What is the FAFSA? A beginner’s guide

Filling out the Free Application for Federal Student Aid (FAFSA) puts you in the running for federal, state, and institutional financial aid, including grants, work-study options, and student loans. In the 2022-23 school year, undergraduate students who filled out the FAFSA received an average of $15,480 in student financial aid — $11,620 of this aid didn’t need to be repaid, according to the College Board.

Key FAFSA facts

• The FAFSA is your gateway to financial aid including grants, work-study, and federal student loans. 
• All college students are encouraged to apply for the FAFSA regardless of their financial situation. 
• The 2024-25 FAFSA deadline is June 30, 2025, at 11:59 p.m. Central Time (CT).
• Some financial aid is limited, and different schools and states may set their own FAFSA deadlines, so apply early. 

How does the FAFSA work? 

The Free Application for Federal Student Aid (FAFSA) is a free form that allows you to access federal financial aid and other types of college or trade school funding. The FAFSA collects your personal and financial information (and your parents’ information, if you’re a dependent student) to determine how much you can reasonably contribute toward college. You should submit the FAFSA for each year you attend college.

Schools use your FAFSA information to determine your financial need. They do this by comparing the school’s cost of attendance to your Student Aid Index (SAI). Your SAI isn’t how much your family must pay for college — instead, it evaluates your family’s financial strength, which takes into account your family’s income and assets. After evaluating your financial need, the schools you’ve been accepted into create your financial aid package. Your financial aid award might contain a combination of grants, work-study, and federal student loans.

Check out: FAFSA Guide 2024-25

Financial aid you might be eligible for 

Submitting the FAFSA can grant you access to various types of federal financial aid including grants, work-study, and federal student loans. Some forms of aid may require you to show financial need in order to qualify, while others are available to all students. Federal student loans offer relatively low, fixed interest rates and are eligible for a variety of repayment plans, forgiveness opportunities, and other protections that private student loans don’t offer.

Federal Grants

These are a type of gift aid that you don’t have to pay back, and that typically go to students with financial need. Funds for grants are usually limited, so apply for the FAFSA early if you think you might be eligible: 

• Pell Grants: Pell grants are awarded to undergraduate students with exceptional financial need and totals up to $7,395 per student in the 2024-25 school year.
• Federal Supplemental Educational Opportunity Grant: This grant is for students with exceptional financial need and it’s awarded directly by participating schools. Eligible students can receive between $100 and $4,000 per academic year. 
• TEACH Grant: Recipients agree to work as a full-time teacher for four years in a high-need field within eight years after graduating from a participating school. This grant provides $4,000 annually to enrolled students. 

Federal Work-Study

The federal work-study program offers part-time jobs to undergraduate and graduate students demonstrating financial need. Work-study jobs may relate to your field of study and will pay at least the federal minimum wage. Opportunities may be on or off-campus. Funds for work-study programs are limited, so apply early through FAFSA.

Federal Direct Subsidized Loans

Subsidized student loans are available to undergraduate students with financial need. Out of all educational loans, federal subsidized loans are the most affordable. These loans feature a low fixed interest rate of 5.50% for the 2023-24 academic year, with the government covering interest charges while you are in school and during your six-month grace period. Borrowing limits total $23,000 throughout your studies, with annual limits as well.

Federal Direct Unsubsidized Loans

Federal unsubsidized loans are available to both undergraduate and graduate students regardless of financial need. They offer a fixed rate of 5.50% for undergraduates and 7.05% for graduate students. After subsidized loans, unsubsidized loans are often the next best option due to their low rates and federal benefits like income-driven repayment plans, forgiveness programs, and relief options for borrowers experiencing financial hardship. Dependent undergraduates can borrow up to $31,000 total, and graduate students can borrow $20,500 annually.

Federal Direct PLUS Loans

Direct PLUS Loans include Grad PLUS loans for graduate students and Parent PLUS loans for parents of dependent undergraduates. Direct PLUS loans carry the highest rate out of all federal loans at 8.05%, but the benefit is that they can cover your full cost of attendance. Grad PLUS loans may be ideal for graduate students who need additional funding after maxing out unsubsidized loans. Parent PLUS loans offer an option for parents who may not qualify for competitive rates on private loans.

Related: Average Cost of College in 2024

Who should fill out the FAFSA?

Everyone who meets the general requirements for federal financial aid should fill out the FAFSA, regardless of their family’s earnings. Even if you think your household income is too high to qualify for grants or work-study, you should complete the FAFSA — some forms of aid aren’t based on financial need. Having this option in your back pocket could be useful if you need a loan or additional funding at some point during the school year.

“99% of all students and families should file the FAFSA,” said Tom O’Hare, founder of Get College Going and senior partner at Pivotal College Years. “Supplying information through the FAFSA allows students and families to be considered for need-based financial aid, which in many cases can be the difference between enrolling or not.”

If you’re a dependent student (most undergraduates are), your parents also need to fill out the form. Independent students, however, can fill out the FAFSA on their own. You might be an independent student if you’re aged 24 or older, married, have your own dependents, or meet other qualifying circumstances.

How to submit the FAFSA

You can complete the FAFSA online at StudentAid.gov. Here are the steps you’ll need to take:

1. Create your Federal Student Aid (FSA) ID: If you haven't already, create an FSA ID to log in to your Federal Student Aid account. Your FSA ID is your unique username and password, and it can’t be shared. Your parents will also need their own FSA IDs if you’re a dependent student. To create your FSA ID, provide your full legal name, date of birth, Social Security number, and a mobile phone number or email address.
2. Gather necessary information: This includes your financial records, such as a W-2 from your employer, banking and investment information, and other paperwork related to your assets. If you’re a dependent student, your parents will also need to provide financial information. To simplify the process, both you and your parents may be able to use the FAFSA’s IRS data retrieval tool to transfer data from your recent tax returns directly into the form. 
3. Complete the form in the FAFSA portal: If you’re a dependent student, there will be two parts to the application — one for the student and one for a parent. You and your parent will provide demographic and financial information. Don’t worry if you’re not sure about your dependency status — there’s also a section that’ll help you determine whether you’re a dependent or independent student. You can also list up to 20 schools to receive your FAFSA information.
4. Sign and submit: Review all your information carefully to ensure there are no errors. You can go back into the form and edit it if you spot any mistakes. Once everything looks accurate, digitally sign and submit the form. If you’re a dependent student, you only need one parent to sign the FAFSA with you.
5. Await next steps: After submitting the FAFSA, you’ll receive a Student Aid Report (SAR), which will summarize all of the information you provided. At this point, you’ll simply wait to receive your financial aid packages from your schools. Once your offers start trickling in, you can compare them and evaluate your cost of attendance at each school.

When is the FAFSA deadline?

The FAFSA typically becomes available on October 1 every year, however the 2024-25 FAFSA is an exception — it became available in December 2023 after lawmakers voted to overhaul the entire application, but things haven’t gone as expected. Many students have reported technical difficulties accessing the form and glitches in the process.

As of April 10, the Department of Education reports that roughly seven million students have completed the FAFSA, far from the 17 million expected annual submissions. The deadline to submit the form is fast approaching on June 30, 2024. 

Submitting the FAFSA is the only way to access federal student aid, so it’s a good idea to submit it as soon as possible to avoid missing out on valuable financial assistance for college. Some states and schools also set specific FAFSA deadlines that are earlier than the federal deadline, so check these due dates and mark them on your calendar. You can find a list of state FAFSA deadlines on the Federal Student Aid website.

If federal financial aid isn’t enough to foot the bill for your college expenses, consider private student loans to help fill in the gap. Private student loans don’t come with the same benefits that federal loans do, but borrowers with strong credit may be able to access competitive rates and favorable terms.