Approximately 66% of students used the Federal Application for Student Financial Aid (FAFSA). Federal financial aid encompasses work-study programs, grants, and other types of scholarships or loans.
FAFSA income limits can be tricky to navigate. Your income largely impacts the types of financial aid that you receive.
In fact, some studies show that federal aid is largely unused. Students use only $30 billion of the allotted $32 billion in federal student grants. How can you find out if you qualify?
If you have an interest in learning more about the FAFSA application and eligibility, then keep reading on.
What Is FAFSA?
FAFSA is a type of government student aid. It is largely referred to as the FAFSA form. This form is available on the official FAFSA site and is free for anyone.
This government aid can reduce college costs by offering student loans, grants, work-study programs, and scholarships. There are no added fees or repercussions for filling out a FAFSA form, so even if you think that you make too much money, you should still apply.
FAFSA also works for undergraduate and graduate students. It accounts for income and assets, so make sure you have all the appropriate documents and records when you are submitting your form.
After registering for a FAFSA ID, you will need:
- Social Security number
- Driver’s license
- Federal taxes
- Retirement plan or untaxed income
- Savings account
Keep in mind – if the FAFSA form is for someone under the age of 18, then they will need a parent’s Social Security number. Additionally, when accounting for income and assets you should include yourself, your spouse, or your parents, when applicable.
FAFSA will also ask which schools you are applying for, and you have the option of choosing up to ten. Lastly, FAFSA opens each year on October 1st. It is highly recommended that you fill out your FAFSA form as soon as possible if you want to try and get the most money.
The final deadline is June 30th, but each school might have different financial aid cut-offs.
How Is FAFSA Calculated?
FAFSA takes into consideration a few different factors when determining how much money you may receive. These factors include:
- Full or part-time enrollment
- Cost of school
- Expected family contribution
- Year in school
The cost of public universities can vary widely across the country and when considering in-state versus out-of-state tuition. The average college tuition for an in-state university for one year is over $10,000. If someone chooses an out-of-state institution, then the price can nearly double.
The expected family contribution (EFC) is what concerns most people. FAFSA takes into consideration two aspects of this including total income and net assets. However, EFC also considers how many dependents are in the family and if any of those dependents are also in school.
After determining all of these factors, you can expect a financial aid eligibility letter a few months later. This typically lines up with college admission acceptance and deadlines.
Colleges cater to those who apply early. You can find yourself saving even more money sometimes with tuition fees by applying early. Standard deadlines are November through February but pay attention to early submission dates and easy scholarships before they get taken.
FAFSA Income Limits
The most important thing to keep in mind with FAFSA is that there are not any income limitations. This means that anyone can apply without a penalty.
If your family’s income is over $350,000 a year and there is more than $1 million in assets, then FAFSA won’t be helpful. However, at that point, most family’s can afford a public university’s tuition and fees.
As you can see – the majority of Americans could qualify for some sort of financial aid and it pays dividends to spend time filling out the form and applying for financial aid at universities and colleges.
Listing a university on your FAFSA application does not mean that you have to apply there. However, you should spend some time compiling a list of universities that are under your consideration and use them on your FAFSA application. Next, pay attention to your state’s guidelines for how you list your schools.
Not every state has restrictions on the order that you list your schools, but you will need to double-check beforehand so that you don’t miss out on in-state grants.
It can be difficult in determining the difference between Pell Grant eligibility, loans, and work-study programs when you are applying for FAFSA. Ultimately, you cannot choose a preference for a loan or grant on the application.
The government determines this based on the criteria above what you qualify for. However, it is helpful in knowing the different types of aid out there before you start the application process.
1. What Are Grants?
Do you have to pay back grants? In short – no. Grants are need-based aid and don’t require repayment.
Grants fall under four different categories at the federal level and that does not include state grants. Some states have separate applications for applying for state grants, but the majority of them accept the FAFSA application.
The different types of federal grants include:
- Pell Grant
- Federal Supplemental Education Opportunity Grant
- Teacher Education Assistance for College and Higher Education Grant
- Iraq and Afghanistan Service Grant
Almost 25% of students used scholarships and grants for the 2020-2021 school year. One of the most popular types of federal grants is the Pell Grant.
In fact, since the 1970s, the Pell Grant has grown to be the largest grant program that the federal government offers.
Students who typically qualify for a Pell Grant have to demonstrate excessive financial need. For the 2021-2022 school year, the maximum amount that a student can qualify for with a Pell Grant is $6,495.
Some studies found that almost two million individuals qualified for Pell Grants but did not apply. Another positive aspect about a Pell Grant is that it is not necessarily more beneficial in applying early.
It is not a first-come, first-serve type of federal aid. If a student qualifies for it, they will receive the grant.
2. Finding Scholarships
When asking yourself, ‘how to pay for college’, it may seem like a daunting question. Applying for scholarships can appear time-consuming and not worth your while. Just like grants, they give students a great opportunity for help with college tuition that doesn’t need to be repaid.
Merit-based scholarships are for students who exceed standards. These standards are based on academic achievement, talents, or other interests.
Sometimes, scholarships have different requirements based on the university’s guidelines. Make sure you pay attention to scholarship criteria on the university’s website beforehand.
One of the best ways for seeing what scholarships you may qualify for is by checking out the financial aid office at a specific university or college. Most scholarship deadlines are before the start of the school year.
If you want a good shot at qualifying for a scholarship, then start the application process early. If you end up qualifying and accepting a scholarship, then report it to the financial aid office at your university or college.
Attending a community college is another option for consideration. Is a community college free? It is not considered a free pass for education, but it can significantly curb costs. If you haven’t qualified for scholarships or grants, then this is a viable option.
Many students attend a two-year community college before attending a 4-year university.
3. What Is Work-Study?
If you have an interest in a work-study program, then you need to check the box on your FAFSA form that asks that question.
This does not guarantee you or your child a job, but it can help qualify you for other types of financial aid. If you have a work-study offer, then you still need a job. You will also need enough work hours to remain qualified for the work-study financial aid.
Additionally, the type of job you get is also important. Only certain jobs qualify for work-study aid, and this is typically found through on-campus jobs. Some other private institutions or non-profit organizations also qualify for work-study programs.
Not every college will provide a work-study opportunity. Before filling out your application, make sure you contact your university’s financial aid center first.
Keep in mind – the money you earn from these work-study programs falls under taxable income. However, work-study jobs differ slightly from regular part-time jobs. For instance, you only have a set amount of hours that you can clock in through this program whereas other jobs might not be as accommodating.
You can also sometimes find part-time jobs on campus that cater to your degree and provide a unique learning opportunity. Because these jobs are on campus, you might also have more opportunities for completing homework or flexibility with changing your work schedule based on classes.
This is also a great solution if you are wondering how to make money in college.
4. Student Loans
Federal student loans are the last category. Grants and scholarships are the two most popular and sought-after means of federal aid. If you receive an offer for a grant or scholarship, you may not need a student loan.
There are four different types of student loans that the federal government offers. These include:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
Compared to private loans, federal aid can be cheaper and have lower rates. Direct PLUS loans are the only type that requires a credit check. Federal loans are also more flexible with payments and deferrals than private ones.
For example, you can defer payment for up to three years based on economic hardship. The two most popular federal student loans are direct subsidized and unsubsidized loans. The difference between the two is that the government pays interest for subsidized loans.
You are required in showing a financial need for subsidized loans whereas unsubsidized loans do not have the same requirement. If you need more money than what the federal student loan offers, then most people advise that you accept the full amount of federal aid before resorting to personal loans.
Graduate Student Loans
Does FAFSA cover graduate student loans? Yes – it can cover both undergraduate and graduate programs. Additionally, you will need the same information that you used for undergraduate programs for your application.
You can choose up to ten schools when completing your FAFSA application. Most graduate students – even if they are living under their parent’s house – qualify as independents.
All of the information on your FAFSA form will be from your own income, assets, and tax forms. Graduate students won’t qualify for a Pell Grant, but they can still qualify for other grants such as the Iraq and Afghanistan Service Grant.
Additionally, there are typically higher interest rates for loans, but graduate students can usually take out more loans than undergraduate students. This is helpful for students who ask, ‘how much is medical school’ or ‘how much is law school’?
Both of these graduate programs can cost thousands of dollars and result in years of debt. On average, medical school costs over $50,000 per year. Make sure you research the schools beforehand because some might offer their own grants.
For example, Cornell University has a full-ride grant program available for medical students.
Student Checking Accounts
The Chase College Checking account is a great option for students looking at finding reasonable rates while they are in school. A student account with Chase will waive monthly fees for up to five years while you are in school.
Another option is the Bank of America student account. For students under 24 years old, they also offer a fee waiver program.
Financial Aid Eligibility
If you are wondering about FAFSA income limits, then you should hopefully know by now that there are not any restrictions on applications. Grants and scholarships are likely to be awarded to students who have a greater financial need.
However, most people can still qualify for subsidized or unsubsidized loans despite their income. Visit our site today for the most up-to-date information on college financial guidance and helpful tips and tricks.