Understanding FAFSA, the Free Application for Federal Student Aid

With the average cost of college per year at $35,720 - and $43,721 for an out-of-state student and $53,949 for a private university – anyone looking ahead to a college education can be worried. How will you be able to pay? Will you have to go into heavy debt to receive an education that will kickstart your career?
Anyone looking to attend college will need to begin the financial aid process with the Free Application for Federal Student Aid (FAFSA). Completing this application determines eligibility for aid through schools as the federal government calculates your needs based on your and your parents' taxes. The application registration opened October 1 and closes June 30, 2022. Here's what you need to know about the program, and why you should apply right now.

Types of financial aid

To understand financial aid, let's begin by explaining the different types available to students.


These are offered through the federal and state government and are based on your financial needs, including the FAFSA in the form of Pell Grants. The money received through grants does not need to be repaid.


These are provided by colleges, universities, and private organizations and also do not need to be repaid. These are based on merit, from your grades to essay contests to unique categories such as children impacted by cancer.

Federal student loans

The government offers low and fixed-rate loans. There are three types of these loans: Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS loans for graduate and professional students as well as the Parent PLUS Loans. These loans need to repaid after graduation. Subsidized loans range from $3,500 to $12,500 per year and unsubsidized loans max out at $31,000.

Private student loans

The last resort for funding your education is a private loans from a bank, credit union or other financial provider. These loans are fixed- or variable-rate loans and need to be repaid after graduation. If you do not have good credit, having a parent cosign could help you get a lower interest rate. These direct loans from lenders require repayment.


The FAFSA application includes this program and funds part-time jobs on campus for students who are in need of more funds to guarantee a job when arriving at school through its federal work-study programs.

Cost of a degree

Educationaldata.org review the cost of college as of August 15, 2021.
Type of institutionCost of tuitionAdditional expensesCost of attendance
4-year in-state$9,580$15,284$25,864
4-year out-of-state$27,437$16,284$43,721
2-year in-state$3,372$12,665$16,037
4-year nonprofit$37,200$16,749$53,949
4-year for-profit$13,475$21,073$34,548
2-year nonprofit$17,294$17,262$34,556
2-year for-profit$15,974$13,984$29,9558

How FAFSA works

Every college student is eligible for federal financial aid and one of the first steps in applying for a college or university is completing this application. Students can select up to 10 schools the completed application will be sent to and applying through this online application. Each school will provide an award letter with a total of what you can expect to receive if you attend the school but you are not required to accept the financial aid package offered.
In order to qualify for the FAFSA you simply input financial data from your – and your parents' - most recent tax returns. The application process includes an IRS data retrieval tool to pull in numbers from your recent returns. Race, gender, age and other personal information are not used to determine aid eligibility. Beside your tax returns, you will enter your expected family contribution (EFC) on what you and your parents expect to be able to contribute to college costs.
Once you submit your FAFSA form, it will take a couple of days to process as your (and parents') social security numbers are verified. Once the form is accepted it will be sent to financial aid offices for a review of your financial situation.
Colleges and universities know how much money they have to distribute each academic year and once the applications are received in October, they begin to dole out financial aid awards. For this reason, it is recommended you apply through FAFSA as soon as the program opens in October rather than by the June deadline as the chance to receive more free money is before the schools run out of their aid.

The bottom line

Any potential student from high school seniors to those entering doctoral programs needs to complete the FAFSA prior to the school year they will be attending. Even if you feel your family may not qualify for aid programs you are encouraged to enroll through this federal program as most will receive some amount in a financial aid offer. The earlier your apply, the better chances you have to receive more in financial aid.

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