If you’re a high school senior or the parent of one, you’ve likely heard plenty about the FAFSA. But every year, families decide not to submit it because they assume they make too much money to qualify for financial aid.
After helping families navigate the college financial aid process for more than 16 years, I can tell you that this assumption can be costly.
The Free Application for Federal Student Aid (FAFSA) is about much more than qualifying for need-based financial aid. It is the gateway to federal, state, and institutional aid and can be important for merit scholarships, student loans, work-study, and even financial aid appeals if your family’s circumstances change.
Even if you think you won’t qualify for financial aid, submitting the FAFSA is one of the most important steps you can take to keep your family’s options open.
Colleges May Use the FAFSA to Award Merit Scholarships
One of the most common misconceptions I hear is that the FAFSA only matters for families seeking need-based financial aid.
That’s simply not always the case.
Many colleges use FAFSA information for multiple purposes. In addition to determining eligibility for need-based grants, schools may require a FAFSA to award certain institutional merit scholarships.
A student may receive an academic or athletic scholarship with an acceptance, but the college may still require a FAFSA before finalizing the student’s complete financial aid package.
Colleges also use FAFSA information to determine eligibility for federal loans and work-study and to help allocate their institutional financial aid funds.
This is why I encourage families not to assume that a high income makes the FAFSA irrelevant. Skipping the application could mean eliminating opportunities before you even know they exist.
Some States Require High School Seniors to Complete the FAFSA
FAFSA completion has also become part of the high school graduation process in a growing number of states.
Currently, 13 states require high school seniors to complete the FAFSA or formally opt out:
- Alabama
- California
- Colorado
- Connecticut
- Illinois
- Indiana
- Kansas
- Maryland
- Nebraska
- New Jersey
- New York
- Oklahoma
- Texas
These policies were developed in part to encourage more students to access available financial aid and continue their education after high school.
If you live in a state with a FAFSA graduation requirement, be sure to understand both the filing requirements and the opt-out process available through your student’s high school.
The FAFSA Is Required for Federal and State Financial Aid
The FAFSA is the application students use to access federal student aid programs, including Pell Grants, Federal Work-Study, Federal Direct Loans, and Parent PLUS Loans.
Most state grant programs also rely on FAFSA information to determine eligibility.
That means choosing not to file can eliminate access to federal grants, student loans, state grants, and some institutional financial aid.
This matters even for families who don’t qualify for need-based grants.
Students may still be eligible for Federal Direct Unsubsidized Loans, which provide benefits that private student loans may not offer. Federal loans have fixed interest rates and include certain federal repayment and borrower protections.
Private loan rates and terms, on the other hand, can vary significantly based on credit and the repayment option selected.
Submitting the FAFSA doesn’t mean you have to borrow. It simply keeps borrowing available as an option if you ultimately need it. Continued…
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