The Free Application for Federal Student Aid (FAFSA) for the 2022-2023 school year opens on October 1st.
One of the largest expenditures we encounter when a creating financial plan is paying for college. Many families pay for college with current income and savings. Depending on the cost of the school and your specific financial scenario, there might be a need for additional financial aid.
“Financial Aid” includes many sources: grants and scholarships (free money is always best), work-study programs, and student loans. Financial aid can be further broken down between “need-based”, designed for those with a financial need, or “merit-based”, which is based on your child’s academic, athletic or artistic achievements.
It is very important to note – many schools will not offer merit-based scholarships to students that have not filled out the FAFSA. This is a common mistake in higher-income earning households: you skip completing the FAFSA because you don’t believe you’ll qualify for a need-based award. Look to the college or university for their specific guidelines.
How much money will you get? Financial need awards are determined by the formula of the FAFSA. In short, it looks at the total cost of attendance (which varies by school) minus the Expected Family Contribution (based on the financial information provided on the FAFSA application). The difference is the financial need. Colleges use this output to determine how they award financial aid to their applicants.
Keep in mind, financial aid is often distributed on a first-come, first-served basis. So don’t wait until the deadline. Apply early!
We’ll continue our discussion in subsequent newsletters. Coming up:
Part 2 – What do you need to have for the FAFSA and what is EFC?
Part 3 - Changes to FAFSA are coming – New simplified FAFSA opens October 1, 2022. What does that mean?