Editor’s Note: Due to major changes coming to the FAFSA, the form for the 2024-2025 academic year is delayed until December 2023. This article reflects the most recent information, but final details will not be available until the new FAFSA form is released.
Even if your parents are high earners (or you’re a grad student with a good salary), it’s worth filling out the Free Application for Federal Student Aid, or FAFSA®. While your earnings are a factor on the FAFSA, there are no income limits to apply or to qualify for aid, and not all programs are based on need. The FAFSA also provides access to non-need-based programs, including institutional merit aid and unsubsidized federal loans.
Regardless of income, It’s generally recommended to fill out the FAFSA as close to its release date as possible. Typically, the form becomes available on October 1 for the following academic year. The 2024-2025 academic year, however, is an exception. Due to upcoming changes to the FAFSA (and some adjustments in how student aid will be calculated), the application will be available in December 2023.
Read on to learn more about income requirements to be eligible for financial aid and why it’s probably a good idea to fill out the FAFSA.
What Are FAFSA Income Limits?
There is no income maximum when you file the FAFSA as an undergraduate or graduate student to attend college or career school. In other words, any student attending or applying to an eligible school can fill out and submit the online form, even if their parents are high earners.
In addition, there are no simple FAFSA income limits — or income cutoffs — for financial aid eligibility, in part due to the complexity of financial aid formulas.
In general, to be eligible for financial aid, you’ll need to:
• Have a high school diploma or a recognized equivalency, such as a GED, or have completed a state-approved home-school high school education
• Demonstrate financial need (for most programs)
• Be a U.S. citizen or an eligible noncitizen
• Have a valid Social Security Number
• Be enrolled or accepted for enrollment as a regular student in an eligible degree or certificate program
• Maintain satisfactory academic progress in college if you’re already enrolled. Standards for satisfactory academic progress vary by school
💡 Quick Tip: Make no payments on SoFi private student loans for six months after graduation.
How Are FAFSA Needs Calculated?
Your eligibility for scholarships, grants, work-study, and federal student loans depends on two key factors: your Student Aid Index (SAI) and the school’s cost of attendance (COA).
If you’re a dependent student with divorced parents, the parent who provided more financial support to you should complete the FAFSA. This is a new rule effective with the 2024-2025 FAFSA. (In prior years the parent you lived with more, or the custodial parent, would file the FAFSA.) If the parent that provides more financial support has remarried, you need to report the stepparent’s income and asset information as well.
The Student Aid Index (SAI) is the new name for Expected Family Contribution (EFC). Like EFC, SAI is an eligibility index number that a college’s financial aid office uses to determine how much federal aid a student would receive if they attended the school.
SAI is calculated using the information you provide in the FAFSA, including family income, assets, and the size of the household. One change from EFC is that the number of family members currently enrolled in college is no longer taken into consideration. As a result, families with more than one child in college will no longer have an advantage in getting aid over those with just one going to college. Another difference: Unlike EFC, SAI can dip into negative territory (as low as -$1,500) to better differentiate levels of need.
The new formula also increases the Income Protection Allowance (IPA) that shelters a certain amount of parental income (enough to cover a family’s basic living expenses) from inclusion in the calculation of total income. This means that more of a student’s or family’s income will be excluded from the calculation than with EFC, which could mean that more families will qualify for aid.
IPA is based on family size. For example, a family of three (not including the student) can exclude $29,040 from their income for 2024-2025, while a family of three can exclude $35,870. Income above those figures — the family’s so-called discretionary income — is what counts when calculating SAI.
Recommended: 2024-2025 FAFSA Changes, Explained
Cost of Attendance
The cost of attendance (COA) of a college or university refers to the estimated cost of a year of attendance at that school, including tuition, lodging, food, transportation, and personal expenses.
When financial aid staffers at a college or university calculate the amount of financial aid you can qualify for, they take their COA and subtract your SAI (and any other financial assistance you are already receiving) to determine your financial need.
You can get an estimate of how much financial aid you might qualify for by using the government’s Federal Student Aid Estimator .
Grants and Loans That Require Financial Need
Here’s a look at a few federal grants and loans that require you to demonstrate financial need in order to qualify:
Different Kinds of Financial Aid
You may be eligible to receive different kinds of need-based financial aid as well as non-need-based aid, including Direct Unsubsidized Loans and Direct PLUS Loans for parents or graduate and professional students.
For the 2021-2022 school year, the most recent year for which these stats are available, undergraduate and graduate students received $234.6 billion in financial aid through grants, federal student loans, tax credits, and federal work-study, according to the Trends in Student Aid report from the College Board. The average full-time undergraduate student received $15,330, while the average graduate student received $27,300.
The Pell Grant is a need-based financial aid program from the federal government that is designed to help undergraduates from low-income families afford college. The Federal Pell Grant award amount changes yearly. The maximum Pell Grant award for the 2023-24 academic year is $7,395. (The amount for 2024-2025 has not been announced yet.)
The actual amount of Pell Grant you can receive depends on your SAI, the COA at your college or university, your status as a full-time or part-time student, and the amount of time that you will attend school during the academic year.
Pell Grant eligibility will be simplified for the 2024-2025 academic year. The maximum available amount will go to students or, if dependent, their parent(s) who fall below income thresholds for tax filing — adjusted gross incomes below 225% (single) or 175% (married) of the poverty line.
The Federal Supplemental Educational Opportunity Grant (FSEOG), which typically doesn’t have to be repaid (unless you don’t fulfill your end of the bargain by completing school), goes to students who demonstrate high need, as determined through the FAFSA.
The awards range $100 to $4,000 a year. The amount of money you can get depends not only on your level of need but also on when you apply, the amount of other aid you get, and how much your college or university can offer students.
Work-study is a federally (sometimes state-funded) program that helps college students with financial need get part-time jobs either on or off campus to earn money for college. Students are typically responsible for securing their own work-study jobs.
Not all schools offer work-study, so it’s a good idea to reach out to the financial aid offices at the schools you’re interested in to see if they offer the program. To apply for work-study, you simply need to select the box on the FAFSA that indicates you want to be considered for work-study.
Direct Subsidized Loans
A Direct Subsidized Loan is a loan provided by the federal government for students who demonstrate financial need. You do not have to pay interest on the loan while you’re in school, during any deferment, or during the grace period. The government picks up this tab.
Before receiving the funds from a Direct Subsidized Loan, you need to complete entrance counseling, which goes over your obligation to repay the loan, and sign a master promissory note, which indicates that you agree to the loan terms.
For undergraduate students who get (or got) loans after July 1, 2023 and before July 1, 2024, the interest rate for Direct Subsidized Loans is 5.50%.
Direct Unsubsidized Loans
Like a Direct Subsidized Loan, a Direct Unsubsidized Loan comes from the federal government, but graduate and professional students can also receive these loans.
Unlike Direct Subsidized Loans, Direct Unsubsidized Loans are non-need based and the government does not pay the interest while you’re in school, during any deferment, and during the grace period. You will be responsible for paying all interest, which begins accruing as soon as the loan is dispersed.
For undergraduate students who get (or got) loans after July 1, 2023 and before July 1, 2024, the interest rate for Direct Unsubsidized Loans is 5.50%.
For graduate or professional students, the interest rate for Direct Unsubsidized loans is 7.05%.
It’s worth noting that for both types of Direct loans, you do not need to undergo a credit check in order to qualify. These types of loans also have annual and aggregate loan limits .
Direct PLUS Loan
Parents of undergraduate students and graduate or professional students can receive a Direct PLUS Loan from a school that participates in the Direct Loan Program. Some schools call this loan type a parent PLUS loan or grad PLUS loan to differentiate the two.
For Direct PLUS Loans first disbursed on or after July 1, 2023, and before July 1, 2024, the interest rate is 8.05%. There is also a 4.228% origination fee for all Direct PLUS loans first disbursed on or after Oct. 1, 2020.
You’ll undergo a credit check as a parent or a graduate/professional student to look for adverse events, but eligibility does not depend on your credit scores.
You can obtain up to the full cost of attendance of the school minus any other financial aid you receive.
💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.
Beyond Federal Student Loans
Do you have to file the FAFSA? No, it’s not required, but it is a good idea to do so. Schools, states, and other programs also use the FAFSA to determine merit-based grants and scholarships.
Aside from federal loans, here’s a look at other ways to pay for college.
Some parents, and grandparents, prepare for the task of paying for college well in advance using a tax-advantaged savings account, such as a 529 account. A 529 plan allows your savings to grow tax-free, and some states even offer a tax deduction on your contributions.The advantage of tapping into savings is obvious: You don’t have to borrow funds and pay interest.
Private Student Loans
Private student loans come from a bank, credit union, or other private lender. Loan limits vary by lender, but you can often get up to the total cost of attendance for school. Each lender sets its own interest rate and you can often choose to go with a fixed or variable rate. Unlike some federal loans, qualification is not need-based. However, you will need to undergo a credit check and students often need a cosigner.
You generally want to exhaust federal loan options before turning to private student loans, since private loans generally don’t offer the borrower protections — like income-based repayment plans and deferment or forbearance — that come with federal student loans.
Grants, which are typically need-based, are a type of financial aid that students generally don’t have to repay (unless they fail to finish the semester or year in college). The U.S. Department of Education offers the following grants besides Pell Grants and Federal Supplemental Educational Opportunity Grants:
• Iraq and Afghanistan Service Grants
• Teacher Education Assistance for College and Higher Education (TEACH) Grants
A student can seek other grants from their state, their college or career school, or another organization.
Scholarships, like grants, are a type of financial aid that you don’t have to pay back. You can apply for scholarships anywhere — through professional organizations, your job or your parents’ jobs, local organizations, religious groups, your college or career school — the list goes on.
There are a number of scholarship finders available online.
Even if you don’t qualify for work-study, you can look for a part-time job. If you have the time and energy to pair a part-time job with your studies, you can consider doing so after classes or on the weekends. Part-time work can help you pay for school or additional expenses, such as rent or groceries.
Private Student Loans With SoFi
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Can you get financial aid if your parents make over $100K?
The U.S. Department of Education doesn’t have an official income cutoff to qualify for federal financial aid. The reason is that the formula involved in determining need-based aid is complex and involves more than just your parents’ income. Assets, the size of your family, your school’s cost of attendance, and other factors all go into deciding how much aid you can receive.
Also keep in mind that not all financial aid is need-based, including Federal Direct Unsubsidized Loans and institutional merit aid. That’s why it’s important to fill out the Free Application for Federal Student Aid (FAFSA) each year.
How are FAFSA income limits different for divorced parents?
For the 2024-2025 FAFSA, the parent who provided more financial support to you is responsible for completing the FAFSA, regardless of who you live with. If the parent who provides greater financial support has remarried, your stepparent’s income and asset information must also be reported on the FAFSA.
Are FAFSA income limits different for independent students?
No. The U.S. Department of Education uses the same formula for calculating aid regardless of whether you are a dependent or independent student.
That said, independent students may receive more aid than dependent students simply because they tend to have less income and fewer assets to report. You can qualify as an independent student if you are any of these:
• At least 24 years old
• A graduate or professional student
• A veteran
• A member of the armed forces
• An orphan or a ward of the court
• Taking care of legal dependents
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