5 Most Frequently Asked Questions When Applying for Federal Financial Aid (FAFSA) Free Application Form Available October 1, 2024

“Applying for college can often feel overwhelming, especially when families discover there are additional forms to tackle,” says Jeff Wong, a financial adviser with Northwestern Mutual in San Francisco. “Yet, if your child is preparing to enter college, there’s one crucial document every family should prioritize: the Free Application for Federal Student Aid, or FAFSA.”

Every year, the FAFSA becomes available online starting October 1. Unfortunately, many families miss this opportunity either because they are unsure about the application process or mistakenly believe their income is too high to qualify for assistance. Here, we break down five common misconceptions about the FAFSA and the realities that counter them.

1. **”It doesn’t matter when you submit as long as you meet the deadline.”**

Once a student submits their FAFSA, the U.S. Department of Education records the submission date and shares it with the colleges on the student’s list. Because some institutions have limited financial aid resources, applying early can significantly enhance a student’s chances of receiving aid, which is often allocated on a first-come, first-served basis.

2. **”Our family earns too much to apply.”**

Many families shy away from completing the FAFSA, thinking their income is too high to qualify for financial aid. In fact, there is no upper income limit for federal aid eligibility. Often, the difference between what a family can afford and the actual cost of college can be addressed by the institutions themselves.

The updated FAFSA has replaced the previous “Expected Family Contribution” with the Student Aid Index (SAI). While this change may benefit more low-income families, households with multiple children in college might see a decrease in aid, as the SAI no longer factors in how many children are enrolled in school simultaneously.

Even if financial aid isn’t granted the first year, submitting the FAFSA each year is crucial. As financial circumstances can change—due to shifts in income, marital status, or household size—Dorman stresses the importance of reapplying annually.

3. **”Will I be forced to take out loans?”**

All student loans are entirely optional. “Colleges will present loans to students to inform them of their eligibility,” states Amy Denton, a regional representative for the College Foundation of North Carolina. “Students have the flexibility to compare their total aid offers with college expenses and decide whether they need to accept a loan. They can decline, accept only part of the loan, or choose to take it later if necessary.”

4. **”I might end up with high-interest rates.”**

Federal student loans come with fixed interest rates, which can be either subsidized or unsubsidized, so it’s important to understand these differences. According to Denton, completing the FAFSA helps students show financial need, making them eligible for subsidized loans where the government covers interest while they are in school. Additionally, students may qualify for the federal work-study program, allowing them to earn money to help pay for college without accumulating debt.

Moreover, even if a family does not qualify for need-based subsidized loans, many eligible students can apply for unsubsidized loans, which require them to start paying interest right away. “If interest isn’t paid while attending school, it compounds and is added to the principal balance,” warns Dorman. “Repayment should start within six months after graduation or if the student drops below half-time enrollment.”

5. **”As long as I fill out the FAFSA, I’m done.”**

Depending on the school, families might also need to complete the CSS Profile to finalize their financial aid applications. Typically used by smaller private colleges, the CSS Profile helps determine eligibility for institutional aid.

“This form is more comprehensive than the FAFSA, providing institutions with a thorough understanding of a student and their family’s financial situation, enabling them to assess potential aid beyond federal assistance,” Dorman explains. “For many families, this could represent a vital opportunity to secure extra financial aid.”