Why should you always fill out the Free Application for Federal Student Aid (FAFSA), even if you don’t think you’ll qualify for aid? According to a January 2023 report from the National College Attainment Network (NCAN), over $3.58 billion in Pell Grants went unused in 2022. For the 2022-23 academic year, the average Pell Grant award amount was $4,686 while the maximum amount was $6,895. This means that some families likely left nearly $5,000 - $7,000 in free money as financial aid on the table for their child. For the upcoming 2023-24 school year, the maximum Pell Grant award amount will rise to $7,395.
Nearly 44% of families with eligible students didn’t complete the FAFSA in 2022, leaving a large pool of money for financial aid packages. So whether your child will graduate from high school this year or is continuing their higher education, it’s always wise to fill in FAFSA. No matter what your family income is, 78% of families receive some amount of financial aid.
The FAFSA enrollment period for the the 2023-24 academic year, the FAFSA application period will start Oct. 1, 2022 and will end on June 30, 2023.
What exactly is FAFSA?
FAFSA is the financial aid application is used by the federal government to determine how much financial aid to give to students for their education after high school. And that monetary support is to help students attend accredited four-year colleges and universities, two-year community colleges, vocational schools, certificate programs, and graduate schools.
However, FAFSA is not just used by the federal government to determine a financial aid offer. Other organizations—like states in which the applicant lives, the universities and colleges to which the student has applied, and other private organizations—also use the information found on FAFSA to determine institutional grants or loans to offer students. Therefore, it is in your family’s best interest to apply for FAFSA to receive federal financial aid as well as additional avenues for student aid.
For an estimate of what amount of financial aid your student may receive, use the same information from the FAFSA form to complete the Federal Student Aid Estimator. On the FAFSA, you submitted what your incomes and assets are as well as your student’s. This information is added to a formula to determine the Expected Family Contribution (EFC). The EFC represents what a family can expect to cover for higher education expenses. The difference between the total cost of enrollment and the EFC represents the remaining amount that may subsidized through federal student aid, based on need. Again, with this tool, your family will receive an estimate of what your EFC might be as well as your aid eligibility.
How are 529 funds considered for FAFSA
When filling in the Free Application for Federal Student Aid (FAFSA) form, your 529 account is considered an asset to determine the EFC. Current federal guidelines state that when a 529 account is owned by parent, the 529 plan funds are assessed at a maximum of 5.64% of its value. Therefore, if you, as a parent, have saved $10,000 in Ohio’s 529 Plan account, only $564 would count against your child’s potential eligibility for need-based federal financial aid.
What’s considered federal financial aid?
After submitting your FAFSA, your child will receive award letters from the schools that they listed on the application. Each letter will break down the amount of federal and non-federal financial aid the student will receive from their elected school.
Federal student aid is available in different forms. Need-based federal financial aid typically is offered in as grants, scholarships, work-study, or subsidized loans. Before you accept any aid, make sure you understand the financial commitments that come with each of them. For instance, a Pell Grant does not have to be repaid; however, a federally subsidized student or parental loans must be repaid and with interest.
Earlier submission date
In 2015, the federal government moved the start date for FAFSA submissions to Oct. 1 of the year prior to the next school year. This aligns the financial aid application process with that of college applications. Now students who are heading off for their higher education can find out how much federal financial aid they may receive around the same time their acceptance letters arrive. Armed with this information, you and your child can better determine what schools may offer the best financial fit.
By knowing how much federal monetary assistance you may receive, you can best estimate your child’s qualified higher education expenses and therefore, better manage your 529 account savings.
How to fill out FAFSA
In order to start the process to receive financial aid, first visit Studentaid.gov. The website will take you step-by-step through the process. The first thing to do is create an account with a Federal Student Aid ID (FSA ID). You will use this same number each year you apply for financial aid. Once you have your FSA ID, then follow the guidance from StudentAid.gov to complete the application, including what documents you will need to have on hand to fil out the application. One of the recent developments to simplify the FAFSA application is to automatically transfer your tax information to the form through the IRS Data Retrieval Tool (DRT). DRT electronically imports your accurate IRS information to the FAFSA form. This can reduce the amount of errors entered on the application as well as reduce the time needed to complete the form. DRT will also help colleges and universities to speed up their approval process as there will be less need to authenticate the supplied financial information.
Once you’ve reviewed that the information on FAFSA is correct, you will need to sign then submit the form. If you discover later that there is some data that needs to be updated on the FAFSA, this page will guide you on how to make those corrections.
Then you wait to receive the awards letters from your selected schools. Make sure you understand what is being offered as financial aid in the letters, and what is being offered, especially loans. Your student aid letter will include how to get in touch with the school to accept their offer. Don’t forget, you can contact the school’s financial aid office to appeal their offer and request additional funding.
Visit Ohio’s 529 Plan online to start saving today for your child’s future education with as little as $25. A 529 account can be used for whatever school comes after high school—including four-year colleges and universities, community colleges, tech, trade or vocational schools, apprenticeships and certificate programs. Learn, plan, and start with Ohio’s 529 Plan today at CollegeAdvantage.com.
This blog was originally posted on Oct. 24, 2022, and has been updated with new information for 2023.