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It’s no secret that college is expensive. But there’s an underused financial planning tool that can help: the Free Application for Federal Student Aid, or FAFSA.

Free = no-brainer, right? Maybe not. Typically, only 50%-60% of high school seniors even fill it out, and that could be a big mistake – let's see why.

What is FAFSA and why is it important?

The is the form that qualifies you for federal financial aid as well as some other kinds of aid, including:

• Grants (including Pell Grants)
• Loans (including federal Direct and PLUS loans)
• Work-study jobs
• State aid
• Institutional aid

We encourage everyone to fill the FAFSA out, even if you think you won’t qualify for any need-based aid. That’s because:

• Federal loans can offer low rates and might have their interest subsidized.
• Some schools require it as part of their merit and need-based aid decisions.
• You might experience changed circumstances before move-in day. The FAFSA can be submitted almost a full year in advance. If someone in your family loses their job or suffers another financial hit, you’ll be glad you have an application on file.

Who needs to complete FAFSA?

Dependent students

In most cases, the FAFSA is filled out by college students and “contributors,” usually their parents, stepparents or adoptive parents. It doesn’t matter whether a contributor is actually planning to pay for college expenses; their financial information is still required and considered.��

Independent students

A student can be considered independent in some cases (so they won’t need to have their parents provide information), but it’s not as common. For example, students in these situations can be considered independent:

• At least age 24 by December 31 of the year they’re applying for
• Enrolled in a master’s or doctoral program during the award year
• Married or supporting a dependent
• Currently or formerly an orphan, in foster care or under legal guardianship, or emancipated
• An active-duty member or veteran of the U.S. armed forces
• Unaccompanied and homeless or at risk of being homeless

When should you fill out the FAFSA?

Each year, you should fill out the FAFSA as early as possible once it’s released, which usually happens in October of the year prior to the school year you’re applying for. Many states and schools distribute aid on a first-come, first-served basis. (Note that you don’t have to know all the schools you’re applying to in order to fill it out – you can add them later. You will have to identify at least one school to receive the information, though.) The federal FAFSA deadline is June 30 each year, but state government and individual colleges often set much earlier deadlines. Any corrections or updates usually need to be submitted by a specified date in mid-September.

What information do you need to complete FAFSA?

IRS data sharing simplifies the process

As we’ll explain, parent and student income information is a critical component of FAFSA calculations. It must be imported directly from the IRS to the FAFSA. You’ll need to give permission for the transfer; without consent, the student won’t be eligible for federal aid.

As you fill out the FAFSA, here’s a list of what you’ll need.

1. 
   You – and any contributors – will need to create a StudentAid.gov account to access and fill out the FAFSA form online.
2. 
   The FAFSA form will have you answer questions that determine who needs to be a contributor on your form.
3. 
   You and your contributors must provide consent and approval to have your federal tax information transferred directly from the IRS into your FAFSA form – even if you didn’t file a tax return.
4. 
   You and/or your contributors may need to provide information about any child support received.
5. 
   You and any contributors will have to answer some questions about your assets and investments, so make sure you have those records on hand. This includes the current balances of your cash, checking and savings accounts; the current net worth of your businesses and/or income-producing farms; and the current net worth of your investments.
6. 
   Add any colleges, career or trade schools you’re considering – even if you’re not sure yet or you haven’t applied or been accepted yet. You can list up to 20 schools on the online FAFSA form and you can always remove a school later if you decide against it.

The can be helpful as you prepare the information and access you’ll need to complete the form.

Understanding the Student Aid Index

What is the Student Aid Index?

Families are sometimes surprised by the results of the FAFSA calculations. At the end, you’ll find out your Student Aid Index, which is a reflection of your need for financial support, given your assets and income. The higher the number, the lower the need.

Need-based financial aid is generally awarded based on the gap between the SAI and the cost of the college your student attends.

How FAFSA calculates financial need

The exact formula for the SAI is complex, but also transparent – you can run the numbers yourself if you like math and getting into the details.

But broadly, here's how it works:

• Income is weighted more heavily than assets
• The amount of income and assets considered to be available for college depends on several factors, including family size
• For a dependent student, their personal income and assets are usually weighted more heavily than those of their parents

Why family size still matters

Previously, the amount a family could be expected to contribute would be divided by the number of children in college at one time. It’s not anymore, although family size is taken into account when determining a parent’s available income.

FAFSA changes families should know about

The FAFSA has undergone several updates in recent years designed to simplify the application process and change how financial need is measured. Understanding these changes can help families better prepare for the financial aid process and avoid surprises when reviewing aid offers.

Expected family contribution was replaced by Student Aid Index

An earlier version of the FAFSA resulted in a student’s “expected family contribution,” which was the dollar amount that a family would be assumed to have available to pay for college. The FAFSA now uses the Student Aid Index to quantify a student’s need for aid instead.

IRS data sharing is now part of FAFSA requirements

In the past, students and families could choose to import income information from the IRS, but it wasn’t required. That’s no longer the case.

Family circumstances can still be reviewed

Federal law now specifies the conditions which would qualify as “unusual circumstances,” allowing someone to skip providing parent information even though they don’t meet the criteria to qualify as independent. If you have a designated unusual circumstance, you can indicate it on the form and you’ll receive an interim SAI subject to final review by the school’s financial aid officer, who may require documentation to decide whether you can be considered independent.

Pell Grant eligibility rules are changing

New Pell Grant eligibility requirements

In the past, Federal Pell Grants, which don’t have to be repaid, could be awarded even if the full cost of attendance was covered with scholarships or other grants. That additional money could help pay for additional living costs. Now, Pell Grants aren’t awarded to anyone whose cost of attendance is covered by other sources, even if the student would otherwise be eligible.

The formula for calculating Pell Grant eligibility has also changed to include assets, not just income. So, students from low-income families who have significant assets (theirs or their parents’) may not qualify anymore, even if they had received Pell Grants previously.

Expanded Pell Grant access for workforce training programs

As the result of a new program as of July 2026, you may be able to qualify for Pell Grants for short-term career-training programs, not just higher education. Programs must meet certain requirements, including supporting in-demand jobs and employer needs and meeting performance benchmarks. They also must have been offered for at least one year. It’s expected that more programs will qualify in future years.

Should you try to lower your Student Aid Index?

You can get plenty of “tips” to lower your college bills online or by going to a college planning specialist, but keep in mind that money moves that have a small impact on financial aid could have a larger, unintended effect on your overall financial plan, causing you to pay capital gains taxes, lose tax deductions or give up investment returns, for example. Speaking with a financial advisor can help ensure any tips you act on are aligned with your overall financial plan.

Talk to your financial aid administrator

If your FAFSA application results in a figure that’s higher than you can afford, a personal conversation with a school’s financial aid officer can go a long way. They have the ability to consider unique circumstances that could improve your FAFSA eligibility.