a complex formula. The parts of the formula are the cost of attendance (COA) and an Expected Family Contribution (EFC). The outcome of this formula will determine the amount and mix of student financial aid.
Cost of Attendance. The COA takes into account the variety of costs that the student will incur in order to reasonably complete their education. This calculation includes tuition and fees, living expenses such as lodging and food, books and related resources, dependent care expenses if the student is a caregiver, travel to and from the school, costs of disability accommodation, and reasonable study abroad costs if applicable.
Expected Family Contribution. The EFT is the portion of costs that the student and family are expected to pay toward the cost of attendance. The EFT is also a formula, and factors in the size of the student’s family, the number of students attending higher education (for now), most forms of income, and certain assets. Whether home equity is considered or not can depend on requirements of some private institutions.
Be careful with deadlines. While the FAFSA can be completed and submitted any time between October 1 and June 30, many schools have earlier deadlines, especially for specific scholarships and grants. Additionally, even some federal grants are available on a first-come-first-served basis, and the opportunity for those funds can close once the budget is used.
Next year, there will be many changes happening to the FAFSA application. These changes will not be in effect until the 2023-2024 application period, but they will be discussed in an upcoming post so families can plan accordingly.