Open the financial aid for the college you need starting October 1
Despite the headlines, college is still the surest path to better lifetime earnings. But a degree is more likely to pay off if you don’t borrow a small fortune to get it.
The Free Application for Federal Student Aid, or FAFSA, is an essential step in making college affordable. Applications open for the 2023-24 school year on October 1, and those who apply early have the best chance of getting more free money for the school.
Dr.. Jane Hester, who has overseen college admissions and school admissions in Ohio and Oregon for more than a decade, advises facing off as quickly as possible. While the federal government does not run out of funds for need-based assistance, colleges and states do.
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“Do it this fall. There’s absolutely no reason to wait,” Hester says.
When you file a FAFSA, you’re applying for need-based assistance that can make a big difference in where you decide to go in school and how much debt you’ll face after you graduate. Every dollar you get in grants, scholarships, and work studies you won’t have to beg for family or borrow.
Applying early also means you’ll get an offer of financial aid from the colleges you apply to sooner, Hester points out, giving you time to compare offers or resolve any discrepancies.
“It’s one of those things you just need to get away from,” she says.
Types of aid covered by the FAFSA
The FAFSA is used to calculate your family’s expected family contribution, or EFC. Subtract the EFC from the official cost of attendance at your school to reveal your financial need; The completed FAFSA then acts as an application for financial assistance to help fill that gap.
A completed FAFSA unlocks these types of need-based federal, state, and school aid:
- Bill grants.
- Work study.
The current maximum limit for a Pell Grant is $6,895; Any combination of grants, work-study and scholarships can cover some or all of the difference between the official cost of attending school and the expected financial contribution to your family.
The great thing: These types of aid do not need to be repaid.
You also need to complete a FAFSA to access federal student loans.
Monitor your student loan balance
After completing the FAFSA, you will likely get subsidized federal loans as well; They are called financial aid because the government pays interest on them until you graduate. But it must be repaid like any other loan.
The FAFSA also serves as an application for unsubsidized federal loans, which are not related to need. For freshmen, the maximum amount is set at $5,500 per year, but this increases to $7,500 by the junior year.
If you need to borrow money beyond this amount, you can take out a private student loan.
Any loan – whether subsidized, unsubsidized or private – becomes part of the debt that you will have to take on once you graduate. NerdWallet analysis suggests that a 2022 high school class could face an average debt of about $40,000 by the time they graduate college.
And while student loan news is currently focused on President Joe Biden’s recent revocation announcement, the administration has made clear that the allowance is tied to COVID relief and will not happen again.