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Busting the Top 5 Myths About the FAFSA

Some common FAFSA myths include your family earns too much to get aid and you have to wait to file taxes before applying. Both are false.
Sept. 20, 2019
Loans, Student Loans
5 FAFSA Myths Debunked
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You should fill out the Federal Application for Federal Student Aid, or FAFSA as soon as possible — even before you know where you got accepted or decide which school to attend— because some colleges award aid on a first-come, first-served basis. But before you get started, here are five common FAFSA myths set straight.

FAFSA Myth: Your family earns too much to be eligible for aid

Truth: Even if you don’t qualify for need-based aid, you may qualify for other types of aid.

If your family’s income is too high, you may not qualify for certain need-based aid programs — like the Pell Grant or work-study. But if you want to be considered for other aid, including certain scholarships and federal student loans, you still need to fill out the FAFSA.

» MORE: Your guide to financial aid

Plus, you won’t know what aid you’re eligible for until you apply. Dustin Smith, assistant director of financial aid at the University of San Francisco.

“There’s so much that goes into the (FAFSA) calculation,” Smith says. Factors include parents’ ages — the closer they are to retirement, the more aid their student is likely to get — and the number of siblings enrolled in college at once.

» MORE: Is college worth it? Use a student loan affordability calculator to find out

FAFSA Myth: The FAFSA is only for federal aid

Truth: States, universities and some outside scholarship programs also use the FAFSA to determine aid.

In addition to federal grants, loans and work-study programs, you may be eligible for need-based and merit-based grants and scholarships from your state, college and private organizations.

Although some require additional applications, the FAFSA is “the first step” for many of these non-federal aid programs, says Rich Nickel, president of College Success Arizona, an organization that offers scholarships and mentoring to low-income and first-generation college students.

In addition to federal grants, loans and work-study programs, you may be eligible for need-based and merit-based grants and scholarships from your state, college and private organizations.

» MORE: How to complete the FAFSA as a first-generation college student

Even some schools and groups that offer merit-based scholarships use the FAFSA to understand how their award fits into a student’s full financial aid package, Nickel says. Knowing the full picture allows the school or organization to allocate its scholarships efficiently and avoid awarding too much aid to one student.

FAFSA Myth: You have to file 2019 taxes before you can file the FAFSA

Truth: You can fill out the FAFSA using your 2018 taxes to estimate your income.

You need to file the 2020-21 FAFSA based on 2019 taxes. But if you haven’t filed your taxes yet, you can use your 2018 return to estimate answers to FAFSA questions, including your adjusted gross income, income tax and net worth for 2018.

» MORE: What are the FAFSA requirements?

When you do file your 2019 taxes, go back and update your FAFSA. You can opt to use the IRS Data Retrieval Tool, which will populate the FAFSA based on your 2018 tax returns.

“Once you file your taxes, the use of that IRS retrieval tool is fairly seamless,” Nickel says.

» MORE: When is the FAFSA deadline?

FAFSA Myth: You have to fill it out only once

Truth: You have to fill out the FAFSA for every year you want financial aid.

Filling out the FAFSA isn’t just a one-time event. You need to do it every year you want to be considered for financial aid.

» MORE: FAFSA renewal: 3 steps to a pain-free application

Even if you filled it out previously and didn’t receive aid, it’s still worth filling out again — especially if your financial situation has changed, Smith says. For example, if your income is lower or you now have more than one student from the same household enrolled in college, you may qualify for more aid this year.

Filling out the FAFSA isn’t just a one-time event. You need to do it every year you want to be considered for financial aid.

Myth: The FAFSA is long and confusing

Truth: If you’re prepared, it won’t be as bad as you think It will be

With its reputation of being a major headache, the FAFSA often causes stress for applicants, Nickel says. But he likens FAFSA anxiety to worrying about going to the dentist: It’s not as bad as you think it’s going to be.

» MORE: 5 FAFSA tips to save you time when applying

“Wondering and worrying and fretting is actually a lot worse than doing the form,” he says.

If you’re prepared with documents — including your Social Security card, 2019 tax information (or 2018 information to use in making estimates), and your current bank statements — filling out the FAFSA can take just 30 minutes.

» MORE: 2020-2021 FAFSA checklist

If you have questions about the application, NerdWallet’s FAFSA Guide can help you understand how to fill it out based on your family situation and immigration status. NerdWallet’s FAFSA Tutorial walks applicants through the process question by question.

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