Despite the headlines, college is still the surest path to a better lifetime income. But studying is much more likely to pay off if you haven’t borrowed a small fortune for it.
The Free Federal Student Aid (FAFSA) Application is an important step in making college affordable. Applications for the 2023-24 school year open October 1, and those who apply early have the best chance of receiving more free school money.
D. Jean Hester, who oversaw college enrollment and admissions at schools in Ohio and Oregon for over a decade, advises getting in line as soon as possible. While the federal government does not run out of money for needs-based assistance, universities and states do.
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“Do it this fall. There’s absolutely no reason to wait,” says Hester.
When you file the FAFSA, you’re applying for needs-based assistance that can make a world of difference in where you choose to go to school and how much debt you will have after graduation. Every dollar you receive for scholarships, fellowships and internships, you don’t have to beg or borrow from your family.
Early submission also means you’ll receive your financial aid offer sooner from the colleges you’re applying to, Hester notes, giving you time to compare offers or resolve discrepancies.
“It’s one of those things that you just have to get out of the way,” she says.
Types of aid covered by the FAFSA
The FAFSA is used to calculate your family’s Expected Family Contribution, or EFC. Subtract the EFC from your school’s official attendance cost to show your financial needs; The completed FAFSA then serves as an application for financial assistance to fill that hole.
Completing FAFSA unlocks these types of need-based federal, state, and school aid:
- Pell grants.
- work study
The current maximum Pell Grant award is $6,895; Any combination of scholarships, work studies, and bursaries can cover some or all of the difference between the school’s official attendance costs and your family’s expected financial contribution.
The great thing is that this aid does not have to be repaid.
You must also complete the FAFSA to access federal student loans.
Watch your student loan debt balance
After completing the FAFSA, you will also likely be offered subsidized federal loans; They’re called financial aid because the government pays the interest on them until you graduate. But they have to be repaid like any other loan.
The FAFSA also serves as an application for unsubsidized federal loans that are not conditional. For freshmen, the amount is capped at $5,500 per year, but increases to $7,500 by junior year.
In addition, if you need to borrow money, you can take out a personal student loan.
Any loan—subsidized, unsubsidized, or private—becomes part of the debt you’ll have to deal with after you graduate. A NerdWallet analysis suggests that the high school class of 2022 could face nearly $40,000 in average debt by the time they graduate from college.
And while student loan news is currently focused on President Joe Biden’s recent cancellation announcement, the administration has made it clear that this allowance is tied to COVID relief and will not occur again.