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As you probably know, students need to submit a new Free Application for Federal Student Aid (FAFSA) each school year. It’s the only way to learn what kinds of federal aid you qualify for, from student loans and grants to work-study programs. Plus, other student aid programs piggyback off the FAFSA, so it’s worth submitting even if you’re not expecting federal aid.

Keep reading to find detailed instructions for how to complete the latest FAFSA for the 2023-2024 school year. We’ll walk you through the required fields, and point out changes from last year’s form.

How To Fill Out the FAFSA

The FAFSA form is available every Oct. 1 for the next school year. For example, the form for the 2023-24 school year became available on Oct. 1, 2022. The Oct. 1 launch date coincides with many college application deadlines, so you can submit admission and federal aid applications at the same time.

Dependent or Independent Student?

Before sitting down to complete the application, you need to decide whether to apply as a dependent of your parents or an independent student. An independent student is one who meets any of these criteria:

•   Will be 24 or older by Jan. 1 of the school year for which the student is applying for financial aid

•   Is married

•   Is working toward a master’s degree or doctorate

•   Has children who receive more than half of their support from the FAFSA applicant

•   Is a member or veteran of the armed forces

•   Has undergone the legal process to become independent

•   The full list of qualifications is available at StudentAid.gov/dependency

Create an Account

Open the FAFSA site at https://studentaid.gov/h/apply-for-aid/fafsa.

Your login credentials for the FAFSA are known as your FSA ID. The ID will be used to confirm your identity and to electronically sign federal student loan documents.

If you are an independent student, you are the only one who needs to obtain an FSA ID. For dependent students, a parent or guardian will also need to obtain a FSA ID. Make sure you keep track of your FSA ID. If you and your parents both get IDs, don’t get them mixed up.

After creating your FSA ID, you’ll be asked to complete some security steps. You’ll need your own cell phone number and email address to enable two-step verification. You’ll also be asked to choose and complete “challenge questions” and to write down a backup code.

After verifying your cell number and email address, you can log in again and fill out the FAFSA. It’s a good idea to know the FAFSA deadlines but complete the application as soon as you can because some schools and states run out of financial aid dollars early.

The application is divided into a series of screens with no more than a few questions on each. The questions are organized under descriptive tabs, such as “School Selection” and “Parent Financials.” You can navigate forward and backward through the screens and tabs, and skip questions you want to come back to later.

Note: Instructions given for the rest of this post are for students. Any time the application says “you” or “your,” it’s referring to the student.

Tab 1: Student Demographics

What’s most important here is that you accurately fill in the fields, carefully proofreading for typos. You’ll be asked for basic information, such as your:

•   Name (entered exactly as it appears on your Social Security card), address, date of birth

•   Email and phone number

•   Permanent mailing address (usually your parents’)

•   State of residency

•   Education status, and whether you want to be considered for a work-study job (you may still turn down the job after it’s offered)

•   Driver’s license or state ID, if you have one

•   Information on foster care and your parents’ education levels

Recommended: How to Choose a Student Loan for College

Tab 2: School Selection

List all schools you’re considering, even if you’re not sure you’ll apply. (Colleges can’t access this list.) You can add or remove colleges from your FAFSA form later. Fields in this section include:

•   Your high school

•   Up to 10 colleges you hope to apply to. You’ll also be asked for your preferred housing situation: on campus, with parent, or off campus.

If you’re considering international study, don’t miss this story about student loans and study abroad.

Tab 3: Dependency Status

You’ll be asked a series of questions to establish your status as a dependent, such as whether you’re married, have children, armed forces status, foster care experience, and whether you’re homeless or at risk of homelessness.

Tab 4: Parent Demographics

If you’re a dependent student, this is where your parent or parents will need to share their demographic information. The section will also ask for details of your living situation.

If your parents can’t or won’t participate, you may answer that you are unable to provide parental information. Otherwise, you will need their Social Security number, date of birth, email address, state of residency, sibling information, and any other people your parents support.

Tab 5: Parent Financials

The IRS Data Retrieval Tool automatically transfers tax information to the FAFSA form. There are manual entry options as well. Parents may find this FAFSA Facts story helpful.

Tab 6: Student Financials

You’ll be asked similar questions to those in the Parent section.

Tab 7: Sign & Submit

Before you submit your application, you’ll be asked to review your answers and correct any errors. You’ll also be asked additional demographics info; your answers have no bearing on your application.

You and your parent(s) sign the FAFSA using your FSA IDs. If you have two parents, the parent who is signing must identify as Parent 1 or Parent 2 (a designation made when filling out parental demographics; you can always go back to that section to see which choice is appropriate).

Another (slower) option: You can print out the signature page, sign it, and mail it.

If you need additional help before submitting your application, see our step-by-step application guide.

Who Should Complete the FAFSA?

Anyone who could benefit from even a little college financial aid has nothing to lose by filling out the FAFSA. Many students leave money on the table every year by failing to complete it, and low-income families are often less likely to complete the form than wealthier ones.

Even if you are not eligible for federal aid, it’s worth your while to complete the FAFSA because most schools and states use FAFSA information to award non-federal aid.

To qualify for federal grants, work-study, and different types of student loans, you must be a U.S. citizen or an eligible noncitizen. You’ll need a valid Social Security number, with few exceptions.

You’ll need a high school diploma, GED, or another recognized equivalent. You’ll also need to enroll in an eligible educational program and maintain satisfactory academic progress.

You may become ineligible for federal aid if you owe money on a previous federal student grant, or are in default on a previous federal student loan.

Some types of federal aid are available only to people who demonstrate financial need. This includes the Federal Pell Grant and Direct Subsidized Loans. For the latter, the government pays the accrued interest while the borrower is in college or during most of their deferment periods.

What If I Don’t Qualify for Any or Enough Aid?

Merit aid, based on academic excellence, talent, and/or certain achievements, is available. Some colleges won’t consider you for any of their merit scholarships until you’ve submitted the FAFSA, according to the Department of Education.

Businesses, nonprofits, cultural organizations, and local groups also offer merit scholarships.

You can also look into state grants and scholarships. Every state has its own money and process for distributing aid. Some only require a completed FAFSA; others, a separate application.

Then there are private student loans, those not issued by the government. You can check to see what various lenders offer.

If you investigate private student loan possibilities, note that each lender has its own conditions. Some, for example, won’t allow you to defer payments if you get into a financially challenging situation after graduation.

Although private student loans don’t come with the benefits and protections that federal student loans have — like income-driven repayment plans and federal forbearance — they may help bridge funding gaps.

The Takeaway

Taking the time to fill out the FAFSA can pay off in the form of federal grants, loans, and work-study. The DOE assures applicants that there are no income limits and that even students whose parents make $100,000 or more may still receive aid. Many state programs and merit scholarships require that a student submit the FAFSA. And by the way, don’t put off your application too long: Some schools and states run out of financial aid dollars early.

If you think a private student loan could fill in gaps in the road to a college degree, check out what SoFi offers. There are no fees ever. Apply with a cosigner if you like, and enjoy flexible repayment options.

Add SoFi student loans to your study list.

FAQ

Can I fill out FAFSA myself?

Yes, students can and should complete most of the application on their own. You’ll need some information from your parents, like their Social Security numbers and income figures. Tax information may be automatically imported from the IRS site. If your parents can’t or won’t participate, you may indicate that in the application.

What disqualifies you from getting FAFSA?

To qualify for federal student aid you’ll need a Social Security number, be a U.S. citizen or eligible noncitizen, and have a high school diploma or equivalent. You’ll also need your own cell phone number and email address to complete the application. You can be disqualified if you owe money on a previous federal student grant, or are in default. As of 2022, drug convictions and Selective Service status are no longer considered in the application.

What is the income limit for FAFSA 2022?

There is no upper income limit to qualify for federal student aid. You may read about lower income limits that will zero out your Expected Family Contribution. However, all students are encouraged to complete the FAFSA. You never know what kind of federal aid you might qualify for, and many merit-based programs piggyback their applications on the federal application.

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If you, like 80% of Americans, use credit cards, you’ve probably been hit with a convenience fee — an additional charge levied by merchants — at some point. Perhaps it was tacked on when you bought concert tickets online rather than at the box office or assessed when you paid your rent online with your plastic. Or maybe you only noticed it when reviewing your monthly bill. Whatever the case, you may well have asked yourself if this is a fair fee and how you can avoid this kind of charge in the future.

We can help! Read on to learn more about credit-card convenience fees, when and why they are charged, and whether you can avoid them.

What Is A Convenience Fee?

A convenience fee is a flat fee that’s tacked on to the cost of your transaction that you, the cardholder, are expected to pay. It is typically charged by merchants when a customer uses a credit card in a payment channel that it’s the usual one for the business. For instance, if a trade school usually accepts payments in-person and you choose to pay online, you might be assessed the additional fee for the convenience of not turning up at their place of business. A convenience fee may be either a small percentage of the transaction’s total or a flat fee charged when you use a credit or debit card with the merchant.

This fee is the result of a lawsuit between retailers and the brands (Mastercard/Visa) that was settled in January 2013. To make a long story short, the verdict permits merchants to add a surcharge when a customer uses a credit card. It helps to understand why retailers fought for this right: When merchants allow a customer to use a credit card as a payment method instead of cash or checks, they (the retailer) are charged a credit-card processing fee for the transaction. When you, the customer, receive a convenience fee, it reflects the merchant trying to offload that processing fee onto you. The convenience fee is what you pay for the “convenience” of being able to use a credit card for a transaction instead of cash or another form of payment. In some cases, a retailer will factor these fees into their business model and won’t pass along the additional charge. That is why you may notice that convenience fees strike you as somewhat random.

Example of a Convenience Fee

In general, the consumer pays a convenience fee when purchasing a product or service in an alternative way than paying in person. One example of a convenience fee is purchasing tickets for a play over the phone or online. Anyone who’s ever reserved seats for the theater knows that you often pay a lot more than the ticket price for the final purchase amount. You may be hit with a credit card convenience fee for this purchase as well as other fees! Buying a ticket in person at a ticket office for a show will often help you avoid convenience fees.

Another example of these convenience fees at work can be found at the gas station. When you fill up your tank, you may notice that the price for gas is about $0.10 cheaper per gallon if you pay with cash than with a credit card.

Why Do Convenience Fees Exist?

Many credit card holders already get hit with an annual fee and monthly interest fees; so why do you have to pay even more money for using plastic as a payment method? The main reason you’re getting stuck with these convenience fees is because the merchants have to pay processing fees to payment networks. The payment networks or payment processors work with the financial institutions that issue your cards (like SoFi), and the card network (Visa, Mastercard, Discover, American Express) to make sure the transaction is secure and processed smoothly. The bank that issues the cards often charges the merchant a fee for allowing them to accept this card – a credit card processing fee. Sometimes, payment networks also charge the merchant a fee. Often, credit-card processing fees cost the merchants between 2% and 4% per transaction. That’s why the merchant might pass those fees on to you, the consumer, as a convenience fee.

This is also another reason some small businesses may not accept credit cards at all: They don’t want to have to pay the fees associated with taking them or pass them on to you.Other merchants choose not to accept certain credit cards, like Discover or American Express, since those companies tend to collect higher fees per purchase.

Credit Card Company Rules on Convenience Fees

Here’s the breakdown for how some of the major credit-card brands handle fees.

Brand	Rules for Merchants on Convenience Fees
Visa	Merchants can add convenience fees on all nonstandard payment methods, except for income tax payments in some states. Retailers are required to register the surcharge with the payment network. They must also display a notice of the surcharge at the point of sale — both in-store and online. You’ll usually see the additional fee on your receipt.
Mastercard	Only select government agencies and educational institutions can charge credit card convenience fees. Retailers must register the surcharge with their payment network. They must also display a message about the surcharge at the point of sale — both in-store at the checkout and online. You’ll usually see the additional fee on your receipt as well.
American Express	Only government agencies, educational institutions, utility companies, and rental companies can charge credit-card convenience fees.
Discover	The retailer cannot charge convenience fees to Discover cardholders unless it charges the same fees to those using credit cards from other card issuers.

Convenience Fees vs Surcharge Fees: What’s the Difference?

When thinking about the additional charges you wind up paying, you may have wondered what the difference between convenience fees and surcharge fees are. Let’s explain.

A surcharge fee covers the cost of you having the privilege of using a credit card. It’s added before taxes. Sometimes called a “checkout fee,” it is usually a percentage of the sale and it’s optional for the merchant to add a surcharge fee onto a transaction. Each specific credit card company has rules about surcharge fees.

Credit card surcharges are prohibited by law in 10 states. If you’re a merchant doing business in Colorado, Utah, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, and Texas, you’re not allowed to add a surcharge to a purchase. So if you’re a customer in those states and paying with a credit card, you might be able to avoid some additional fees.

In comparison, a convenience fee covers the cost of doing a transaction with a credit card instead of another payment method. Sometimes this is charged as a percentage of the transaction. Other times, it is charged as a flat fee, regardless of the cost of the products or services purchased. A retailer might add $3 to $5 to the transaction completed with a credit card, regardless of what or how much was purchased.

How Can Convenience Fees Be Avoided?

When you’re trying to avoid credit card convenience fees, you can choose to pay with a method other than plastic, such as cash, check, or money orders at some merchants. For example, if you’re paying for college tuition, you might be able to set up an online payment using an electronic check, money order, or personal check. At some schools, this could save you nearly 3% per payment transaction. If one semester of college tuition was $5,000, avoiding a convenience fee charge could save you about $150.

That being said, if you have a high-rewards credit card, conducting an expensive transaction might be beneficial if you can get cash back.

So, it’s important to scan for notices about convenience fees. When making a purchase at a bricks and mortar location, look at the point of entry and at the checkout area to see if they have messages posted about surcharges or convenience fees. You could always ask before purchasing a product or service if paying by cash will save you money. This often works well in service businesses. If you’re paying someone to install or service an appliance in your home, for example, paying with cash could save you a chunk of money if it allows you to avoid fees. If you are purchasing something online, look carefully at the charges before hitting “purchase.” Credit card fees are fairly common today, so you want to be alert to how they can crop up – and avoid them when you can!

The Takeaway

Knowing that credit card convenience fees (and surcharge fees) exist, whether they are legal in your state, and how to avoid them can help save you money in the long run. Oftentimes, these fees are added at the merchant’s discretion, and you may — with a little sleuthing and a work-around or two — be able to avoid them. Using a credit card can be an expensive proposition, so it’s good to know how you can trim some of these additional charges. Using cash or a check can sometimes be the most economical path forward.

Get Money-Smart With SoFi Checking and Savings

Avoiding additional fees and paying you interest for the privilege of holding your money are two benefits SoFi can offer you! With our online checking and savings accounts, eligible accounts will pay no account or overdraft fees, plus you’ll earn a competitive APY.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

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A short put spread, sometimes called a bull put spread or short put vertical spread, is an options trading strategy that investors may use when they expect a slight rise in an underlying asset. This strategy allows an investor to potentially profit from an increase in the underlying asset’s price while also limiting losses. An investor may utilize this strategy to protect against any downside risk; the investor will know their total potential loss before making the trade.

When trading options, you have various strategies, like short put spreads, from which you can choose. The short put spread strategy can be a valuable trade for investors with a neutral-to-bullish outlook on an asset. Which options trading strategy is right for you will depend on several factors, like your risk tolerance, cash reserves, and perspective on the underlying asset.

What Is a Short Put Spread?

A short put spread is an options trading strategy that involves buying one put option contract and selling another put option on the same underlying asset with the same expiration date but at different strike prices. This strategy is a neutral-to-bullish trading play, meaning that the investor believes the underlying asset’s price will stay flat or increase during the life of the trade.

A short put spread is a credit spread in which the investor receives a credit when they open a position. The trader buys a put option with a lower strike price and sells a put option with a higher strike price. The difference between the price of the two put options is the net credit the trader receives, which is the maximum potential profit in the trade.

The maximum loss in a short put spread is the difference between the strike prices of the two puts minus the net credit received. This gives the trading strategy a defined downside risk. A short put spread does not have upside risk, meaning the trade won’t lose money if the price of the underlying asset increases.

A short put spread is also known as a short put vertical spread because of how the strike prices are positioned — one lower and the other higher — even though they have the same expiration date.

How Short Put Spreads Work

With a short put spread, the investor uses put options, which give the investor the right — but not always the obligation — to sell a security at a given price during a set period of time.

An investor using a short put spread strategy will first sell a put option at a given strike price and expiration date, receiving a premium for the sale. This option is known as the short leg of the trade.

Simultaneously, the trader buys a put option at a lower strike price, paying a premium. This option is called the long leg. The premium for the long leg put option will always be less than the short leg since the lower strike put is further out of the money. Because of the difference in premiums, the trader receives a net credit for setting up the trade.

💡 Recommended: In the Money vs Out of the Money Options

Short Put Spread Example

Say stock ABC is trading around $72. You feel neutral to bullish toward the stock, so you open a short put spread by selling a put option with a $72 strike price and buying a put with a $70 strike. Both put options have the same expiration date. You sell the put with a $72 strike price for a $1.75 premium and buy the put with a $70 strike for a $0.86 premium.

You collect the difference between the two premiums, which is $0.89 ($1.75 – $0.86). Since each option contract is usually for 100 shares of stock, you’d collect an $89 credit when opening the trade.

Recommended: Guide to How Options Are Priced

Maximum Profit

The credit you collect up front is the maximum profit in a short put spread. In a short put spread, you achieve your maximum profit at any price above the strike price of the option you sold. Both put options expire worthless in this scenario.

In our example, as long as stock ABC closes at or above $72 at expiration, both puts will expire worthless and you will keep the $89 credit you received when you opened the position.

Maximum Loss

The maximum loss in a short put spread is the difference between the strike prices of the two put options minus the credit you receive initially and any commissions and fees incurred. You will realize the maximum loss in a short put spread if the underlying asset’s price expires below the strike price of the put option you bought.

In our example, you will experience the maximum loss if stock ABC trades below $70, the strike price of the put option you bought, at expiration. The maximum loss will be $111 in this scenario, not including commissions and fees.

$72 – $70 – ($1.75 – $0.86) = $1.11 x 100 shares = $111

Breakeven

The breakeven on a short put spread trade is the price the underlying asset must close at for the investor to come away even; they neither make nor lose money on the trade, not including commissions and investment fees.

To calculate the breakeven on a short put spread trade, you subtract the net credit you receive upfront from the strike price of the short put contract you sold, which is the option with the higher strike price.

In our example, you subtract the $0.89 credit from $72 to get a breakeven of $71.11. If stock ABC closes at $71.11 at expiration, you will lose $89 from the short leg of the trade with a $72 strike price, which will be balanced out by the $89 cash credit you received when you opened the position.

Set-Up

To set up a short put spread, you first need to find a security that you are neutral to bullish on. Once you have found a reasonable candidate, you’ll want to set it up by entering your put transactions.

You first sell to open a put option contract with a strike price near where the asset is currently trading. You then buy to open a put option with a strike price that’s out-of-the-money; the strike price of this contract will be below the strike price of the put you are selling. Both of these contracts will have the same expiration date.

Maintenance

The short put spread does not require much ongoing maintenance since your risk is defined to both upside and downside.

However, you may want to pay attention to the possibility of early assignment, especially with the short leg position of your trade — the put with the higher strike price. You might want to close your position before expiration so you don’t have to pay any potential assignment fees or trigger a margin call.

Exit Strategy

If the stock’s price is above the higher strike price at expiration, there is nothing you have to do; the puts will expire worthless, and you will walk away with the maximum profit of the credit you received.

If the stock’s price is below the lower strike price of the long leg of the trade at expiration, the two contracts will cancel each other, and you will walk away with a maximum loss.

Before expiration, however, you can exit the trade to avoid having to buy shares that you may be obligated to purchase because you sold a put option. To exit the trade, you can buy the short put contract to close and sell the long put contract to close.

Impacts of Time, Volatility, and Price Change

Changes in the price and volatility of the underlying stock and the passage of time can affect a short put spread strategy in various ways.

Time

Time decay will generally work in favor of the short put spread. As both of the legs of the short put spread get closer to the expiration, any time value that the option contracts have will erode.

Volatility

The short put spread is more or less volatility neutral. Because you are both long and short one put option contract each, volatility in the underlying stock similarly affects each leg of the contract.

Price

A short put spread is a bullish option strategy. You have no risk to the upside and will achieve your maximum profit if the underlying stock closes above the strike price of the higher put option. You are sensitive to price decreases of the underlying stock and will suffer the maximum loss if the stock closes below the strike price of the lower put option.

Pros and Cons of Short Put Spreads

Here are some of the advantages and disadvantages of using short put spreads:

Short Put Spread Pros	Short Put Spread Cons
No risk to the upside	Lower profit potential compared to buying the underlying security outright
Limited risk to the downside; maximum loss is known upfront	Maximum loss is generally larger than the maximum potential profit
Can earn a positive return even if the underlying does not move significantly	Difficult trading strategy for beginning investors

Short Put Calendar Spreads

A short put calendar spread is another type of spread that uses two different put options. With a short put calendar spread, the two options have the same strike price but different expiration dates. You sell a put with a further out expiration and buy a put with a closer expiration date.

Alternatives to Short Put Spreads

Short put vertical spreads are just one of the several options spread strategies investors can use to bolster a portfolio.

Bull Put Spreads

A bull put spread is another name for the short put spread. The short put spread is considered a bullish investment since you’ll get your maximum profit if the stock’s price increases.

Bear Put Spread

As the name suggests, a bear put spread is the opposite of a bull put spread; investors will implement the trade when they have a bearish outlook on a particular underlying asset. With a bear put spread, you buy a put option near the money and then sell a put option on the same underlying asset at a lower strike price.

Call Spreads

Investors can also use call spreads to achieve the same profit profile as either a bull put spread or a bear put spread. With a bull call spread, you buy a call at one strike price (usually near or at the money) and simultaneously sell a call option on the same underlying with the same expiration date further out of the money.

The Takeaway

A short put spread is an options strategy that allows you to collect a credit by selling an at-the-money put option and buying an out-of-the-money put with the same expiration on the same underlying security. A short put spread is a bullish strategy where you achieve your maximum profit if the stock closes at or above the strike price of the put option you sold. While this trading strategy has a limited downside risk, it provides a lower profit potential than buying the underlying security outright.

Short put spreads and other options trading strategies can be complicated for many investors. An options trading platform like SoFi’s can make it easier, thanks to its user-friendly design and offering of educational resources about options. Investors have the ability to trade options from the mobile app or web platform.

Trade options with low fees through SoFi.

FAQ

Is a short put spread bullish or bearish?

A short put spread is a neutral to bullish options strategy, meaning you believe the price of an underlying asset will increase during the life of the trade. You will make your maximum profit if the stock closes at or above the strike price of the higher-priced option at expiration.

How would you close a short put spread?

To close a short put spread, you enter a trade order opposite to the one you entered to open your position. This would mean buying to close the put you initially sold and selling to close the put you bought to open.

What does shorting a put mean?

Shorting a put means selling a put contract. When you sell a put option contract, you collect a premium from the put option buyer. You’ll get your maximum profit if the underlying stock closes at or above the put’s strike price, meaning it will expire worthless, allowing you to keep the initial premium you received when you opened the position.

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