The Trickiest FAFSA Questions & How to Approach Them

Every year, college students all over the country complete the Free Application for Federal Student Aid, also known as the FAFSA. The FAFSA determines these students’ eligibility for federal loans, grants, and work-study as well as financial aid at their colleges and universities of choice.

The FAFSA becomes available on October 1st each year. After you submit it, you’ll receive a Student Aid Report (SAR) that gives you basic information about your eligibility for federal student aid and also indicates your Expected Family Contribution (EFC). 

EFC is the most important number on the form. It represents the estimated amount of money that your family can contribute to the cost of your college education.

In addition to the federal government, the majority of colleges and universities use your EFC to determine the financial aid package that they will offer you. Alternatively, some schools prefer to use the CSS Profile.* Though the outputs and resulting financial aid packages can be different, the CSS Profile is used in the same way as the FAFSA to determine how much financial support a student needs.

For more information on filling out the FAFSA, check out our step-by-step guide.

How to Approach the Trickiest FAFSA Questions

While a lot of the questions on the FAFSA are quick to answer, there are a few tricky ones that can leave students puzzled. There are others too that seem easy but you need to be careful when you answer as small mistakes can have a significant impact on the amount of financial aid you receive.

fafsa questions

Here are the 7 trickiest FAFSA questions and our best advice on how to approach them:

1. Your Name & SSN

While nicknames are cool, the FAFSA doesn’t appreciate them. The name that you enter must be an exact match to the name associated with your social security number or alien registration card. Otherwise, the federal government won’t be able to locate your information in the system. You should keep this in mind for both the student section and the parent section.

2. Your Legal Status

It’s worth mentioning that even though the FAFSA asks you for your legal status, both green card holders and U.S. citizens are treated the same in terms of financial aid. Essentially all U.S. citizens are eligible for financial aid as well as green card holders, conditional permanent residents, any person with a legal status stating “asylum granted”, “refugee”, “indefinite parole”, “humanitarian parole”, or “Cuban-Haitian Entrant”. Lastly, citizens of the Republic of Palau, the Republic of the Marshall Islands, and the Federated State of Micronesia are considered eligible non-citizens

DACA students are not eligible for federal student aid, but they are eligible to receive financial aid packages from many schools and sometimes from States too. Therefore, it’s still worth filling out the FAFSA if they have a social security number.

3. A Note About Selective Service…

All men in the U.S. are required to register for the Selective Service within 30 days of their 18th birthday (either before or after). After that period, they have up until their 26th birthday to file a late enrollment. Women are exempt.

The FAFSA asks men if they’ve enrolled for the Selective Service and, if they select no, it asks if they would like to register now. Students who don’t enroll by their 26th birthday are ineligible to receive student aid from the government. Some state laws also prevent students from receiving school-based aid if they select “no” to Selective Service on the FAFSA. 

fafsa questions

4. The Size of Your Household

Some students get confused when asked about their household size, which isn’t necessarily the number of people who live in your house. Rather, it’s the number of people that you (if you’re independent) or your family (if you’re dependent) financially support.

Why does it matter so much? This little number makes a huge difference when determining the amount of financial aid you receive. Luckily, it’s not too difficult to figure out by following a few easy steps. First, you’ll need to determine if you’re a dependent student or an independent student.

There are 10 FAFSA questions to determine dependency. If you answer “no” to all of the questions, you’re considered a dependent student and must include your parents’ information on the FAFSA (more on that below). If you answer “yes” to one or more questions, you’re considered to be an independent student and only need to provide your own information. Now, let’s see how you can figure out your household size based on your dependency status.

For dependent students:

  1. Start with your parents and yourself.
  2. Add all children under the age of 24 that live in your parents’ house and receive more than half of their support from them. You can also include children who will be born during the school year.
  3. Then add any other people who live with your parents, receive more than half of their support from your parents, and will continue to receive half of their support from them during the school year (e.g. an elderly relative).

For independent students:

  1. Start with yourself and your spouse (if married).
  2. Add your children who receive more than half of their support from you.
  3. Then add any other people living with you who receive over half of their support from you and will continue to receive more than half of their support from you during the school year (e.g. an elderly relative).

Note: When the FAFSA asks about the number of people in your household attending college, don’t include your parents even if they are enrolled in a program leading to a degree or a certificate.

fafsa questions

5. Who is the Primary Parent?

Determining who to list as the primary parent, or your parents in general, can get tricky depending on your family situation. In general, only legally adoptive or biological parents can be listed as your parents on the FAFSA. Legal guardians don’t count even if they claim you on their tax forms.

If your parents are divorced and you qualify as a dependent, there are a few things you should keep in mind:

  1. You must include at least one parent’s information on the form.
  2. If your parents are divorced or separated but still live together, provide both of their information.
  3. If your parents don’t live together and you need to decide whose information to provide, choose the parent that you’ve lived with the most in the last 12 months. Keep in mind that this might be different from the parent who has legal custody. If your primary parent is remarried, be sure to also include your step-parent’s information, too!
  4. If you spend an equal amount of time with both parents and receive more or less equal support from each, then you can choose which parent to include. To maximize your student aid, list the parent with the lowest income. And remember again to include your step-parent’s information if your parent is remarried.

Side note: When the FAFSA asks about your parents’ education levels, only enter information about your biological or legally adoptive parents. Step-parents don’t count for this one.

5.5 A Note About Recent Divorces…

If your parents were divorced recently, it won’t show up on their most recent tax return–meaning you could run into some issues. To fix this, contact the financial aid offices at the colleges or universities that you’re applying to and see if they can work with you to correct it. Schools are usually willing to provide FAFSA help as long as you can give some additional information (like your parents’ W2 forms). 

fafsa questions

6. Reporting Income for Parents and Students

The most confusing part of the FAFSA is the income section, since there are various questions about taxed and untaxed income. However, it’s also the most important determinant of your EFC. There are a few things you should keep in mind when filling out these FAFSA questions to help you get as much aid as possible for school.

If students have a part-time job, any annual sum of money earned over $6,310 is expected to be used toward paying for college. In fact, students are expected to put 50% of their earnings towards saving and paying for school.

When it comes to reporting income, parents should never list their 401K plan. Parents are never expected to use retirement money for college costs and as parent age rises, EFC decreases. Additionally, most social security runs out when a student hits 18, so you’re not expected to use any of that.

7. And What About Assets?

Deciding which assets do and don’t count can be confusing…and these FAFSA questions can also heavily impact your financial aid award. There are some assets that you’re required to report and others that, surprisingly, don’t really matter.

As a general rule, you should only report assets that are liquid and cash-based. Things like trust funds and 529 savings plans (if they’re owned by you or your parent) do need to be reported, as well as more obvious things like your bank balances.

Some assets that don’t need to be reported include 401K plans, small family businesses, and your parent’s home. Retirement assets are never included when calculating EFC. Additionally, the maximum contribution possible from parental assets is 5%. In other words, if you report $100K worth of assets, your contribution to paying for school would be $5K. Student assets, on the other hand, are weighed heavier. Students are expected to contribute 20% of their assets towards paying for college. Check out this list for a more detailed breakdown of which assets count and which don’t.

Side note: Try to complete the FAFSA on the day that your checking account is the lowest, like right before payday. That way, the amount that you report as your account balance will be smaller.

Side note 2: It’s best to keep college savings plans in a grandparent’s or non-custodial parent’s name so that you don’t have to list them on the FAFSA (i.e. to maximize your award!).

*While the CSS Profile and the FAFSA are both used to determine financial aid, they differ in a few ways.

  1. The CSS Profile asks questions based on the specific schools you’re applying to while the FAFSA questions are the same for everyone.
  2. The CSS Profile has a “Minimum Student Contribution” section while the FAFSA does not.
  3. The CSS Profile gives more decision-making power to financial aid officials.
  4. Home prices are taken into account on the CSS Profile, which can become an issue when home equity values rise.
  5. Lastly, the FAFSA is always free and the CSS Profile has a cost. As of 2018, the cost is $25 for the first school and $16 per additional school.

fafsa questions

Which FAFSA questions do you find most confusing? Let us know below! 

Everything You Need to Know About Filling Out the FAFSA

Figuring out how to apply for financial aid can be stressful and overwhelming, but it’s really not so bad once you have all the info. The FAFSA, or the Free Application for Federal Student Aid, is the form that the government, along with several colleges and universities, use to determine how much financial aid college students should receive each year.

But what is the FAFSA and how does it work? In general, federal student aid (i.e. financial aid from the government) is determined based on four factors: Expected Family Contribution (EFC), year in school, enrollment status (i.e. part-time or full-time), and the Cost of Attendance (COA) at your intended school. Colleges and universities might use a similar method or a completely different one.

The FAFSA becomes available every year on October 1st and must be completed again each year. We recommend filling it out as early as possible since some awards are given out on a first-come, first-served basis.


When it comes to figuring out how to apply for financial aid, students are often overwhelmed by all the technical jargon. EFC and COA are both determining factors when it comes to deciding financial aid awards. Understanding what they are and how they affect you can help you maximize the aid you receive and make paying for college much easier.

Your Expected Family Contribution (EFC) is essentially your family’s ability to help you pay for school (i.e. how much they can contribute). It’s based on factors like your parents’ taxed and untaxed income, assets, benefits (like unemployment or social security), your family size, and the number of people in your household also attending school that year. Your EFC is determined by a set formula established by law. For more information, check out the official EFC Formula Guide.

Your Cost of Attendance (COA) is the price of attending your college or university of choice. In addition to tuition, the COA can also include the cost of books, transportation, supplies, loan fees, personal expenses, child or dependent care, disability-related costs, and study abroad program expenses.

how to apply for financial aid

Types of Federal Student Aid

The U.S. government offers several forms of financial aid, including grants, work-study, and loans, to help students pay for school. Grants are the best form of financial aid since they provide students with money that doesn’t have to be repaid.

Students have a variety of different grants available. The most common are Federal Pell Grants, which are worth up to $6,095 each year and are awarded to undergraduate students with significant financial need. Other programs include Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Iran Service Grants. For more information, check out our helpful section on federal grants.

Another option is federal work-study, which involves students being provided with part-time jobs while in school. Students can’t work more than a set number of hours per week (usually around 20) and can either work on- or off-campus. For more information about work-study, head over to our comprehensive financial aid guide.

Loans should be your last option for funding your education. The federal government, however, does offer options to help students avoid taking out private loans. The government currently offers five loan types: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Direct Consolidation Loans, and the Federal Perkins Loan Program. Check out this article for more info on the different loans offered by the federal government and how you can avoid loans altogether.

How Schools Use the FAFSA

When schools use the FAFSA to determine student financial aid packages, they often focus most of their attention on COA and EFC. Each school uses its own formulas, standards, and methods for calculating financial aid based on these numbers. You’ll likely receive a different financial aid offer from each school since each institution has a different level of funding available to assist students.

What If I Don’t Think I Qualify for Financial Aid?

You should fill out the FAFSA whether you think you qualify or not. It’s free and takes under an hour to complete, so what is there to lose? While your family’s income might be too high to qualify for federal aid, you might still qualify for awards at private universities or colleges. Spending a small portion of your day applying for financial aid could save you thousands of dollars on college tuition.

how to apply for financial aid

How to Apply for Financial Aid: Step-by-Step

What You’ll Need

To complete the FAFSA, you should have the following documents ready:

-Social Security Number (SSN) for US citizens or Alien Registration Number (ARN) for non-US citizens

-Your/Your parents’ income tax return

-Records of untaxed income (if applicable)

-Investment records (if applicable)

Step 1: Create an FSA ID

Before you begin the FAFSA form, you should create an FSA ID, which serves as your username and password for entering the U.S. Department of Education’s websites. It’s used to confirm your (or your parent’s) identity while logging in and can also be used to sign and submit the form. Both students and parents can access the FAFSA, but each need their own FSA ID.

Step 2: Begin Your FAFSA at

Once you have your FSA ID, head over to to complete the form. When it comes to figuring out how to apply for financial aid, getting the website and dates correct is important. The form becomes available each year on October 1st and closes on June 30th. You should complete the FAFSA as early as possible, since many university-based awards are given out on a first-come, first-served basis.

Pro Tip: At the beginning of the application process, you can create a “Save Key” which temporarily allows you and your parent/student to share the FAFSA back and forth.

how to apply for financial aid

Step 3: Complete the Student Demographics Section

The first step to completing this section is to make sure you’re filling out the correct section. The parent demographics and student demographics section are different, so make sure to double check that you’re entering the information where it belongs.

You should enter your information exactly as it appears on your Social Security Card or Alien Registration Card. Generally, it’s only necessary to enter the information for the first time; it should autofill the following years.

Step 4: Decide Who Gets It

You’re allowed to send your FAFSA to up to 10 colleges and universities. You should list all the schools you’re applying for, even if you haven’t been accepted yet. You can always add and remove schools later if you change your mind. If you wind up not applying for a school or weren’t accepted, schools will automatically disregard your FAFSA.

Step 5: Are You Dependent or Independent?

Dependent students are required to provide parental information on the FAFSA while independent students are not. Keep in mind that the FAFSA uses a different set of requirements than the IRS when it comes to determining dependency. For more info on the FAFSA’s dependency guidelines, check out this page.

how to apply for financial aid

Step 6: Complete the Parent Demographics Section

If your status is determined to be “dependent”, you’ll need to complete the parent demographics section. It simply requires your parents’ basic info and can be filled out by either you or your parent.

Step 7: All About Taxes

The next step is to fill in your and/or your parents’ tax information. To make it easier, the FAFSA has an IRS Data Retrieval Tool (DRT), which automatically fills in your information (if you’re eligible to use it). Make sure to double check and fill in all areas that aren’t automatically completed.

Step 8: Sign, Submit, & Cross Your Fingers!

Surprisingly, many students make it through the FAFSA and then forget to sign and submit it at the end! Make sure to do it and remember, dependent students also need their parents to sign the form! 

Finally, here are 10 common FAFSA mistakes to avoid…

1. Never leave a field blank on the FAFSA. It can make your processing time longer and could require you to go back and edit the form. Instead, fill in answers that don’t apply to you with a “0” (zero).

2. Make sure to report all sources of untaxed income to avoid legal issues. Untaxed income sources can include non-educational veteran benefits, child support, workers comp, disability, and more.

3. Enter the correct marital status. In order to file as married, you must be married before or on the date that the FAFSA is submitted. If you’re getting married in the near future, file as single for this year.

4. Make sure to include all parents. If your parents are divorced, then you also need to include your step parents’ (if applicable) financial and demographics information on the FAFSA.

5. Include yourself in your household size. Even if you haven’t been living at your house recently, you should include yourself when determining your household size.

how to apply for financial aid

6. The early bird gets the worm. Don’t wait until the last minute to complete your FAFSA. Lots of colleges and universities give out financial aid awards on a first-come, first-served basis. Also, filing early ensures that you won’t miss the deadline.

7. Use the correct website. The ONLY website you should use to complete the FAFSA is Any other website is untrustworthy. Also, the FAFSA is always free, so stay away from any sites requesting money.

8. Get your FSA ID before beginning the FAFSA. The first step to determining how to apply for financial aid, you might need to wait up to three days to sign the FAFSA after applying for your FSA ID – meaning that it doesn’t hurt to get a head start!

9. Add all the colleges! Well, maybe not all of them, but definitely more than one or two. Even if you’re not sure about applying for a school, you should add it. You can add up to 10 schools and change your preferences any time.

10. Just do it! The biggest mistake you can make is not filling out the FAFSA at all. It involves zero money and little time and can save you thousands of dollars on college tuition.

Once you successfully determine how to apply for financial aid and submit the FAFSA, you’ll automatically be considered for all types of federal student aid – grants, loans, and work-study. You’ll also be considered for a variety of school-based aid depending on your college or university.

how to apply for financial aid

What are your best tips on how to apply for financial aid? Let us know below!

The Only Financial Aid Guide You’ll Ever Need

Figuring out how to pay for college is often the most difficult part of the application process. Just as the need for a college education is rising, the cost of tuition is skyrocketing. Between 2003 and 2013 alone, the cost of tuition rose by 79% above inflation. Since 1982, the cost has increased by a total of 500%. As a result, about 40% of soon-to-be college students end up turning down their first-choice school and going for a cheaper option

One major reason for such drastic increases in college costs is a lack of funding from state and local governments. As more and more funding is being taken away from universities and colleges, upping tuition rates is an easy way to make up the difference. Other factors have also contributed to this, such as the ‘recreation parks arms race’ to attract students and rise up college rankings.

how to pay for college

Is the Price Worth the Education?

Current tuition rates are enough to cause some students to wonder if it’s even worth going to college. After all, who wants to end up with piles of student debt at the beginning of their career?

However, despite the price, the numbers show us that attaining a secondary degree is generally worth it–even after taking the potential debt into account.

First of all, the pay gap between degree holders and non-degree holders is forever widening. Those who hold a Bachelor’s degree earn an average of $2.27 million throughout their lifetime compared to $1.55 million for those who completed some college and $1.3 million for high school graduates with no college education.

As of 2017, unemployment rates for the 25+ demographic also show that getting a college degree is generally the way to go. The unemployment rate among graduates with a Bachelor’s degree or higher was 2.5% while the rate rose to 5.3% for those with only a high school degree and to 7.7% for high school dropouts. 

How Does the Cost of School Affect Me?

The rising cost of tuition tends to have a heavy impact on middle- and low-income families as well as on students who are tasked with figuring out how to pay for college on their own. Studies show that middle-income families often earn too much for federal need-based aid but too little to pay out-of-pocket, presenting a challenging situation.

If a student’s intended program or school are out of their budget, they’ll likely need to adjust and attend a more affordable school. This can be discouraging because it forces students to stray from their initial goals. 

how to pay for college

What Can I Do About It?

Luckily, when it comes to figuring out how to pay for college, there are various options available. Whether you decide to take advantage of federal aid and scholarships, take out student loans, enter a work-study program, or a combination of them all, help is available. The key is deciding which option is the best for you and your situation.

So, let’s start with the basics!.

What is Financial Aid?

In short, financial aid is money to help you pay for college. It can come in a variety of forms, such as grants, scholarships, work-study, and federal and private loans, as well as from a number of sources, including the federal government, the state government, nonprofits, and private organizations.

A great tool to help you figure out how much financial aid you’ll need in order to attend school is the Financial Aid Calculator. It calculates the difference between the cost of the school and your expected contribution, which comes from the FAFSA (see below).

What is the FAFSA?

Now let’s dive into the holy grail of all financial aid formsthe FAFSA (Free Application for Federal Student Aid). The FAFSA is used primarily to determine the financial aid you’re eligible to receive from the federal government, but many schools also use it when determining their own financial aid packages.

The good news is that the form is relatively simple and only takes around 30 minutes to fill out. In order to complete it, you’ll need to have a few things on hand, including:

-Your Social Security Number (SSN)

-Your Alien Registration Number (for non-U.S. Citizens)

-Your or your parents’ federal income tax returns (these can often be transferred into the form automatically)

-Records of untaxed income (if applicable)

-Investment records (if applicable)

Shortly after submitting the FAFSA, students receive an electronic or paper copy of their Student Aid Report (SAR). The SAR lists basic information about a student’s financial aid eligibility as well as their answers to the questions on the FAFSA. The key number and indicator of your financial aid eligibility is the Expected Family Contribution (EFC). It is an estimate of the amount of money your family can contribute towards your education. We’ll talk more about how it’s used below.

The FAFSA becomes available to students each year on October 1st. Once it’s available, it’s recommended that students fill it out as soon as possible to avoid missing any deadlines and to ensure they have enough time to plan for how to pay for college. Some schools also grant financial aid awards on a first-come, first-served basis. For more information, check out the video below.

University-Based Aid

Many schools also use the FAFSA to determine how much financial aid to award their students. As part of this, they take three factors into account: enrollment status (part-time or full-time), cost of attendance, and EFC. Generally, they subtract the EFC from the cost of attendance to determine your financial need and present you with scholarships, grants, and more. Awards can differ wildly from school to school since each institution has its own requirements and a different amount of funding available.

Alternatively, some private colleges and universities use the CSS Profile to determine financial aid eligibility. The CSS Profile is provided by the College Scholarship Service, which is the financial aid sector of College Board. Unlike the FAFSA, the CSS Profile asks questions related to the specific school or program that the student is applying for and takes additional factors into account, including minimum student contribution. Financial aid officers are also able to weigh in on individual student circumstances. The CSS Profile can be completed online and has an application fee of $25 USD.

how to pay for college

It’s also worth discussing the differences between Need-Aware and Need-Blind colleges and universities (some schools also use a blend of both approaches).

While each has its pros and cons, a student’s academic and financial status often determines how they are affected.

Need-Blind schools don’t consider students’ financial need during the application process. While this sounds positive, it can result in schools giving out some not-so-great financial aid packages. Need-Aware schools, on the other hand, do take financial need into account. While this often results in better financial aid packages overall, it can also lead to wealthier students being chosen over financially needy students when limited spaces are available. 

Now that we’ve covered all the background info, let’s dive deeper into the different types of financial aid available!

how to pay for college

Government Grants

When it comes to figuring out how to pay for college, grants and scholarships are arguably the best way since they both offer free money with no strings attached! But what’s the difference?

To begin, grants are generally awarded by the federal government and are based on financial need.

The main grants that the U.S. government currently offers are the Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG). Both apply to participating public and private universities as well as four-year and two-year degree programs and some vocational training programs.

The Pell Grant is awarded to undergraduate students who demonstrate financial need and the maximum amount of the award varies from year to year. For the 2018-2019 school year, students can receive up to $6,095.

The Federal Supplemental Educational Opportunity Grant (FSEOG) is a campus-based aid program (i.e. it’s administered directly by each school’s financial aid office rather than the government itself) that offers additional aid to students with a high amount of financial need. Award amounts range from $100 to $4,000 and students with an Expected Family Contribution of 0 are given highest priority. Participating colleges and universities receive a set number of FSEOG funds from the federal government each year, meaning that the number of awards, award amounts, and award availability vary by school.

In order to apply for government grants, all students need to do is complete the FAFSA each year. They’ll automatically be considered for any grants and federal student aid that they qualify for and will be notified in their award letter.

how to pay for college


Scholarships are also free money to help you pay for college and are generally offered by nonprofits, individuals, corporations or universities and colleges. Anyone can apply for scholarships and deadlines vary throughout the year, meaning there are always some available!

Luckily, figuring out how to find scholarships is an easy task. The first step to finding excellent scholarship opportunities is to talk to your guidance counselor or financial aid advisor. They should have the most up-to-date information on local scholarships, allowing you to start your search off on the right foot.

After discussing possibilities with your advisor or counselor, continue your search online with Going Merry! Inspired by what the Common App has done for college applications, we make the scholarship application process much simpler by allowing you to apply directly to scholarships through our site. Simply fill out your profile, then we’ll match you with the scholarships that are best for you and let you apply directly. You can even upload documents, like letters of recommendation or transcripts, and reuse them for every application.

The best part about scholarships is that they’re available to all sorts of people in all different situations and can be applied to both traditional and online colleges. Whether you’re transferring schools, majoring in marketing, or just looking for scholarships that only apply to residents of your state, there’s something for you! Most scholarship applications take some time to complete, but if you’re short on time you can also consider scholarship sweepstakes. Check out our list of essay-free scholarships for an idea of where to get started!

For more information, check out our step-by-step guide on applying for scholarships.

how to pay for college


Work-Study is a type of financial aid that provides you with a part-time job while you’re enrolled in school. Part-time or full-time undergraduates, graduates, and professional students that express financial need and attend a participating school are eligible. Over 3,400 schools participate in the federal work-study program. To find out if your college or university is eligible for work-study, contact the financial aid office or visit the financial aid website.

Through this program, students earn at least minimum wage though they can only work a limited number of hours. While the amount of hours per week varies depending on the job, most student employers only require 10 to 20 hours per week. Jobs can be on- or off-campus and, if possible, are related to the student’s field of studymeaning you can get some relevant work experience under your belt at the same time!

In general, undergraduates are paid by the hour while graduate and professional students are either paid by the hour or paid a fixed salary.

Student Loans

Student loans strike fear into the hearts of college students all over and they’re often the least-desired option when deciding how to pay for college….and for good reason! Who wants to be welcomed by thousands of dollars of student debt after graduation? Not many.

But realistically, student loans don’t have to be the enemy. While you should always try to get financial aid from other sources first, student loans can make higher education a real possibility for many people in cases where it wasn’t before.

Here’s a  step-by-step guide through the different types of loans and all of the important information that you should know about them. First, let’s talk about federal versus private loans.

how to pay for college

Federal Loans

Federal loans are, unsurprisingly, issued by the federal government. When you’re considering taking out student loans, it’s a wise choice to target federal loans first since they offer more benefits than private ones.

One such benefit is that federal loans don’t require a cosigner or guarantor. That means you can apply independently. And most importantly, interest rates are generally lower than with private loans, meaning you’ll end up paying less in the long run. For the 2018-2019 school year, the interest rate is 4.45% for undergraduate loans and 6% for graduate and professional loans. These interest rates are fixed for the life of the loan, so you always know the interest rate you’ll be paying.

When you receive a federal loan, it will either be subsidized or unsubsidized. Subsidized loans don’t accumulate interest for the entire time you’re in school while unsubsidized loans do. Unfortunately, students don’t have much say in which type of loan they receive, since it’s heavily based on financial need. Only students with financial need are eligible to receive subsidized loans while financial need is not a requirement to receive unsubsidized loans. Federal interest rates are currently the same for both subsidized and unsubsidized loans.

Loan amounts vary considerably based on a student’s year in school and their level of financial need. Take a look at the table below to get an idea of your eligibility.

Year in School Dependent Students (Except students whose parents are unable to obtain PLUS loans) Loan Limit Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS loans) Loan Limit
First Year Undergraduate $5,500 (Up to $3,500 of this amount may be granted in the form of subsidized loans while the rest is granted in unsubsidized loans) $9,500 (up $3,500 of this amount may be granted in the form of subsidized loans)
Second Year Undergraduate $6,500 (up to $4,500 of this amount may be granted in the form of subsidized loans) $10,500 (up to $4,500 of this amount may be granted in the form of subsidized loans)
Third Year & Beyond Undergraduate $7,500 (up to $5,500 of this amount may be granted in the form of subsidized loans) $12,500 (up to $5,500 of this amount may be granted in the form of subsidized loans)
Graduate or Professional Students All graduate and professional students are considered to be independent $20,500 (unsubsidized only)


PLUS loans are another type of loan that students should be aware of. They are a federal loan offered to independent students or parents of dependent students and are intended to make up for any gaps between the cost of attendance and financial aid. PLUS loans can be a convenient option for covering the remaining cost of tuition as they have fixed interest rates and virtually no borrowing limit. However, keep in mind that PLUS loans do require a credit check, an origination fee (i.e. a fee for processing the loan), and payments are expected to begin immediately (although deferment is an option).

Lastly, Perkins Loans are for students who demonstrate high financial need. While the Perkins loan is a federal program, loans are granted to students by individual schools (about 1,700 schools participate in the program). When paying back the loan, students make payments either directly to the school or to the school’s loan servicer. Like other federal options, an advantage of Perkins Loans is that their interest rates are fixed. The current level is 5% and the size of the loan depends on the amount of funds available at each individual school.

how to pay for college

Many students prefer federal loans because of the flexible payment plans available. When paying back student loans, most monthly payments are based on a 10- or 15-year payment plan, but sometimes the monthly payments are just too high for new graduates. Federal loans work with you to find the best payment plan for your situation.

The best way to determine which payment plans you qualify for is to talk to your student loan servicer. They’ll be able to provide you with the most up-to-date information and guide you on the repayment plan that’s best for your situation.

One of the most common repayment plans is income-based repayment and the process of switching plans is quick and painless. Students need to submit their most recent tax information to determine their eligibility. Each year that they’d like to continue with the income-based payment plan, they simply need to recertify by sending their latest tax records.

To see if you qualify for income-based repayment, check out the Department of Education’s Repayment Estimator Tool. If the calculated cost of your payment is lower under an income-based repayment plan than it is under the standard repayment plan, you likely qualify and should discuss options with your student loan servicer.

Contrary to popular belief, it is possible to discharge student loans if you go bankrupt (although it’s much more difficult than with traditional loans). In order to have loans discharged, it’s required to file for Chapter 7 or Chapter 13 bankruptcy and prove that loan repayment would impose undue hardship on you and your dependents during an adversary proceeding in bankruptcy court. However, what makes it difficult in practice is that undue hardship has never been defined. For more information, head over to the FSA website.

For the latest information on loan forgiveness options, please visit the Federal Student Aid Loan Forgiveness page.

how to pay for college

Private Loans

Private loans are often used as the last option after all other financial aid options have been exhausted. While they can be helpful in providing that little extra bit of money needed to fund your education, they shouldn’t be your first choice when deciding how to pay for college.

Private loans are issued by banks, credit unions, or private companies and the rules, interest, and repayment terms can vary wildly depending on the lender. Some private loans also have variable interest rates, meaning that your interest, and your loan payment as a result, can increase.

Another downside to private loans is that they’re based on credit, so a cosigner or guarantor is generally necessary.

how to pay for college

Frequently Asked Questions

Should I apply for aid even if I don’t think I qualify?

Yes! The FAFSA is a free form and you never know what type of student aid is available to you until you apply…you might be pleasantly surprised! Thirty minutes of your time could save you thousands of dollars on your tuition bill and make paying for college much simpler. To apply for Federal Student Aid, head over to the FAFSA website.

Do I need to be accepted into a university or college to apply for financial aid?

No. You can apply for financial aid at any time you want, regardless of if you’ve been accepted into a school or not. However, you do need to be enrolled and accepted in order to receive the financial aid. Applying early can be a great option and provide you with a clearer picture of how to pay for college.

Is the FAFSA a one-time thing or do I need to reapply every year?

The FAFSA is based on the previous year’s tax records, so it’s necessary to fill it out once a year to qualify for financial aid. Luckily, it’s quick and easy and should become even easier after the first time.

When do I need to start repaying my student loans?

Most federal loans allow a six-month grace period after graduation (except the Perkins loan which allows a nine-month grace period). In other words, you’ll be required to start paying back your federal loans six months after graduation. Private loan repayment terms vary, so it’s best to check with your lender for the most accurate information.

Where can I get more info about financial aid?

The Federal Student Aid Information Center (FSAIC) is the best place to get the most up-to-date information on financial aid. Reach out to them with one of the methods below:

Federal Student Aid Website

FAFSA Website

Phone: 1-800-4-FED-AID (1-800-433-3243)

Phone (if hearing impaired): 1-800-730-8913


Federal Student Aid Information Center

PO Box 84

Washington, DC 20044

Financial Aid Glossary

Let’s face it, financial aid terms can be confusing and unclear. We put this glossary together to turn you from clueless into a financial aid expert.

Cosigner → A second person (i.e. not the original borrower) who also signs for a loan and assumes the same amount of financial responsibility for the loan. Having a cosigner can often help make loans possible for those with bad or no credit.

Deferment → Allows you to stop making your monthly federal loan payments for a determined amount of time.

Expected Family Contribution (EFC) → A number that represents your family’s ability to help you pay for college. It’s determined by a number of factors, including taxed and untaxed income, family size, and the number of family members in college. It’s used in determining financial aid eligibility on the FAFSA.

FAFSA → The Free Application for Federal Student Aid. It’s a free form used by the federal government and many universities to determine if you qualify for financial aid and, if so, how much.

Federal Supplemental Educational Opportunity Grant (SEOG) → A need-based grant offered by the federal government for students with the greatest need of financial aid.

Financial Aid → Financial assistance to help students and their families pay for school.

Financial Aid CalculatorA free tool that allows you to estimate your Expected Family Contribution (EFC) before completing the FAFSA. This tool can simplify the process of deciding how to pay for college. 

Forbearance → Like deferment, forbearance allows you to stop making your monthly loan payments for a determined amount of time. The difference is that deferment doesn’t always require you to pay interest, but forbearance does.

Grants → Money for college, generally awarded by the federal government, that doesn’t need to be paid back.

Guarantor → Similar to a cosigner, a guarantor agrees to pay for a loan if the original borrower defaults or is unable to pay. Having a guarantor can help make loans possible for those with bad or no credit.

Loan Forgiveness → Options for saying goodbye to student loans in exchange for non-profit, government, or volunteer work. For more information on current requirements, visit the FSA website

Payment Plans → Options for repaying your student loans based on income or other factors. To find out which payment plan is best for you, check out this article or discuss options with your student loan servicer.

Pell Grant → A need-based grant offered by the federal government for undergraduate students who express financial need.

PLUS Loan → An unsubsidized loan offered by the federal government to students’ parents. It’s intended to cover remaining education costs not covered by other forms of financial aid. This loan is available only to parents of dependent undergraduate students or independent graduate/professional students and, as of 2018, the interest rate is 7.0%.

Tuition → The amount of money a university, college, or institution charges students for education.

Scholarships → Money for college, generally awarded by corporations, nonprofits, schools, or individuals, that doesn’t need to be paid back.

Student Debt → The type of debt that is accumulated from taking out federal or private loans in order to attend a college, university, or institution.

Student Loans (Federal) → Financial assistance in the form of a loan from the federal government. Student loans accrue interest and must be paid back.

Student Loans (Private) → Financial assistance in the form of a loan from a private provider. Student loans accrue interest and must be paid back.

Subsidized Loans → A type of federal student loan in which the federal government pays the interest while the student is in school or while the loan is in deferment.

Unsubsidized Loans → A type of federal student loan in which interest begins accruing as soon as the loan is taken out.

Work-Study → A type of federal student aid that provides students with part-time jobs while in school.

Useful Resources

Information about the cost of attending school 


Information about Federal Student Aid and deciding how to pay for college 

Information about private student loans 

Financial Aid Calculators 

Information about repaying student loans 

Considering your options for paying for school? Check out our ultimate guide to financial aid (from scholarships to student loans) to get started!

Have questions about how to pay for college or financial aid that we didn’t answer in this article? Let us know below!

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