Breaking down FAFSA: What You Need to Know About Federal Student Aid

As you get ready for the college admissions process, what do you think is the most important decision you’ll make

This is something I discuss with students all the time. As you can guess, I hear a lot of different answers—choosing the best school, finding just the right major, or maybe figuring out where to meet the cutest guys or girls.

Those are all important factors. (Well maybe not the last one.) But none of them is as critical as the all-important decision of how you will pay for it all.

That’s right, I said it. When it comes to college, no other decision matters as much as the question of cash. And that’s why you need to know all about a little form known as FAFSA.

What Is FAFSA?

FAFSA stands for the Free Application for Federal Student Aid. It’s the form schools will use to decide how much money to offer you for college, not to mention what kinds of aid you qualify for. You can fill it out here.

But before you jump to the FAFSA website, you need to know a few things about how it works.

The key dates for the 2018-2019 school year are 10/01/17, the first day to apply, and 06/30/18 which is the deadline. So you have a few weeks to get ready for your application, but don’t wait too long to complete it. Be diligent to get it done soon, because it’s the key to getting the maximum financial aid available. If you miss the deadline, you could miss out on aid and be forced to pay out of pocket or sit the year out.

Now let’s talk about the money itself. Student aid comes in two basic forms:

  • Student loans. I want you to avoid these at all costs.
  • Free money through scholarships and grants. This is the only kind of student aid I recommend, because you never have to pay it back! There are many different scholarships available, some directly from your school and more from many other sources. There are two main kinds of federal grants, the Pell Grant and the SEOG Grant.

FAFSA is used to determine your eligibility for both kinds of aid, but at the risk of repeating myself, I need to say this again—don’t go into debt to attend college. This is something that you absolutely can pay for with cash.

The reason I’m so passionate about helping you avoid student loans is because of the stress and problems I’ve seen them cause in the lives of so many young people—including my own! I’m one of millions of Americans who fell for the student debt scam when I went to college. I wound up with over $25,000 in student loans. It’s all paid off today, but it took a lot of time and energy to knock out. With the convenience of the FAFSA and the availability of so many scholarships and grants, there’s really no reason to even consider debt.

Your Award Letter

Once you’ve submitted your FAFSA, you will receive what’s known as an EFC (Expected Family Contribution). This is an estimate the Federal Student Aid office will send to schools to help them determine your financial need. The general rule is that the lower this number is, the more aid you’ll be eligible for.

Here’s what happens next. The school or schools you’re applying will crunch your FAFSA numbers and send you an award letter. This will show you the details of how you can attend school for free!

Remember that grants and scholarships are your best friends here. Either kind of free cash is sweet! Don’t hesitate to sign up for those right away.

Don’t Sign Up for Loans by Mistake!

But listen up! The award letter can be a confusing document. In fact, it’s something that’s caused a lot of confusion and heartache for too many young people I know because of a common misunderstanding—people thinking they’re signing up for scholarships, not realizing they’re putting themselves on the hook for loans!

Don’t let this happen to you. Read the whole letter slowly and carefully. And be particularly sure to read the fine print! Then before you sign anywhere, make absolutely sure you’re only signing up for free money!

Here’s the truth: schools don’t really care how you pay for your tuition, room and board. All they care about is getting you to enroll, because they’ll get paid either way, whether it’s from your own cash and scholarships upfront or through a lender on your behalf. But you have to care about the difference, because the burden of future debt repayment will be on you!

Let me give you another tip about financial aid. You shouldn’t assume you’re going to get solid advice from your school’s financial aid officers, either in what they say in your letter or what they might tell you during a campus visit. As I’ve seen in my own conversations with many who work in financial aid, they often think it’s impossible to attend school without taking out loans. But I’m here to tell you that you can! And in an area as serious as your money, you need to be the one taking ownership of this process because no one else is going to jump in and do it for you.