Going to College Archives

Mar

2023

31 Facts About FAFSA for Parents

By Kaitlyn Farley | Going to College, Student Loans, student_loan | Comments Off

Applying for federal aid is a crucial step most high school students take while transitioning to college life. Parents going through the college admissions process for the first time, though, may not realize that they also play a huge role in helping their children apply for grants and scholarships through the Free Application for Federal Student Aid or FAFSA^®.

Applications for the 2023-2024 round of FAFSA opened on Oct. 1 and will remain open until June 30, 2023. If you’re looking for facts about FAFSA that will help your child apply for college aid during the 2023-2024 academic year, we’ve compiled some of the most important information on how you can help your child during the FAFSA process.

Recommended: FAFSA Guide

FAFSA Facts and Tips

Filling out FAFSA for the first time? These facts and FAFSA tips can help you prepare for the application process and offer suggestions for getting the most aid.

1. FAFSA Is Required to Receive Government Student Loans

For those who may be new to the financial aid process, FAFSA is the form students fill out to apply for federal financial aid. Just over 18 million students fill out the FAFSA each year. Your child won’t be eligible for government-funded college aid, such as federal loans or grants if they don’t apply.

2. Your Child Could Qualify for Grants by Filling Out FAFSA

While you can get subsidized or unsubsidized loans through FAFSA, your child may also be eligible for grants. One common federal grant is the Pell grant, which is awarded to first-time undergraduate students who show exceptional financial need, such as coming from a low-income family.

Recommended: Types of Federal Student Loans

3. It Also Determines Work-Study Eligibility

Federal work-study is a way for students to earn income at a part-time job while in college. These jobs can be on or off-campus and vary by school, although not all schools participate in the program. You have to fill out FAFSA to determine if you’re eligible for work-study programs.

4. Some Schools Use FAFSA to Determine What Aid They Offer

If the schools your child applies to offer their own aid, such as need-based scholarships, they may use FAFSA to determine eligibility. You may want to check with the schools your child is applying to and ask if they have a separate application for internal scholarships and grants.

5. Most Applicants Under Age 22 Are Considered Dependents

Most students under the age of 22 who are neither married nor parents themselves won’t be able to apply as an independent . As a result, for most incoming freshmen, their parents’ income is counted in the determination of financial need.

6. Your Child Needs Your Information to Apply

If your child is filing as a dependent, then they’ll need some basic information about your finances, such as your income and paid taxes. You may also elect to apply for a Parent PLUS loan, which can help cover your child’s educational expenses if they don’t receive enough in loans and grants to cover costs. Note that you may need additional information to apply for a Parent Plus loan.

7. High-Income Families May Want to Still Apply

If your family is middle- or upper-class, you may wonder if your child will receive any FAFSA aid. However, applying is free, and family income is just one of many factors considered during the application process. Additionally, your child’s school still may require FAFSA to be eligible for institutional aid, so it may be worth applying for even if you don’t think your child will need or receive aid.

8. Grades Don’t Affect FAFSA Eligibility

FAFSA does not have a GPA requirement to apply. However, your child may want to keep in mind that they could lose any aid given to them through FAFSA if they have poor grades for multiple semesters after they receive the aid.

9. Deadlines May Differ by State and School

While the FAFSA doesn’t close until June 30, 2023, FAFSA application deadlines may vary by state and school. State and school deadlines may close prior to the federal deadlines. If you’re not sure what deadlines apply to your student, consider checking with the financial aid offices of each school your child applies to and ask what their FAFSA deadlines are.

10. Having Multiple Kids in College No Longer Affects Financial Aid Awards

Starting with the 2021-2022 FAFSA form, how many children in a family are in college or applying to college will no longer affect aid eligibility. Before, families with multiple children in college may qualify to receive more aid. This is one of many changes rolling out through the FAFSA Simplification Act, which aims to simplify the FAFSA form and therefore hopefully encourage more families to fill out FAFSA.

11. Expected Family Contribution Is Also Changing

Expected family contribution (EFC) is an estimate of how much FAFSA believes families can contribute to the cost of a student’s education. However, as part of the FAFSA Simplification Act, EFC will be replaced with the Student Aid Index, or SAI, starting on July 1, 2024 (for the 2024-2025 academic year). While that may sound far off, a freshman during the 2023-2024 academic year will be a sophomore when SAI is put into effect.

12. FAFSA Is Changing the Process for Children of Divorce

Before the new simplified FAFSA , in the case when a child’s parents are separated, the custodial parent’s information was included on the form. However, with the new changes, the parent who provides the most financial support to the student is responsible for filling out the FAFSA.

Recommended: How much FAFSA Money Can I Expect?

13. Your Child Will Need Their Social Security or Alien Registration Number

As your child prepares to fill out the FAFSA, they’ll need their Social Security or Alien Registration numbers.

14. Have Nontaxable Income at the Ready

One question that may trip up parents is what FAFSA considers nontaxable income. For FAFSA, that generally includes (but is not limited to):

• Workers compensation

• Disability benefits

• Welfare benefits

• Social Security income

• Veteran’s benefits

• Military or clergy allowances (if applicable)

• Foreign income not taxed by any government

15. Your Child May Need to Report Grants and Scholarships

Most first-time college students won’t need to report any grants or scholarships they received. However, they may if they had to report them on their taxes, such as:

• AmeriCorps benefits, such as living allowances or awards

• Taxable work-studies, assistantships or fellowships

• Combat pay, special combat pay, or cooperative education program earnings

• Other grants or scholarships reported to the IRS

If you have any doubts about what types of grants may be taxable, consider consulting a tax professional.

16. Have Bank Statements Available

To fill out FAFSA, you’ll need bank statements for both you and your child. This information helps determine how much aid your child will be eligible for.

17. You Don’t Have to Have a Social Security Number to Sign the Form

If you’re filing for FAFSA online, you can create a federal student aid (FSA) ID . This is simply your login and password. Your child will need to create one (they can do so here ). But if you don’t have a Social Security number, you can print out the signature page of the form, sign it, and mail it in.

18. You Don’t Need to File Taxes Before Submitting FAFSA

If you filed for an extension for your tax return, you can use your W-2 or 1099 statements. But you will need to update FAFSA once you file. This is because what tax bracket you’re in can impact how much aid your child is eligible for.

Recommended: What Tax Bracket Am I In?

19. You’ll Need to Have a List of Assets Ready

FAFSA uses parental assets to help determine aid eligibility. You’ll need to know how much in assets you have, which include (but are not limited to):

• Money in cash, savings, and checking accounts

• Non-retirement investments (such as stocks and mutual funds)

• Businesses that have more than 100 full-time equivalent employees and you and your family have minority stakes in

• Investment farms (in other words, you don’t live on and operate the farm)

• Other investments, such as real estate and stock options

20. 529 Plans Are Also Considered Assets

When filling out information about assets, you’ll also need to provide the value of all 529 College Savings Plans you own — including the accounts for siblings. Also, if your child owns a 529 plan (often called an UGMA or UTMA 529 plan), you will need to report it as a parental asset – and not as the student’s asset. (Please note, however, that if your child owns a UGMA or UTMA account that is not a 529 plan, you don’t list it as an asset — your child does as their asset.)

21. Your Primary Home Doesn’t Need to Be Listed as an Asset

One common FAFSA mistake is listing your primary home as an asset. However, FAFSA does not require you to do so. In fact, listing it as an asset can decrease the amount of aid your child receives.

22. You Don’t Need Your Retirement or Insurance Information

FAFSA also doesn’t count retirement or insurance accounts as assets. Again, including them can inflate the number of assets you have and therefore may decrease the amount of aid your child is offered.

23. You’ll Need to Include Each School Your Child Is Applying To

When you and your child fill out the FAFSA, you’ll want to have a list of all the schools your child may be interested in applying to. You’ll need each school’s federal school code to add them to the list of schools you want your FAFSA information sent to, although you can also search for this information on the form itself if you can’t find it on the school’s website. It may be wise to include schools your child isn’t sure they want to apply to yet since it’s easier to simply add the school to the list now than having to send the school your FAFSA information later.

24. Schools, Not the Government, Will Give You Financial Aid Updates

Part of the reason you’ll need to send your FAFSA to schools your child is considering applying to is because schools, not the government, send out financial aid packages. As such, each school your child applies to may offer a different financial aid package.

25. Skipping Information Can Be Costly

Before hitting submit, you might want to double check that every section of the FAFSA is filled out (and accurate). Skipping FAFSA sections may result in delays in your application being processed, errors that prevent you from submitting, or even a decrease in the amount of aid offered.

26. Your Child Will Need to Take Student Loan Exit Counseling

While filing FAFSA or talking to your school’s financial aid office, you may hear about something called student loan exit counseling. This is mandatory for anyone who gets federal student loan aid. Counseling is simply an online module that will help your child navigate how the student loan repayment process works. A reminder will be sent to your child’s email in their last year of school about when this exit counseling is due. However, you and your child may want to consider reviewing student loan exit repayment options before the counseling is due to ensure they pick the best option based on their financial situation.

27. File Early to Get the Most Aid

While it may seem like you have a ton of time to fill out the FAFSA, it may be best to complete it sooner rather than later. Delaying can mean financial aid for your state or school dries up before your child can even be considered for it. Additionally, knowing how much aid each school is offering your child may help them when deciding on which school to attend.

28. You Could Be Selected for FAFSA Verification

After your child receives their student aid report, they may get a message saying they were selected for verification. FAFSA verification is used by some schools to simply verify that students’ FAFSA information is accurate. Some schools randomly select people to be verified, some verify all students, and some may elect not to verify any students.

29. You Can Appeal Your Aid Package

Once your child has their financial aid packages, they may find that they were offered less than they expected or hoped for. If your child’s dream college didn’t offer enough aid (or perhaps even didn’t offer them any aid), they may be able to appeal for more financial aid. This process may be especially important if your financial situation has changed since you and your child first applied for FAFSA. While schools may deny the request, it doesn’t cost you or your child anything but time to ask for more aid.

30. You Can List Unusual Circumstances That Affect Your Finances

Another way to try and increase your financial aid package is by listing unusual financial circumstances both on your FAFSA and in an appeal letter to schools you’re applying to. Some common unusual circumstances include (but are not limited to):

• Having tuition expenses in elementary and/or secondary schools

• Experiencing unusual medical or dental expenses not covered by insurance

• Having a family member become unemployed recently

• Experiencing changes in income and/or assets that could affect aid eligibility

31. You’ll Have to Reapply Every Year

Once you’ve filed your FAFSA, you may want to keep your login information in a safe place. You’ll need that information to file for FAFSA every year your child is in school, and losing your FSA login information may delay your ability to apply next year. You may also want to set a reminder on your phone or calendar to apply next year, although FAFSA will send you an email reminder when next year’s FAFSA is open.

The Takeaway

Filing for FAFSA is an important first step in helping your child pay for college. Knowing how FAFSA works and how to optimize the amount of aid your child receives can help increase the amount of federal aid they’re offered.

However, if their financial aid package isn’t enough to cover college costs, they may want to consider private student loans. Private student loans aren’t required to offer the same borrower protections as federal student loans, and are, therefore, generally considered as an option only after all other sources of funding have been exhausted.

If you’re considering private loans to pay for college, you may want to review the differences between private and federal student loans to ensure that you and your child choose the best options for them to pay for college. SoFi offers private student loans that have no hidden fees and allow borrowers to choose between four repayment options.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

Photo credit: iStock/wagnerokasaki

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Mar

2023

mother and daughter doing paperwork mobile

Navigating Your Financial Aid Package

By Kayla McCormack | Going to College, Student Loans | No Comments

College financial aid includes grants, scholarships, work-study and federal student loans. Scholarships and grants are forms of aid that generally don’t need to be repaid. Students who qualify for work-study are able to find part-time employment that can help them pay for college costs. Federal student loans are also considered financial aid, but unlike scholarships or grants, generally need to be repaid, typically with interest. Because you’ll be responsible for repaying student loans, it’s essential that you fully understand the terms of borrowing.

After applying for federal aid by filling out the Free Application for Federal Student Aid (FAFSA®), students can expect to receive a financial aid award that details the type and amount of aid for which they qualify. Financial aid can be incredibly helpful when trying to finance your college education, but it’s possible that you may not receive enough to fully foot your tuition bill. If that’s the case, there are other options available to help you pay for your education. Continue reading for more information on understanding your financial aid package and the options to consider should you find yourself in need of additional funding.

The Steps to Getting a Financial Aid Package

In order to get any financial aid package for college, the first step is generally to fill out a Free Application for Federal Student Aid , commonly known as FAFSA^®.

The FAFSA for the 2023-24 school year became available Oct. 1, 2022, and the application cycle ends on June 30, 2024. Some states and colleges have separate deadlines for the FAFSA to determine aid. Consider contacting your school’s financial aid office for questions on the deadline required by your state or school.

Filling out the FAFSA requires some basic financial and income information. If you’re a dependent student, then you’ll need your parents’ financial info as well. For higher income families or those in unique financial situations, this can be a little tricky.

All federal loans, both subsidized and unsubsidized, require a FAFSA in order to determine eligibility. Colleges may also use the FAFSA to determine their own financial aid awards and packages, based on things like expected family contribution and financial need.

After you fill out the FAFSA, the Office of Federal Student Aid at the U.S. Department of Education will process your FAFSA and send you a Student Aid Report (SAR), which is essentially a summary of your information. It’s usually worth reviewing this information in detail to confirm that all of the information is accurate. If you find a mistake after reviewing your SAR, you’ll likely need to update or correct your FAFSA .

The SAR will include the calculated Expected Family Contribution (EFC), which is how much you and/or your family can be expected to contribute personally towards your education. (Next year, the EFC will be replaced by the Student Aid Index.)

Then, colleges use this information to determine eligibility for university, local, state, and federal financial aid. Sometimes schools may also ask for additional information, particularly if you are applying for school-specific scholarships.

The schools will then assemble a financial aid package that could be made up of grants, loans, work-study, and other waivers, and send you an “award letter.” Reviewing your award letter carefully can help you choose the financial aid mix that is right for you. Often these financial aid award letters come shortly after admissions decisions, though this may vary. Students typically have a deadline (often May 1, which is National College Decision Day) to make their decisions by.

It’s important to understand and compare the financial aid packages you’ve gotten from different colleges — even if that can be a little confusing. The key is to break down the jargon in order to help make an informed decision.

Understanding What’s in the Average Financial Aid Package

The format of an award letter can vary from college to college. That, in combination with financial aid jargon can make it difficult to decipher, but at its heart a financial aid package is a list of different amounts of money in different forms of loans, grants, work-study, or other tuition waivers that should add up to cover the cost of the college, minus your expected family contribution.

Yet, you may have to decode the language and research each of the line items. Sometimes, for example, instead of clearly identifying loans as such, they might be simply denoted with abbreviations like “L” or “LN” in the award letter. Here are the different types of financial aid you may see in your financial aid package:

Grants and Scholarships

These don’t have to be repaid, so they are sometimes referred to as “gift aid.” These could be school, state, or federal scholarships and grants you qualified for and were awarded.

Work-Study

This is part-time work you will do and be paid for. You’ll be paid at least the federal minimum wage, but depending on the job, you could earn more. Being granted work-study in your aid package does not always guarantee a job. Depending on the school you attend, you may be matched with a job or you may have to apply for and secure your own job.

Federal Student Loans

Federal loans can be either subsidized or unsubsidized, and usually have lower interest rates than private loans. There is also typically a cap on how much you can borrow.

Subsidized loans are for undergrads and are awarded based on financial need; additionally, the government pays the interest on them while you’re in school at least half-time, during your grace period, or during periods of deferment.

Unsubsidized loans are available to undergraduate and graduate students and are not awarded based on financial need. This type of loan accrues interest while a student is enrolled at least half-time, during the loan’s grace period, or during other periods of deferment.

Borrowers have the option to make interest-only payments during this time, but are not required to do so. If the interest on the student loan accrues, at the end of the deferment period it will be capitalized or added to the principal value of the loan.

There are also PLUS loans for parents and graduate students, which are also unsubsidized.

Beyond Federal Financial Aid: Private Student Loans

Private student loans are not part of a federal financial aid package. Private student loans can be borrowed from a private lender, which typically have more stringent financial qualifications and, like federal loans, must be paid back with interest. Typically, that interest also accrues while you’re in school.

Check the terms of any private student loans you’re considering and the interest rate being offered to get a sense of how they stack up to federal loans. Federal loans also offer benefits that private student loans do not, such as income-driven repayment plans, deferment options, or the

In order to make the decision that’s best for you, you’ll want to compare the total cost of attendance, how much gift aid is being awarded, and the loans you’ve received and their terms. This should give you a better idea of how much any federal loans will cost you, and whether there is a gap in funding.

The total cost of college may change over a student’s enrollment, so it generally needs to be calculated each year. Consider things like fluctuation in tuition rates, federal interest rates, and your financial aid award which, among other factors, have the potential to change.

Tips on How to Compare Financial Aid Packages

One of the most important things to look at when comparing financial aid packages for college is the net price. What that means is the actual cost to you, minus all awards. To find the net price you need to figure out the total cost for each college and then subtract the amount of grants and gift aid (e.g., not loans).

Factor in how much you can borrow in loans, and carefully consider the loan terms. And then you can calculate how much each college will cost you additionally out-of-pocket.

Just because one school is giving you more in financial aid doesn’t mean it’s necessarily the best financial option. For example, if it will ultimately cost you more because the college is more expensive and, perhaps, you’re going to need to borrow a private student loan with a comparatively high interest rate to cover what your federal aid doesn’t cover.

However, a financial aid package won’t always list the net price and many of the financial aid award letters don’t even necessarily tell you how much a specific college costs in total.

Some letters only outline the direct cost to the school — e.g., tuition and fees — but don’t include room and board or other expenses.

It can be helpful to make your own spreadsheet to ensure you’re comparing apples-to-apples. Figure out the total cost of attendance for each school you’re considering. Include tuition, fees, room and board, and you can even estimate expenses like books, supplies, and living expenses.

Note how much is being awarded in gift aid (grants and scholarships), how much you’re offered federal student loans, and how much it’ll cost you out-of-pocket. If needed, consider private student loans, carefully evaluating their loan terms.

Also understand whether the scholarships or grants in your aid package are a recurring award that will be given to you each year, or whether they are a one-time award.

It’s also worth noting that you are not required to accept all of the loans offered in your financial aid package. You can choose to borrow a lesser amount, which could help save you money in the long run by reducing the money you owe in interest.

The Consumer Financial Protection Bureau and the College Board both have tools to more accurately compare financial aid packages and the costs of college.

If Your Financial Aid Package for College Isn’t Enough

Sometimes you do the math, compare all the costs, and feel like your financial aid package for college just isn’t adding up.

Appeal the Financial Aid Decision

It is possible to appeal a financial aid package, particularly if you’ve had changed circumstances or if there was a gap between the cost and the award. While writing an appeal letter might be a first step if your financial aid package isn’t enough to cover the cost of college, it doesn’t guarantee your award will change.

It also might be the case that circumstances change and you lose your financial aid or portions of your award package. In these situations, there are options in addition to or besides appealing.

Apply for Private Scholarships

You can look into private scholarships, of course. These are different from the scholarships and grants awarded by the state or school. However, private scholarships are considered non-need-based aid and will factor into the cost of attendance — and each school deals with that differently.

Get a Part-Time Job

Even if you don’t qualify for the work-study program, you could look for a part-time job. There may be on-campus jobs available, like working as a teaching assistant, or tour guide. Another option is to look off-campus for a job. There may be local restaurants, coffee shops, or stores that are looking for part-time associates.

Consider a Private Student Loan

Private student loans are another tool that could help students fill in financial gaps. Keep in mind, that, as mentioned, private student loans may lack borrower benefits afforded to federal student loan borrowers. If you think a private student loan is something that could work for you, get quotes from a few different lenders to compare the terms and conditions, so you can find the best loan for you. Some student borrowers may also consider applying with a cosigner, who could potentially help them qualify for more competitive loan terms.

The Takeaway

Your financial aid package will state the amount and types of aid you receive. Financial aid includes scholarships, grants, work-study, and federal student loans. Carefully compare your financial aid awards at each college when you are making your college decision.

If you don’t get enough financial aid, you might consider getting a part-time job, applying for private scholarships, or borrowing a private student loan. Keep in mind that, as mentioned, private student loans are generally only considered an option after all other financing has been exhausted. If you’re interested in a private student loan, consider SoFi. SoFi offers private student loans with no origination fees and no late fees.

Find out what rate and terms you may prequalify for in just a few minutes.

Mar

2023

Step-by-Step Guide to Filling out a FAFSA Form for the First Time

12 Steps to Filling Out the FAFSA Form for School Year 2023-2024

By Kaitlyn Farley | Going to College, Student Loans, student_loan | Comments Off

This year, Federal Student Aid (FSA) estimates that filling out the Free Application for Federal Student Aid (FAFSA^®) takes less than one hour. Read on for the information you’ll need, the step to take before going to the FAFSA site, and what to expect when filling out the application online.

Completing the FAFSA Application for Academic Year 2023-2024

If this is your first time submitting the FAFSA, you’ll be glad to know that it usually takes less time after the first time (yes, FAFSA is submitted annually.) Last year, renewing the FAFSA application took an average 35 minutes, compared to submitting for the first time, which took an average 54 minutes, according to the Department of Education.

Not quite ready to submit your FAFSA, but want an estimate of your student aid package? You can fill out an abridged Federal Student Aid Estimator .

Recommended: 6 Reasons to Go to College

Docs You’ll Need to Fill Out FAFSA

Before you start the online FAFSA form, it’s useful to have the info you’ll need handy. That includes:

• Your Social Security or alien registration ID

• Driver’s license or state ID

• Federal income tax returns for 2021, W-2s and other financial documents for yourself (and your parents if you’re a dependent)

• Most recent bank statements

• Any untaxed income amounts

12 Steps to Filling Out the FAFSA

FAFSA opened Oct. 1, 2022, and closes June 30, 2023, for the 2023-2024 academic year. That said, schools and state and scholarship programs have varying deadlines, so it’s a good idea to check and double-check the FAFSA deadlines for everything you are applying to.

Here are the steps to completing the online FAFSA form.

1. Creating Your FSA ID

The first step is creating a Federal Student Aid ID . This is simply the username and password you’ll use to log into FAFSA. Note that if your parents’ financial info is required to complete the application, a parent will also need to create a FSA ID.

2. Logging in

Now that you have a FSA ID, you’re ready to log into the online FAFSA form . But before you log in, the site will ask if you are a student, parent, or preparer helping a student fill out the FAFSA. Select which one you are.

Once you’re in, you will be asked to accept or decline the disclaimer, which details how the site will use and monitor your data. You should then be prompted to start a FAFSA application for 2023-2024.

You’ll also be asked to create a save key, which is a temporary code in case you leave the site before you submit your application. In other words, if you don’t finish FAFSA in one sitting, you can enter your save key and pick up where you left off.

3. Filling in Your Personal Information

You (the student) will be asked to fill in the following info (you’ll be prompted to hit “Continue” several times):

• Your Social Security number

• Full name

• Date of birth

• Email address

• Phone number

• Mailing address

You’ll then need to answer questions about:

• How long you’ve lived in your state

• Whether you are a citizen

4. Filling in Your Student Information

Next, you’ll need to answer questions about your education and future plans. Specifically, you’ll be asked about:

• Your high school completion status at the beginning of the 2023-2024 academic year

• The college degree or certificate you will be seeking to earn

• Your college grade level

• Whether you’d like to be considered for work-study

Additionally, you’ll be asked to provide (you’ll be prompted to hit “Continue” several times):

• Your driver’s license number (if you have a license)

• Your driver’s license state

• Whether you’ve ever been in the foster care system

• The highest level of school each of your parents completed

• Your high school name and city (optional) and state

5. Filling in the College Search Section

To send your FAFSA information to schools you’re applying to, you’ll need to add the federal school code for each school. Doing so allows colleges to receive your FAFSA information and so use it to provide you a financial aid package. The online form will help you find the codes; you just input the school name, city, and state. You can add up to 10 colleges at a time.

Next, for each school, you’ll need to select your housing plan (on campus, with parent, or off campus).

Recommended: SoFi’s College Search Tool

6. Filling in Info That Helps Determine Your Dependency Status

Your answers in this section will determine whether you are an independent or dependent student— and so determine the financial information you and your parents will need to provide. Specifically, you’ll be asked about:

• Your marital status

• Whether you have children that you support

• Whether you have other dependents who live with you and you support

• Whether you are on active duty or a veteran of the U.S. armed forces, are an emancipated minor, whether someone other than a parent or stepparent has legal guardianship, and whether you have ever been in foster care or a ward of the court or both parents have died since you were 13.

• Whether you were homeless or self-supporting and at risk of being homeless on or after July 1, 2022

7. Learning Your Dependency Status

At this point, the smart technology of the online FAFSA form determines whether you’re a dependent or not. If you are single, have no children or other dependents, and answered “none of the above” and “no” on the previous two screens, you are likely a dependent. As a result, your parents’ financial information will be needed in addition to yours to complete the form and calculate your expected family contribution (which will soon be replaced with the student aid index).

Please note that the rest of these steps assume you’re filing as a dependent. While the process of filing as an independent will be similar, you won’t be asked to provide information about your parents.

8. Filling in Your Parents’ Personal Information

You (the student) can answer the following questions about your parents:

• Their marital status and when they married or remarried

• Date of parent’s marriage

• Each parent’s name, Social Security number, date of birth, and email

• If your parents have lived in your state of residency for at least 5 years

• Number of other dependent children and other dependents your parents have

9. Providing Your Parents’ Financials

You will need info about your parents’ tax return for 2021 or 2022 to answer the following questions about:

• Their tax return status

• The type of tax return they filed (i.e., 1040 or something else)

• Their tax filing status (e.g, married-filed joint return)

At this point, you can either use the IRS Data Retrieval Tool (DRT) that pulls their tax return information into the FAFSA form or enter their info manually. In addition to being more convenient, using DRT means you may not have to later provide IRS documentation. (As mentioned earlier, one of your parents will need to create and provide an FSA ID and password to use DRT.)

If you are manually entering your parents financial info, you will need to answer questions about:

• Their adjusted gross income

• Amount each parent earned

• Amount they paid in federal taxes

• Amounts of other income (such as college grants and tax-exempt interest income)

• Amounts of child support paid, earnings from work under a Cooperative Education Program, and taxable earnings from need-based employment programs

• Amounts of untaxed income (such as child support or payments to tax-deferred retirement savings plans)

• Their assets (including the value of cash and bank accounts, investments, and owned businesses and investment farms)

10. Providing Your Financials

Now it’s time to provide your financial information. Basically, you will be asked for the same info about yourself that you provided in the previous step about your parents’ income and assets.

11. Checking for Errors

Once you’ve reached the end of the application, you’ll see a summary to review. Checking that all the information is accurate may help avoid having to file a FAFSA correction later.

You’ll next need to answer a few more questions that the federal government collects about gender, ethnicity, and race. This info has no impact on whether you will receive financial aid.

Recommended: How Much FAFSA Money Can I Expect?

12. Signing and Submitting

FAFSA requires you to accept or reject its agreement of terms. If your parent or parents provided information because you filed as a dependent, one of them will also need to accept these terms in order for you to submit the application. Both you and your parent will e-sign using your FSA ID. Once you’ve signed and submitted your application, your FAFSA is complete.

Downloadable FAFSA Form for 2023-2024

Here’s the FAFSA form for 2023-24 if you want to see it before logging in to fill it out — or if you want to print it, fill it out, and mail it in. There’s also a FAFSA worksheet available for download.

What’s Different About the 2023-24 FAFSA

If you heard there was a FAFSA app and wondering where to find it, unfortunately, the myStudent Aid app is no longer in use. This application cycle, the only online access is via the Federal Student Aid site .

Additionally, the 2023-24 form does not ask about Selective Service registration status or drug convictions.

A Few Extra Tips

Completing FAFSA can be an overwhelming process. It can also be tempting to skip it altogether, especially if you’re from a middle- or high-income family and you believe you aren’t eligible for aid. However, that’s an assumption that could mean leaving aid on the table. Here are three more helpful tips:

2. Schools, states, and scholarships have varying deadlines. As stated earlier, FAFSA opened Oct. 1 and closes June 30 of next year. However, the schools and scholarships you’re applying to may require you to fill out your FAFSA before June 30, so it’s best to check each school’s and program’s FAFSA deadlines to avoid losing out on aid.

3. The IRS Data Retrieval Tool can help you avoid making mistakes. This tool auto-fills your (and your parents’) latest tax information from the IRS database. So instead of having to figure out what the adjusted or non-taxed income was on your parents’ tax return, you can let the tool do it for you.

4. It doesn’t pay to guess. Not sure how to fill out a section or what the answer is? FAFSA offers helpful tips and clarifications throughout each section of the FAFSA form, so be sure to read all the boxes that appear. Inaccurate answers can result in receiving less financial aid than you’re eligible for as well as needing to file corrections and send in supporting documentation.

Recommended: Navigating Your Financial Aid Package

The Takeaway

Filling out the FAFSA is a great first step to pay for your dream school. This is one of the best ways of getting scholarships and grants you won’t have to pay back or government-backed loans to help you pay for college-related costs. By learning how to properly fill out the FAFSA (and then actually doing so!), you can increase your odds of getting a bigger financial aid package.

However, if your financial aid package doesn’t cover all your college expenses, you may want to consider a private student loan. It’s important to note that private student loans don’t offer the same protections as federal student loans, like income-driven repayment plans or deferment options. For this reason, private student loans are generally considered only after other sources of funding have been considered.

SoFi’s private student loans are available for undergraduate and graduate students, as well as parents. In just a few minutes, you can apply online for student loans and be well on your way to financing your education.

Find out more about SoFi Private Student Loan options.

Header photo credit: iStock/Vladimir Sukhachev

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Mar

2023

Supreme Court Latest: The Legal Battle Over Student Loan Forgiveness

By Nancy Bilyeau | Fresh Out of School, Going to College, Student Loans, Student News, student_loan | Comments Off

Several members of the U.S. Supreme Court, hearing arguments for the first time on legal challenges to President Joe Biden’s student debt cancellation program, expressed skepticism about whether it was legal for the government to forgive up to $20,000 in federal debt for individual loan holders.

After three hours of debate, as expected, there was no decision made on whether the debt relief plan would go forward or the challenges would be upheld.

Court followers say that, based on past cases, the Supreme Court justices will cast votes at a private conference held at some point in the next week. Then one of the justices will be selected to draft a majority opinion. It takes an average of three months after an argument for the decision to be made public.

It is possible the court will rule much sooner that the parties challenging Biden’s policy have no legal standing. If that happens, there will be no larger ruling, the debt relief program will continue, and the deadline for resuming federal student loan payments will likely be set.

However, the most probable time to hear the court’s decision on whether the student debt cancellation is legal is June, when different Supreme Court rulings are typically made public. Until then, the future of the one-time student debt relief and the date when federal student debt payments will resume could be up in the air.

At stake are such vital issues as the burden that debt-strapped working and middle class Americans struggle under, the power of the executive branch to deliver a cancellation of $400 billion of debt without Congressional approval, and the fairness that such a cancellation would impose on people who never attended college or who’ve managed to repay their college loans

The Two Sides of the Student Loan Divide

In August 2022, President Joe Biden announced his plan . He said the Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples).

An online portal was created for applicants. Over the next month, more than 26 million people applied for cancellation, according to the Education Department.

However, the portal was frozen after legal challenges to Biden’s plan gained steam. Six Republican-led states and two individuals, students with loans, brought court actions. The states say Biden overstepped his authority with the debt cancellation program; they also argue that the plan would cause their tax revenues to fall. The two individuals say Biden’s cancellation is unfair to them because one of them has loans held by private lenders, so he can’t benefit, and the other is ineligible for the full $20,000.

In the arguments heard, Supreme Court Chief Justice John Roberts seemed to question whether the president can do this unilaterally.

“Most casual observers would say if you’re going to give up that much amount of money, if you’re going to affect the obligations of that many Americans on a subject that’s of great controversy, they would think that’s something for Congress to act on, and if they haven’t acted on it, then maybe that’s a good lesson to say for the president or the administrative bureaucracy that maybe that’s not something they should undertake on their own,” said Roberts.

Justice Sonia Sotomayor talked about the harm to students from debt, saying, “There’s 50 million students who are — who will benefit from this. Who today will struggle. Many of them don’t have assets sufficient to bail them out after the pandemic. They don’t have friends or families or others who can help them make these payments.”

The Supreme Court presently holds a 6-3 conservative majority. However, Justice Amy Coney Barrett joined liberal Supreme Court justices in appearing to question the legal standing of the Republican challenges. So the fate of the loan ruling is still unclear.

Why the Government Put Federal Student Loan Debt on Hold

The outstanding federal loan balance is currently $1.635 trillion and accounts for 92.4% of all student loan debt, according to educationdata.org.

In March 2020, because of the economic harm caused by Covid-19, the federal government paused loan payments and set interest rates to 0% for eligible federal student loans. The debt payment relief was authorized by the The Coronavirus Aid, Relief, and Economic Security (CARES) Act. Since then, the deadline for resuming payments has been extended multiple times.

Over 43 million Americans have federal student loan debt. The average federal student loan debt balance is $37,574 while the total average balance (including private loan debt) may be as high as $39,590.

In August 2022, President Biden announced that the pause would be extended again to December 31, 2022, along with explaining his cancellation plan. Biden also made changes in the Public Service Loan Forgiveness Program to make it accessible to more people.

After the court challenges threatened Biden’s plan and forced the Education Department to freeze applications, Biden pushed back the date for payments yet again, saying they would resume either 60 days after the Supreme Court makes its ruling — or 60 days after June 30 if litigation is ongoing. He said the delay would give enough time for the Supreme Court to rule and for loan holders to prepare their payments.

The White House said, “Borrowers can use the additional time to ensure their contact information is up to date with their loan servicers and consider enrolling in electronic debit and income-driven repayment plans to support a smooth transition to repayment.”

If the Supreme Court rules before June 30, borrowers with remaining balances will need to start repaying loans 60 days after the date of that court decision, at which point interest will also start accruing again. If the Supreme Court does not rule before June 30, forbearance will end and borrowers will need to start repaying loans 60 days after June 30, at which point interest will also start accruing again.

The Takeaway

The U.S. Supreme Court heard arguments challenging President Biden’s proposed debt cancellation of up to $20,000 in federal loan debts, with some justices expressing skepticism that Biden can relieve nearly half a trillion in debt without Congressional involvement. The decision may not come until June.

Student loan refinancing is one way holders of debt can seek to make student loan payments more manageable. If your federal debt is more than the amount of forgiveness you are potentially eligible for and you are worried about rising interest rates, you can refinance just the amount that will not be canceled. Remember that the refinanced amount will lose access to federal protections and programs, including the payment pause that has been extended.

Refi with SoFi today to get flexible terms and a competitive low rate before interest rates rise even higher!

Photo credit: iStock/Kameleon007

SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.

Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

Feb

2023

14 Must-Know College Financial Aid Terms for Parents

By Kelly Boyer Sagert | Going to College, Life & Career, Student Loans, student_loan | Comments Off

When applying for financial aid to fund their college educations, students and their parents are often introduced to words they’d never heard of before. To help you learn the lingo, here are definitions of 14 important financial aid terms, plus information about different ways to pay for college.

Financial Aid Terminology for Parents

1. College Grants

Grants are used to help fund a qualifying student’s college education, and unlike loans, they typically don’t need to be paid back. They are often based on financial need and are available from private and public organizations. Some grants have criteria that a student must meet, such as maintaining a certain grade point average. Here is information about college grants from the U.S. Department of Education .

2. Cost of Attendance (COA)

A student’s cost of attendance (COA) is the total of all costs to attend college in a given year. This includes tuition, room and board, book and supplies, loan fees, costs associated with studying abroad or managing a disability, and more.

A COA is different from an invoice a college may send a student, which is more comprehensive. The COA figure is used to determine how much financial aid a student may be eligible to receive. Anyone who receives a form of financial assistance is not responsible for paying the full COA.

3. Expected Family Contribution (EFC)

The expected family contribution (EFC) is a number colleges use to determine a student’s eligibility for financial aid. It’s calculated using a formula that considers a family’s income, savings, investments, benefits, family size, and more.

Starting with the 2024-2025 school year, the EFC will be replaced by the Student Aid Index, or SAI. Both serve a similar function, but there are key differences in how they work and how students receive financial assistance. Here’s where you can find more information about the SAI.

Recommended: How the Middle Class Affords College

4. Free Application for Federal Student Aid (FAFSA)

FAFSA is the official government form that students must fill out to be eligible for federal student loans and grants. Filling the FAFSA out does not guarantee that a student will receive aid, but it must be completed annually in order to be considered for the upcoming academic year. The information provided will be used to calculate a student’s expected family contribution (see that definition above). Here’s more information about completing a FAFSA application.

5. Financial Aid Award Letter

A financial aid award letter goes by a few different names: merit letter, award letter, a financial aid offer or a financial aid package. But no matter what you call it, once a student fills out a FAFSA, they’ll receive one of these letters from each college that accepts them. A typical letter will list a student’s cost of attendance, expected family contribution, awarded grants and scholarships, work-study details, and federal student loans. Many schools now provide this information electronically.

6. Merit-Based Assistance

Merit-based assistance is based upon a student’s abilities and accomplishments. This can include their grade point average, athletic achievements, or another skill. Financial need is not typically taken into account. Students generally receive merit-based aid directly from the college.

7. Need-Based Assistance

Need-based assistance is provided to students based on their financial needs, and is commonly offered by federal and state governments, colleges, and other organizations. There are three types of federally granted need-based financial aid: Pell Grants, work-study programs, and Subsidized Direct Student Loans. Each of these is defined in this post.

To qualify for federal need-based aid, a student must fill out the FAFSA. Colleges may require additional information for non-federal aid. Simply applying for need-based aid does not mean a student will receive it, though applying early may potentially improve their chances.

8. Parent Loans/Direct PLUS Loans

Parents can borrow funds to help their children pay their college expenses, including through federal loans called Direct PLUS Loans. When this type of loan is provided to a parent borrower, it’s often called a Parent PLUS Loan. Not all schools participate in the Direct Loan Program, so students should check with their colleges of choice to see if this type of funding is an option. Private parent loans are also available through lenders, including SoFi.

Note that graduate or professional students are also eligible to borrow Direct PLUS Loans.

9. Pell Grants

A Pell Grant is a federal form of aid based solely on need. It’s the biggest source of federal grants. To receive these funds, a student must fill out the FAFSA and meet eligibility requirements. Because this is a grant and not a loan, it typically does not need to be repaid.

10. Scholarships

A scholarship is a type of funding awarded to students to help them pay for a college education. They are available through federal and state government sources, colleges, private and public organizations, and more.

Unlike loans, scholarships typically don’t need to be repaid. They can be based on need or merit, or a combination of the two. There is a wide range of scholarship possibilities, so it can be worthwhile for the student to research their options and apply for ones that seem to be a good match.

Recommended: Scholarship Search Tool

11. Student Aid Report (SAR)

After a student completes their FAFSA, they’ll receive a student aid report (SAR). This report provides basic information about the student’s federal student loan eligibility and includes the answers they provided on the FAFSA application. The SAR also contains the Expected Family Contribution (EFC) and a four-digit Data Release Number (DRN), which students may need to provide when changing information on their FAFSA. It’s important to review the entire report and address any errors, as colleges use that information to determine aid eligibility.

12. Subsidized vs Unsubsidized Assistance

Federal student aid can include both Direct Subsidized Loans and Direct Unsubsidized Loans, which are also referred to as Stafford Loans or Stafford Direct Loans. There are notable differences between the two.

Subsidized loans are reserved for undergraduate students with demonstrated financial need. The school determines the amount available for each qualifying student. The government will pay the interest on a subsidized loan as long as the student is enrolled in school at least half time (generally 6 credit hours per semester), for six months after the student leaves school (called the “grace period”), and during deferment periods.

With unsubsidized loans, students do not need to demonstrate financial need to qualify, and both undergraduate and graduate students are eligible. Loan limits are higher than with subsidized loans, but interest rates are generally higher, too. The borrower is responsible for interest that accrues from the day their funds are made available. If a student chooses not to pay the interest while they’re in school, it will continue to accumulate.

13. Work-Study

The federal government’s work-study program provides college students who have demonstrable financial need with part-time jobs to help them earn money for their college education. The program attempts to match a student with work in their area of study or in jobs that benefit the community. Students who are interested in this program should check with their colleges of choice to see if they participate.

Here is additional college financial aid glossary , plus financial aid secrets that may help students more effectively fund their education.

Overall College Financial Aid Plan

When it comes to planning how to pay for college, it helps to understand all the available options and how they may be combined. Students and their parents may have money to contribute to help cover the expenses. Scholarships and grants can reduce the bill and typically don’t need to be paid back, while work-study opportunities allow students to earn money to cover some expenses while in college.

Subsidized loans give qualifying students some time to establish themselves financially before the debt starts accruing interest they’ll have to pay. Meanwhile, unsubsidized or private student loans can help borrowers cover remaining costs.

Recommended: Guide to Private Student Loans

Private Student Loans at SoFi

Private student loans, including those from SoFi, can come in handy once you’ve exhausted your other loan options. Borrowers can use the funds to cover all school-certified costs, including tuition, books, room and board, transportation, and more.

SoFi offers fee-free private student loans for undergraduates, graduate students and their parents. These loans don’t have any fees, and borrowers can choose between four different repayment plans. When applying for a SoFi loan, students can quickly and easily find out if they prequalify and at what rates. Adding a cosigner is also simple — just a few clicks away.

SoFi private student loans offer competitive interest rates for qualifying borrowers, flexible repayment plans, and no fees.

FAQ

What is a cosigner?

A cosigner helps assure lenders that someone will pay back the loan. Their income and financial history are factored into the loan decision, and their positive credit standing can benefit the student’s loan application.

What’s the difference between a student loan lender and a student loan servicer?

Lenders lend borrowers money to help cover school-related costs. Servicers send borrowers their monthly bill, process payments, field customer service requests, and handle other administrative tasks.

How do I calculate my college costs?

There are several online tools to help students estimate the potential cost of attending college. Net price calculators, for instance, are available on a school’s website and give cost estimates based on basic personal and financial information provided by the student.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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