If you need help paying for college or graduate school, the Free Application for Federal Student Aid, also known as FAFSA, is a great place to start. This application allows students to obtain loans and grants from the federal government, states and schools. How much money you’ll qualify for depends on several factors, including your year in school, how much money your family is able to contribute to your education and the overall cost of your school.
TL;DR (Too Long; Didn't Read)
Your financial situation, estimated attendance cost and your year in college will determine how much need-based and non-need-based aid you receive. Filling out your FAFSA will provide the estimated family contribution your school will use.
Need-Based Financial Aid
Financial aid is awarded on both a need basis and a non-need basis. Once you’ve completed your FAFSA application, your school’s financial aid office will determine how much need-based aid you should receive. First, they will calculate your cost of attendance. This is the amount it will cost you to attend school, including tuition and fees, room and board, books, supplies, loan fees, any disability costs you might incur and other miscellaneous costs such as child care.
Once your cost of attendance has been determined, your school will figure out your expected family contribution. This is calculated based on your family’s income, assets and even benefits such as Social Security or unemployment payments. Finally, your expected family contribution will be subtracted from your cost of attendance, resulting in your need-based aid. For example, if your cost of attendance is $15,000 and your expected family contribution is $12,000, then your need-based aid would be $3,000.
Need-based programs include Federal Pell Grants, Federal Supplemental Educational Opportunity Grant, Direct Subsidized Loan and Federal Work-Study. Individual states and schools may also have their own need-based aid available, so do a little research on other options that may be available to you.
Sometimes, need-based aid won’t cover all of your expenses. Alternatively, some students won’t qualify for any need-based aid but may still need a little assistance. College is expensive, and even families with relatively high incomes can struggle to pay for it. FAFSA tries to ensure that the vast majority of students have access to higher education.
Non-need-based financial aid is available regardless of your expected family contribution. Think of this as the aid that will help you cover the rest of your expenses. Your non-need-based aid is determined by your cost of attendance minus any need-based aid you’ve received. So, if your cost of attendance is $10,000 and your need-based aid award is $3,000, then you could qualify for non-need-based aid of up to $7,000.
Non-need-based programs include Direct Unsubsidized Loans, Federal PLUS Loans, and Teacher Education Access for College and Higher Education Grant.
How Much You’ll Get
As you can see, your financial aid offer will depend on a number of factors. It’s also important to note that federal loan programs are not the only financial aid option available. States and even individual schools may have their own financial aid programs.
In terms of federal loan programs, undergraduate students could be awarded up to $5,500 to $12,500 each year in Direct Subsidized and Unsubsidized Loans. Graduate students may be awarded up to $20,500 per year in Direct Unsubsidized Loans. The rest may be covered by Direct PLUS Loans.
The U.S. Department of Education offers a handy tool called the FAFSA4caster to estimate your federal financial aid contribution. Make sure to have important financial information on hand, such as your tax return, to use this tool.
Chelsea Levinson earned her B.S. in Business from Fordham University and her J.D. from Cardozo. She has been writing professionally for more than ten years. She has created personal finance content for Bank of America, H&R Block, Huffington Post and more.