FAFSA Explained: How to Unlock Financial Aid for College

By: LottoEdge

The North Carolina State Education Assistance Authority (SEAA) has high hopes for current and future students and wants to empower all North Carolina schools to offer the best information and education possible to school students and parents. The state, along with the dedicated team at myFutureNC have set an ambitious goal of seeing two million North Carolians earn a high-quality credential or a postsecondary degree by 2030. As part of SEAA’s commitment to that goal, they have placed emphasis on FAFSA outreach and creating resources to support NC students on their path to higher education.

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What is the FAFSA?

The FAFSA, or Free Application for Federal Student Aid, is a comprehensive financial aid form that you will complete annually to access help paying for a post-secondary degree. It’s a crucial part of preparing for college. When you complete your FAFSA, it gives your desired school (or schools) the information they need so they can determine how much aid you or your family might need toward the cost of your education.

Once each school you’re applying for has a reference point as to how much you can afford to pay for college, they can determine if there’s a gap between your financial means and the Cost of Attendance (COA). If there is a gap, your FAFSA application allows colleges to match you with grants and other funding you qualify for and acts as an application for those core programs, including grants, work-study, scholarships, and loans. The FAFSA is created and updated by Federal Student Aid, a branch of the US Department of Education and the single largest provider of financial aid in the nation. It is a safe and legitimate way to apply for help paying for college.

FAFSA is a tool that can help you bridge the gap between what you can afford to pay for college and what your classes, books, other materials, and housing will actually cost.

Regardless of income or familial status, FAFSA is a valuable first step to unlocking grants, scholarships, and other aid that can help pay for the cost of a college degree or certificate. The importance of filling out your FAFSA application cannot be overstated. It’s a critical first step in the process, particularly for students who anticipate needing some form of assistance in funding their college education.

Laura Morgan with College Foundation Inc., a nonprofit organization dedicated to increasing access to college by assisting students with education, career, and financial aid planning, shares, “The FAFSA is an important first step for almost all forms of financial aid. The FAFSA form for the upcoming academic year opens October 1st of each year, and students should submit the FAFSA as soon after October 1st as possible to ensure that they qualify for all eligible funds, including some scholarships and grants that are awarded until funds are depleted. The FAFSA is required to qualify for each of the four grant programs for North Carolina students, including the North Carolina Education Lottery Scholarship.”

We’ve created this comprehensive guide as a reference tool to help NC students and their parents prepare for the transition to college, navigate the financial aspects of paying for higher education, and understand what kind of aid is available through the FAFSA.

Things to Keep in Mind

  • Your FAFSA application is the first step you can take to access financial aid that can help pay for part or all of your college degree.
  • FAFSA for the upcoming academic year will open on October 1st.
  • You’ll want to fill out and submit your FAFSA application on October 1st, or as soon after as possible, to make sure you are first in line for all financial resources, including need-based grants and scholarships.
  • Some funds accessed through the FAFSA do run out. You need to apply early for the best chance to secure the most aid possible.
  • You don’t have to know which college you will attend; you can list up to ten on the application and decide on the school later once you have aid information.
  • NC students must also complete the Residency Determination Service (RDS) to qualify for in-state tuition. The RDS requires similar information as the FAFSA and can be completed alongside it.

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Getting Started: What You’ll Need to Know to Fill Out Your FAFSA

Before you sit down to complete your FAFSA application, there is some information you’ll want to have on hand. Make sure you have an accurate idea of your household income, assets, and any state or federal benefits received. You’ll also want to look up the Federal School Code for any schools you are thinking of applying to (you can list up to 10 on your application).

Why does FAFSA want to know my household income?

Many of the grants and scholarships available through FAFSA are need-based. The level of need each student may have is calculated using a few key pieces of information, including household income.

If a student is considered a dependent, which is a common scenario for young adults under the age of 24, the income of the parents or guardians will be needed. Typically, W2s and last year’s tax returns are the easiest places to look for this information. If you are not sure if you qualify as a dependent, you can find out quickly by referencing this FAFSA questionnaire. If you don’t meet the guidelines to be considered “independent,” you will be viewed as a dependent.

How does FAFSA use my household income information?

Your level of need is assessed based on your Estimated Family Contribution (EFC), which is calculated using a specific formula. The EFC formula considers household income, both taxed and untaxed; assets; family size; benefits; and the number of people in your family who will attend college during the year. The index number that this formula generates based on your unique situation helps FAFSA calculate how much aid you would receive based on the school (or schools) you wish to attend.

How is my EFC used to determine how much aid I am eligible for?

Once your Estimated Family Contribution (EFC) is calculated, FAFSA will consider the Cost of Attendance (COA) for all the schools you’ve listed on your application (you can include up to 10). The difference between the published COA at each school you list and your EFC is how much FAFSA will assume you need.

After FAFSA has used their formula to calculate your need, they will determine how much need-based aid you qualify for. Once they have allocated the amount of need-based aid available to you, they will determine if there are still costs not yet covered and direct you to other options, also called non-need-based aid.

COA – EFC = Anticipated Financial Need

COA – Need-Based Aid = Gap in Funding (which Non-Need-Based Aid can potentially fill)

Non-need-based aid is offered as federal subsidized and unsubsidized loans and some degree- and school-specific grants like TEACH.

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What types of grants, scholarships, and other aid can I access by filling out FAFSA?

FAFSA is a powerful tool that gives you access to state and federal grants and programs that help more than 13 million students and their families pay for college every year. When you fill out your FAFSA application, you will be applying to multiple programs at once, including federal grants such as Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG). You’ll also be considered for federal work-study opportunities, public scholarships such as The North Carolina Education Lottery Scholarship (ELS), and federal student loans.

When is the deadline to apply for aid that will help pay for the upcoming school year?

You can apply for aid through the FAFSA application for the upcoming school year anytime on or after October 1st. Put another way, when you apply this October, you are applying for aid to help pay for the academic year that begins next Fall. While it may seem like you have time to spare, please don’t delay. Much of the Need-Based Aid available is in high demand. Some grant funds you may qualify for are limited and could run out. It’s best to apply early, as close to October 1st as possible, to have the best opportunity to maximize the free aid that may be available to you.

Where can I get help filling out my FAFSA application?

If you are struggling to complete the FAFSA application on your own, you can reach out to the Financial Aid Department of your chosen school for local, possibly in-person, counseling. For assistance over the phone, you can contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243); they’re available from 8 a.m. to 10 p.m. Eastern Time, Monday through Friday, except federal holidays. You can also go online and check out FAFSA’s Help Center for answers to the most commonly asked questions.

Register to get help completing your FAFSA application in-person from the comfort of your car at a series of Drive-In events across the state on FAFSA Day. The events are a collaboration between SEAA and myFutureNC. Check out CFNC.org for additional details and a list of events and locations as mid-October draws closer.

This article was produced by Lotto Edge to help students and parents navigate the FAFSA application process and understand, in part, how the North Carolina Education Lottery provides funding for K-12 public schools and higher education.