3 Big Reasons To Fill Out The FAFSA (Even If You Think You Earn Too Much)

One-quarter of families don't bother completing the FAFSA ― and end up missing out on billions in financial aid.

It’s been about 10 years since I set foot on a college campus, and boy, things have changed a lot since then. But one thing that definitely hasn’t? The Free Application for Federal Student Aid ― FAFSA for short ― is still a pain to complete.

Yet it’s definitely worth taking the time to fill out, even if you think it’s a waste of time.

A third of families don’t complete the FAFSA, according to Sallie Mae’s 2022 How America Pays for College survey. Of those that don’t fill it out, 36 percent say it’s because they don’t believe they’ll qualify for financial aid.

But they’re often wrong: An analysis by NerdWallet found that the class of 2022 left an estimated $3.6 billion billion in federal financial aid on the table by not filling out the FAFSA.

So if you’re waffling over whether you should bother filling out a FAFSA, here are three major reasons to do it.

1. You might be eligible for more than you realize.

According to Elaine Rubin, senior contributor and communications specialist at private student loan marketplace Edvisors, most Americans are eligible for some type of federal aid. In fact, there is no household income limit for the FAFSA.

The assumption that your parents earn too much could leave you short when it comes to covering college costs. For example, according to the NerdWallet study, more than half of the high school grads who didn’t submit a FAFSA would have qualified for Pell Grants. The maximum award amount for that upcoming school year was $5,920.

“You never know what you’ll be eligible for,” said Sabrina Manville, co-founder of college comparison site Edmit. “Given how high tuition is these days, even a family who has solid financial standing can have a gap between their [estimated family contribution] and the cost of attendance.”

Manville noted that some schools might be more generous with aid than others, so where you attend college might make a difference. Plus, there are also non-income factors that determine financial aid eligibility, such as whether siblings are attending college at the same time, that can significantly lower your Expected Family Contribution, or EFC.

2. Not all financial aid is need-based.

Financial aid is often thought of as something reserved for students with lower incomes. But that’s just one type of aid. Plenty of scholarships, grants and other types of financial assistance are awarded based on factors other than financial need.

For example, some aid is merit-based. That means it’s awarded for high academic, athletic or artistic performance, as well as other special skills or interests; think scholarships for graduating at the top of your class or crushing it on the volleyball team. “Many universities require all applicants to submit FAFSA information in order to be considered for merit aid,” Manville said. “In those cases, a higher EFC will not be a disadvantage.”

And the FAFSA isn’t only for federal aid. “States and institutions also use the information provided on the FAFSA to award financial aid, and the criteria to award need and non-need based aid can be different,” Rubin said.

If you don’t fill out the FAFSA, you could miss out on scholarships and grants that other organizations offer.

3. FAFSA is the key to other types of aid, too.

Beyond scholarships and grants, there are other types of financial aid available to students who fill out the FAFSA.

For example, you must submit a FAFSA to qualify for federal student loans. Though they’re not free aid (in other words, you have to pay them back), Manville pointed out that federal loans often have lower interest rates and will qualify for special loan forgiveness or repayment programs that are not available for private loans. The same is true if your parents plan to help finance college; you’ll need to submit a FAFSA for them to apply for a Parent PLUS loan.

Additionally, you might qualify for a federal work-study program, which lets you earn money toward your college costs by working part-time as a tutor, researcher, computer lab technician and more. Money earned through a work-study job is excluded from the EFC calculation since it’s considered financial aid, according to Rubin. “This could be a reason why a federal work-study job may be advantageous over an outside part-time job,” she said.

So why pay more for college than you have to? Regardless of how much money your family has, there’s probably some type of financial aid out there waiting for you. Don’t let it go to waste.

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