Free College Money: The FAFSA

Email  Print Print  

FAFSA FormThe last few weeks have been hectic in the BFP household as we had a combination of the holiday festivities and my wife’s applications for graduate school. She’s applying to Ph.D. programs, so she’s been researching graduate programs, writing applications, preparing for the GRE, and taking the GRE these last few weeks. Fortunately, one problem she hasn’t had to tackle was how to pay for the Ph.D. because they often get tuition covered by the school, plus a stipend.

I graduated undergrad with about $25,000 in student loans, a paltry sum when compared to some of my friends who had upwards of $50,000 and $80,000 in student loans. Also, the majority of my loans were low-interest deferred Stafford loans. I was only able to get those loans, and other grants, because I filled out a FAFSA form… something 25% of families fail to do.

I was amazed when I read a press release from Sallie Mae that stated 25% of families didn’t even complete the FAFSA application! Sallie Mae is another one of those former government sponsored entities that privatized a few years ago (like Freddie Mac and Fannie Mae) and they deal strictly with student loans and college savings plans. The FAFSA is the Free Application for Federal Student Aid.

How do I apply?
You can either fill out a paper form or you can apply online. Applications can be submitted starting January 1st (so you can do it now) and the deadline is June 30th.

Why is the FAFSA so important?
It’s used to determine everything in federal aid. Need- and non-need-based grants, scholarships, work-study and low-cost student loans – they all use the FAFSA to determine who gets what. Last year, $163 billion dollars in student aid was awarded and 40% of them were grants that do not have to be repaid. That is free money. If you don’t complete a FAFSA, you are not eligible for any federal financial aid. No Stafford loans, no Perkins loans, no PLUS loans, and not even unsubsidized Federal loans. Zero. Zip.

I heard student loans are really hard to get this year.
That may be true, but if you don’t spend the hour or two to fill out the FAFSA, they will be nearly impossible for you to get because you won’t be eligible for any of the federal loans.

What are the interest rates on subsidized loans?
The Stafford loan is probably the most popular subsidized loan as it has the most favorable interest rates, it’s a need-based loan and the rates are schedule to be (all loan rates are listed on Sallie Mae):

  • July 1, 2008–June 30, 2009 the interest rate is 6%.
  • July 1, 2009–June 30, 2010 the interest rate is 5.6%.
  • July 1, 2010–June 30, 2011 the interest rate is 4.5%.
  • July 1, 2011–June 30, 2012 the interest rate is 3.4%.
  • Beginning July 1, 2012 the rate is 6.8%.

Those rates may not look incredibly favorable now but remember that interest is tax deductible if you earn under a certain amount and the interest is deferred until after graduation.

I recognize that some part of that 25% of families may not be eligible for federal financial aid on a need basis, but there are plenty of non-need related federal financial aid options that everyone should try to apply for.

I am extremely thankful that I was able to get federal financial aid (and some grants directly from Carnegie Mellon) and it all starts with filling out and submitting a FAFSA.

(Photo: btreenews)

{ 10 comments, please add your thoughts now! }

Related Posts

RSS Subscribe Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.

10 Responses to “Free College Money: The FAFSA”

  1. Mary Fallon says:

    One thing you didn’t mention is the fierce competition for funds this year. The oldest and largest FAFSA advisor – Student Financial Aid Services – saw a 40% jump in calls during the first 5 days of the financial aid season. Delaying could cost families aid because grants, work-study, scholarships, and loans are awarded on a first come, first served basis. Sure you might be eligible for a loan but why not apply early and try to get a grant.
    The reason why so many people – about 8 million according to the Dept of ED – don’t apply for aid via the FAFSA is because the form can be daunting. This year it is 137 tax and asset questions and a mistake can cost you time and time can cost you money in this world. There are professional FAFSA preparers who fill the form out for a fee and should double check for errors. Pick one that is all about maximizing your eligibility for student aid. Or you could file the application yourself for free on the ED Web site – be prepared to spend several hours and take your time. More than 2 million FAFSA forms are rejected by ED for errors. And errors slow down the processing of your application.

    You don’t have to be a full-time student to file a FAFSA.

    Nearly every student is eligible for some form of financial aid, including low-interest federal Stafford and/or parent PLUS loans, regardless of income or circumstances, provided a student:

    • is a U.S. citizen, a U.S. national, or an eligible non-citizen;
    • has a valid Social Security Number;
    • has a high school diploma, GED, or equivalent;
    • is registered with the U.S. Selective Service (if a male ages 18 to 25);
    • completes a FAFSA promising to use any federal aid for educational purposes;
    • does not owe refunds on any federal student grants;
    • is not in default on any student loans; and
    • has not been found guilty of the sale or possession of illegal drugs during a period when he/she received federal student aid.

    Good luck!

  2. Where do you find one of these FAFSA application preparers? What terms would you google?

  3. Mary Fallon says:

    To Funny about Money – You could search for FAFSA preparers using terms such as Student Financial Aid Services, FAFSA preparer, FAFSA.

  4. rachel says:

    I’m applying for full time grad school after 4 yrs of working as an applications engineer.
    Is there any incentive for me to fill out FAFSA?

  5. Mary Fallon says:

    Yes nearly everyone can receive some aid. Pell grants have been increased as have work study monies because of the new stimulus bill. And tuition tax credits are increased for those making $180,000 or less.

  6. Anthony says:

    I’m more than happy to help out! FAFSA preparation is a very helpful and appreciated service! I am an independent FAFSA preparer. I’ve worked in education for years, where many people have told me they would just rather pay someone to do it. The application is free, and I always make that point, but for many the FAFSA is confusing and a pain. Questions have complicated wording, and 167 questions leaves much room for error. All someone needs to do is fax or email me a copy of their tax return, then sign the application when I’m finished. Or, I can get the specific information from someone verbally or via email. Typcially clients are local to me in Texas because of the fear of identity theft, but I can help clients anywhere in the country with access to a fax or scanner and internet. If in Austin, I can pick it up. It’s definitely a same-day turn around, and people appreciate my service for the accurate, fast, and reliable work that they pay me for. I can be reached at for any questions or additional contact information.

  7. Anonymous says:

    i qualified for loan now how do i get the money whats next step

  8. G Flora says:

    A big reason 25% don’t fill out the FASFA form is it’s a very confusing mouse maze of questions. the student fills out thier form, then the parents fill out their form each with about 30 pages of every aspeck of there lives and some questions are plain redundent. Hmm, the end result about an $800.00 loan for my child. My annual income is about $35000.00 a year. Getting a FHA or VA Loan has about one tenth of the quesrtions and headaches.

  9. Diamond says:

    Is it actually free becuase I have a teacher that told us that you have to reimburse the government back. She said read the dotted lines. Is this true???

    • Educate4Less says:

      Um, yes you do have to repay LOANS; hence the name.
      Grants and scholarships (gift aid) do not need to be repaid.

      Study hard. Generally, the better the college, the more generous the gift aid package.

Please Leave a Reply
Bargaineering Comment Policy

Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2016 by All rights reserved.