How Does The FAFSA Work? What You Need To Know Now

Mike Brown Updated on October 18, 2016

If there is a key to the kingdom of getting money for college, it’s the Free Application for Federal Student Aid (FAFSA). Not only will a completed FAFSA streamline the college financial aid process, it is a must-have when applying for scholarships and grants from your school. But with more than 100 questions to answer, figuring out how the FAFSA works can be a challenge. Here is information that will make the process easier.

How does FAFSA work?

To be eligible for a portion of the billions of dollars the federal government provides annually to qualified undergraduate, graduate and professional students, you must complete a FAFSA. The application asks for financial information about you and your parents if you are a dependent. That information is used to calculate your financial need, based on the cost of attending your school and your Expected Family Contribution (EFC). 

Even if you think you or your parents make too much money to qualify for financial aid, you should still complete the FAFSA. Many schools that award private scholarships or merit-based aid require the FAFSA to be on file.

The purpose of the FAFSA

To receive any form of federal aid, including Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Perkins Loans, Stafford Loans, PLUS Loans and Federal Work-Study jobs, you must first submit a completed FAFSA.

But the FAFSA is more than just a federal application. Your state will use the FAFSA EFC calculation to determine your eligibility for state-funded grants and scholarships. It is also an important component of many schools’ decisions about who will receive institutional merit- or needs-based aid.

Who should complete the FAFSA?

The FAFSA is for most students who plan to enroll or are enrolled in two- and four-year colleges, graduate schools, professional schools (like law, business or medical school) or any program that rewards a degree, certificate or credit, including most vocational and technical schools. You should complete and submit a new FAFSA each year you are in school. And be sure to submit your Renewal FAFSA as soon after October 1 (the new, earlier due date) each year as possible. Often, state and school grants and loans are limited and awarded on a first-come, first-served basis.

If you have a high school diploma or a General Equivalency Diploma (GED), or completed high school in a home school setting approved under state law, and meet any of the following requirements, you are eligible to complete the FAFSA:

  • U.S. citizen with a Social Security number. Males between the ages of 18 and 25 must also be registered for the Selective Service.
  • Legal permanent resident or eligible non-citizen like a U.S. national.
  • A person born in one of several Pacific Islands like the Federated States of Micronesia, American Samoa and the Marshall Islands.
  • A person with refugee status, victim of human trafficking and who has been granted political asylum.

People with criminal records are still eligible for federal financial aid unless you were convicted of possessing or selling illegal drugs while you were receiving federal financial aid in the past.

How is the FAFSA aid distributed?

If your FAFSA qualifies you for federal grants, loans or work-study programs, that money is disbursed directly to your school. With grants or loans, your school will apply that money toward your tuition, fees and (if you live on campus) room and board. Your school will notify you each time money is disbursed to cover expenses, typically twice a year. Any money that is left over will be paid to you to use for other expenses associated with school. You may be able to choose how that money is paid to you: via check, cash, a credit to your bank account or a prepaid debit or ATM card.

If you qualify for a work-study program, your school will pay you directly unless you request that money be applied to your student account.

Be prepared before you go online

Preparation is key to successfully completing the FAFSA. Make sure you know these 17 things before you even begin filling out the FAFSA.


Published in: FAFSA

About the Author
Mike Brown

Mike is responsible for the editorial and marketing direction of Nitro. He has a history of helping people thru his educational background—first as a teacher at the Pennsylvania State University and then thru 15 years of development and marketing of education programs. Read more by Mike Brown

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