Whether you’re heading to campus for the first time or returning for another academic year, understanding financial aid is a crucial part of money management during college. Your educational expenses can add up quickly, and you’ll need to know what options are available to you so you can make smart money decisions.
Financial aid is a combination of funds used to pay for your education. There’s a common misconception that financial aid is only made up of “free” money – or money you don’t pay back – when in reality, there are several types of financial aid options available. Depending on the type of funding, you may be limited on how you can use the funds. Oftentimes, financial aid issued from the Department of Education can only be used for educational expenses like tuition, room and board, or books and cannot be used for expenses unrelated to your schooling.
The majority of financial aid is based on the Free Application for Federal Student Aid, or FAFSA form. The FAFSA must be completed if you intend to use funding like:
The FAFSA must be completed each year by the student and may require some parent information, depending on the student’s age and background. Your eligibility may change from year to year, which is why it’s so important to submit the FAFSA annually.
There are other types of funding available that aren’t typically dependent on your FAFSA information. Funding sources like employer tuition reimbursement, private student loans, and cash payments can all be used to help pay for your education.
To start the FAFSA, you’ll need to register for an FSA ID and password. Before you begin, gather personal and financial documents that you’ll need like your most recent tax information, driver’s license, Social Security number, and documentation on any other assets or untaxed income you may have.
The FAFSA is released each year on October 1 for the following academic year. The earlier you complete the form, the better your chances of getting the best financial aid package for your situation.
Once submitted, the information on your FAFSA is used to calculate your Expected Family Contribution, or EFC. Your EFC is used by the financial aid office at your school to determine how much funding you can receive – whether from grants, loans, or a combination of the two.
After applying for financial aid, be sure to contact your financial aid office at the school you attend. There may be additional documentation they need to confirm your eligibility. If there’s been a change to your information after your FAFSA was submitted, they may be able to assist you in updating it.
While the FAFSA is only submitted once per year, other types of funding may be available year-round. Seek out opportunities like grants and scholarships both through your school and outside organizations to help cover additional education costs.
Attending college is an exciting time but mismanaging your finances during your schooling can add unnecessary stress. For more tips and tools on how to manage your finances while attending college, visit our WalletWorks blog.