When exploring ways to pay for college, you’ll hear a lot about the FAFSA, or Free Application for Federal Student Aid. What is the FAFSA used for and what does it do? The FAFSA is a legal document that helps you secure valuable federal and state support to pay for school. When you sign it, you agree to spend the federal or state financial aid you receive to pay for the cost of attending college. But before you envision financing high-end dorm accessories or spring break trips, understand that the cost of attendance is specifically defined.

What can you use federal or state financial aid for?

Your school establishes a cost of attendance amount (COA) for what it would typically cost a full or part-time student, in-state or out-of-state, to attend one academic year. The COA is the foundation for determining the amount of money you can receive under a Campus-Based Program, Stafford/Direct PLUS loans and a Pell Grant. It takes into consideration the direct costs of attending your school, like tuition, fees and room and board. It also includes indirect costs like books, transportation and other education-related expenses. 

The COA categories include:

  • Tuition and fees
  • Room and board (including off-campus housing)
  • Books and supplies
  • Transportation (cost of travel to/from school, but not for the purchase of a vehicle)
  • Miscellaneous personal expenses
  • Cost of rental or purchase of required equipment, materials and supplies
  • Dependent care expenses
  • Disability-related expenses
  • Loan fees
  • Licensing and certification fees
  • Reasonable costs associated with a study abroad program approved for credit by your school
  • Expenses associated with a cooperative education program

Budgeting your federal or state financial aid

When you receive federal or state aid, the money is actually sent directly to your school. Your school applies that money to your tuition, fees, and room and board costs. If there is money left over, your school will send you those additional funds, and it is up to you to use that money to cover other educational-related expenses.

What is not covered by federal or state aid?

Not all college expenses — like health insurance, prescriptions and clothing —  are covered by federal or state aid. And the more expensive your school is, the more likely your federal aid package will not stretch to cover all expenses and you will have unmet financial need.

What if you need more money?

There are several solutions if you find your federal or state aid won’t stretch to fully cover all your college expenses. You can appeal your school’s COA by documenting higher costs than specified. To do that, save receipts and ask your financial aid office to increase your supplies allowance. If you have special circumstances, such as a significant change in your family’s finances, you can apply to your financial aid office to review your award. Finally, if you need more money, apply for loans or scholarships, and take on a part-time job for extra cash.

Get a maximum amount of federal or state aid

Completing the FAFSA correctly is key to getting the highest possible amount of federal or state aid for college. Make sure you know these 17 things before you even begin filling out the FAFSA.

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