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Why the FAFSA Is So Important?

Written by Lee Gonet

  1. You cannot attend most colleges without it.

  2. It may earn you financial aid for school.


The majority of colleges in the United States require students to fill out the Free Application for Federal Student Aid (FAFSA). The government uses this form to determine a family’s ability to afford a college education for their children, and most colleges use this information to award grants, loans, work-study opportunities, even non-federal aid.

Much of the form is generally based on the tax returns of both students and parents. If your child is a senior and planning to attend college in the fall of 2018, you both would complete the FASFA based on 2016’s tax statements, in addition to answering a plethora of other income-related questions!



Once completed, you will receive a Student Aid Report (SAR), which will dictate your Expected Family Contribution (EFC). Colleges determine your family’s financial need by calculating the difference between the Cost Of Attendance (COA) and your EFC. Your COA will vary from school to school based on the total estimated cost of tuition, fees, room and board, books, transportation, etc.

According to Troy Onink, a contributor to Forbes Personal Finance column, “college aid formulas expect parents to contribute up to 47% of their after-tax income to college costs each year.” However, if your child’s EFC is less than the COA, he or she may qualify for financial aid even if your family earns a fairly large income.

Be aware that any scholarships a student earns count as income and will be used to lower his or her financial need. In other words, all private awards that a student earns will be deducted from the school’s COA, and your EFC will not change.



The FAFSA also determines your child’s eligibility for need-based federal grants such as the Pell Grant or the Supplemental Educational Opportunity Grant (SEOG). Both are primarily provided for low-income families whose EFC is small. These grants are not repaid and can range from $600 to $6,000 per year for the Pell and from $100 to $4,000 per year for the SEOG.

Colleges often confer additional need-based financial aid on those students who have already earned Pell Grants, and some families with adjusted gross incomes as high as $60,000 have earned these grants.

Every school has discretionary funds for low-income students who demonstrate high merit. These awards are given strictly based on personal need at the moment and are not necessarily renewed from year to year. Never hesitate to explain extenuating circumstances to financial-aid officers, remembering that their job is to help you fund your child’s education.



The interest on Direct Subsidized Loans (currently 4.45%) is paid by the government until six months after a student leaves school, at which point interest begins accruing. If you are able to earn, invest, and save a comparable amount as your child attends school, the loan can be paid upon graduation, essentially allowing the student to borrow the money for free.

The interest on Unsubsidized and PLUS Loans begins accruing immediately, and I advise against accepting these. All educational loans are in the student’s name except the PLUS Loan.



The Federal Work-Study program provides part-time jobs for students with financial need. I recommend pursuing these opportunities because the program encourages community service and work related to students’ courses of study.

Each student applies for work-study on the FAFSA, but will have the opportunity to accept or decline specific jobs once school begins. Most employment is on campus, but some public interest positions are off campus.


Acceptance Letters

With each college acceptance letter, your child will receive a financial-aid package, including a combination of proposed scholarships, grants, loans, work-study, etc. Review and compare these carefully. You can even use them to negotiate additional aid money if your child is accepted by competing schools.

The earliest you can complete the FASFA is October 1 and the latest is June 30, but do not put off filing because the money available for financial aid is limited, and if it has all been awarded to other students by the time you apply, it won’t matter if you qualify or not. When the money’s gone, it’s gone!

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