4 common FAFSA misconceptions that cause students to miss out on aid

4 widespread FAFSA misconceptions that trigger students to overlook out on assist

The Free Application for Federal Student Aid, often called the FAFSA, opened on Oct. 1 which implies students can now apply for his or her share of $150 billion in federal student assist — together with grants, scholarships, loans and work-study — for the 2022-2023 faculty yr. 

But faculty finance specialists say that confusion across the kind leads students to overlook out on billions in assist annually.

During the 2020-2021 educational yr, solely 68% of students and their households submitted the FAFSA — the bottom share ever recorded by Sallie Mae for the reason that group started its How America Pays for College report in 2008.

Ashley Boucher, who just lately served as director of company communications for Sallie Mae, says the development is “incredibly alarming.”

“This idea that runs rampant, that ‘The FAFSA won’t help me,’ or ‘The FAFSA’s not for me, that’s for other families,’ that idea is grounded in falsehood,” she says.

Here are 4 of the most typical misconceptions concerning the FAFSA:

1. You have an excessive amount of cash to qualify 

The most typical purpose households gave Sallie Mae for not submitting the shape was that they did not assume they’d qualify for any monetary assist. But, there is no such thing as a official revenue cutoff to use for federal student assist.

Typically, “aid is available for anyone with a household income below $250,000 a year,” Charlie Javice, founder and CEO of Frank, an internet FAFSA platform, beforehand defined to CNBC Make It. As a overwhelming majority of Americans make lower than $250,000, Javice says, being too wealthy to get assist “only applies to less than 5% of the U.S. population.”

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“So it’s really important as FAFSA season comes up that people don’t forget that there is no such thing as being too rich to file FAFSA,” he says. “Everyone should be doing it.”

Plus, lower-than-normal completion charges may be seen throughout a variety of students — suggesting that many households will not be even near incomes an excessive amount of. According to Sallie Mae’s report, 67% of low-income households, 70% of middle-income households and 66% of high-income households submitted the FAFSA.

2. The FAFSA solely determines student loans 

Another widespread false impression amongst students is that the FAFSA solely determines student loans and that students should take out the entire loans they’re provided.  

A current survey of 1,000 undergraduate students by Student Loan Hero discovered that 85% of students do not know that the FAFSA determines eligibility free of charge assist reminiscent of grants and work-study along with loans. 

“These misconceptions could be causing some students to ignore the FAFSA completely — one in five said they don’t plan to submit it this year. It’s a good idea for all students to submit the FAFSA, since it doesn’t have an income cutoff and can be used for more than just federal aid,” says Rebecca Safier, a student loan counselor for Student Loan Hero. “One of the most dangerous misconceptions we discovered was that 43% of students believe you need to accept the full student loan amount you’re eligible for.

She continues, “You needn’t settle for all (or any) of the student loans you are provided, and in reality ought to attempt to decrease borrowing as a lot as potential so you do not find yourself with burdensome debt after commencement.”

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3. Aid packages are set in stone

Students should also know that they can always appeal whatever financial aid package they are offered to try to get more assistance. For instance, if a student’s household income has decreased, a family member has lost a job, or unexpected health costs have arisen they can and should appeal and indicate that their financial conditions have changed.

“Many households are nonetheless experiencing financial challenges on account of a pandemic and we wish to see extra households preserve their {dollars} of their pockets, and never pay extra for faculty than they must,” says Boucher. “Of course, meaning beginning with the FAFSA, however it would not finish there.”

According to Sallie Mae’s report, 29% of families who received a financial aid offer from a college appealed for more aid and 71% of those appeals were approved, leading to higher grant amounts in most cases. 

4.  Time is on your side

While the form may feel intimidating to some, experts stress that students should complete the FAFSA as soon as possible because schools often distribute student aid funds on a first-come, first-served basis according to the date the students complete the financial aid application.

“October 1 is extremely vital in the case of paying for faculty as a result of the FAFSA is the gateway to $150 billion in assist to assist pay for larger schooling, together with scholarships, grants, work-study and federal student loans,” says Boucher. “But a few of that assist is proscribed, a few of it’s first-come, first-serve, and so households wish to be among the many first in line to use for his or her justifiable share of assist.” 

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Time, it seems, is of the essence.

But because of current updates, the FAFSA software may be accomplished in as little as 4 minutes. Check out CNBC Make It’s step-by-step information for finishing the FAFSA to assist stroll you thru the method. 

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