What Every Parent and Student Needs to Know About FAFSA (Free Application for Federal Student Aid)January 23, 2021
Frequent reminders of essential information are necessary and important. That is brought to my attention when, in conversation with a parent, the mystery and misunderstanding of FAFSA come to the front. This blog is not exhaustive in its treatment of FAFSA. I have written other blogs on the topic, including 8 common mistakes to avoid when completing FAFSA. You can read that post by clicking here. This article is the reminder you want of the basics about FAFSA.
FAFSA F ree A pplication for F ederal S tudent A id. The application is free, not necessarily will the financial aid be free. Reputable counselors (like your author) do not charge a fee to help families complete FAFSA. Other consulting services do come with a fee.
It's a data collection tool. FAFSA does not award any financial aid. There is a Student Aid Report (SAR)generated as FAFSA is completed and submitted. However, even those amounts are not set in stone. The data you provide is sent to any college you list within the FAFSA form. Those college financial aid offices make the actual awards decisions.
A loan is a loan. Every FAFSA SAR I have seen includes student loans. As with any other loan, there is paperwork to be completed, by the student, within a deadline. The requirements include signing off on a financial education module, signing a Note of Indebtedness, and signing a consent to assign the loan dollars to the college of your choice. Those dollars will be deposited in your student account, and the college will deduct appropriate charges. The balance (if any) is yours to do with as you please. There are origination charges (temporarily waived for COVID-19 relief), and interest charges that may be subsidized (i.e. paid for) by the U.S. Treasury Department. Most loans, however, are unsubsidized. That means the student owes the interest as well as the principal sum.
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