Why You Should Complete the Free Application for Federal Student Aid (FAFSA)

Families are required to complete the FAFSA to be eligible for financial aid in the form of grants or loans from the government, colleges, and graduate schools.  Many families assume, based on their family income and assets and/or after using the government Federal Student Aid Estimator, that they aren’t eligible for financial aid, so they don’t bother to complete the FAFSA.

However, there are several compelling reasons for completing the FAFSA even if you may not be eligible for financial aid:

Qualify for Merit-Based Aid

Even if your family doesn’t qualify for financial aid, many educational institutions and scholarship providers require that you complete the FAFSA to be considered for scholarships and grants from those institutions. Be aware that these institutions have different deadlines for merit and financial aid consideration, so it is always better to file your FAFSA as early as possible and to research the deadlines in advance.

Protect Against Downside Risk

Financial aid eligibility is based in large part on family income. If your family experiences a significant unforeseen change in financial circumstances such as a job loss, serious medical condition or injury, or death in the family, your student’s financial aid eligibility could change.  If you have the FAFSA already on file, the financial aid department will be able to review your student’s situation deftly and help provide your family with resources.

Access to Unsubsidized Federal Loans

Most students qualify for unsubsidized federal student loans, but to be eligible you must file the FAFSA. You may want this option if (a) you want your child to have some skin in the game (you can always pay the loans off for them if they maintain a certain GPA, for example) and/or (b) the interest rate offered on the loan makes it an attractive alternative to withdrawing funds from investment accounts to pay for college.

You can complete the FAFSA online starting on October 1st each year for the following academic year.  The US Department of Education estimates that it will take approximately one hour to complete the FAFSA.  There is now an IRS data-retrieval tool on the FAFSA form which allows you to pull information from your tax filing and expedite the process.

When completing the FAFSA, be sure that you get an FSA ID for both the parent completing the FAFSA and the student before starting the application.  This allows you to save the FAFSA during the process and return to the form later if a question arises.  Also, the FSA ID is necessary for both the parent and the student to sign the form electronically.

Get started on completing the FAFSA as soon as possible after October 1st.

A small investment of your time may result in some unanticipated benefits!

Kerry B. Connell, CFP®

Kerry joined HTG in 2014. She helps clients create a picture of their financial goals and directs investments to attain those goals. Kerry is also involved in the firm’s management and strategic planning initiatives and contributes to HTG’s educational and networking efforts.

Kerry is a CERTIFIED FINANCIAL PLANNER™ practitioner. She has a BA degree from Tufts University and an MBA/JD from Northwestern University.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
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