A Beginner’s Guide to FAFSA: What to Know About Federal Student Loans
March 11, 2021
FAFSA doesn’t have to be confusing. Here's a breakdown of what the FAFSA is and how to complete it.
No one understands the FAFSA, right? And everyone pronounces it FASFA, because it’s a too-hard-to-say acronym? Wrong. FAFSA stands for Free Application for Federal Student Aid, and it should be your best friend if you don’t think you can finance college on your own. Also, like any BFF, FAFSA doesn’t have to be confusing—so here is a breakdown for beginners of what the FAFSA is and how to complete it.
What is FAFSA?
The FAFSA is an online application for financial aid through the federal government. To apply, go online to FAFSA and input your (and your parents’ if you’re under 24) financial information. From there, the government will make a determination for how much financial aid you might be eligible for, based on:
- How much your school tuition costs
- How much you earn
- How much your parents or guardians earn
Keep in mind that FAFSAs are good for academic years, not calendar years. That means that the 2019/2020 FAFSA is good from the fall of 2019 through the summer of 2020.
What kind of financial aid does FAFSA provide?
The majority of financial aid that the government gives out is in the form of student loans, which you have to start paying back once you’ve been out of school for six months. Deciding whether or not to go into debt for college is a personal decision that requires serious consideration, but if you can’t afford tuition it on your own, student loans may be your best bet.
The FAFSA will check your eligibility for two different kinds of student loans: subsidized and unsubsidized:
- Unsubsidized student loans accrue interest before you begin paying on them. For example, if you take out an unsubsidized loan your freshman year, and you begin paying on it after you graduate four years later, it will have accrued four years’ worth of interest.
- Subsidized student loans, however, don’t begin accruing interest until you begin paying them. If you have the choice, choose subsidized over unsubsidized.
FAFSA also offers financial aid through the Pell Grant. The Pell Grant is money that the federal government gives out to students depending on their financial status. It’s money you don’t have to pay back when you’re done with your education. Not everyone is eligible, so check here to see if you may be.
What you need to complete the FAFSA
Before you sit down to complete your application for financial aid, it's best to know what you’ll need to fill out the FAFSA:
- Driver’s license: If you have a license, you’ll be prompted to enter the license number.
- Social Security card: If you don’t know your social security number off the top of your head, you’ll need to have the card nearby.
- Income tax returns: The FAFSA uses tax information from two years prior. For example, the 2020/2021 FAFSA is available now, using 2018’s tax information. The 2019/2020 FAFSA is also available, and it uses 2017’s tax information. It also allows you to use the IRS Data Retrieval Tool, which automatically pulls in your tax information, but if you’re unable to access that tool you’ll need to have your physical tax return handy.
- W-2s: Similar to the tax return, you can use the IRS DRT to pull this information. Sometimes, however, the tool goes down. If it does, or if you don’t want to allow the IRS to automatically pull your data, you’ll need to have a physical copy handy.
- Bank statements: The FAFSA will ask you how much money you have in checking/savings accounts, so be prepared to have either a bank statement or your bank’s app at the ready.
- Records of investments and untaxed income: This isn’t always applicable, but if you or your parents have investments or any income that isn’t subject to taxes, make sure you know how much it is.
What happens after you submit the FAFSA?
Within a few days of completing the FAFSA, you will receive an email with your Expected Family Contribution (EFC), or the amount of money the government assumes that you and your family can contribute towards your schooling. That same email will give you an estimate of what aid you may be eligible for based on that EFC, but the aid you’re actually awarded will depend on what your school decides. Each school has different financial aid timelines, so check with your school to see how quickly you can find out about your financial aid package.
Once you have your award package, you may want to really sit down and think about what aid you’d like to take. If you decide that you want to take out loans, you’ll need to complete the Entrance Counseling and Master Promissory Note, a sort of quiz that indicates you know what it means to borrow money. Basically, you need to understand the interest rate on your student loans, and agree to pay back the loan after you stop going to school.
Don't love quizzes? Don’t worry! There will be plenty of reading material to help you understand. The Master Promissory Note is a note that you sign promising that you will pay back the money you borrowed. It’s as simple as that!
Congratulations, you’re now a FAFSA know-it-all with the money to get through college! It’s really not so bad once you break it down into words that are easy to understand. If you have other questions, feel free to check out Noodle’s Financial Aid 101 and StudentAid’s website, because in the words of an iconic song from High School Musical, “We’re all in this together."
Questions or feedback? Email firstname.lastname@example.org
As a former admissions counselor at one of the largest universities in the world, Daphne Whittaker helps students of all ages and backgrounds get into and succeed in college.