Financial Aid Guide: How to Apply For Financial Aid

Last updated on - January 4, 2023

Financial Aid Guide: How to Apply For Financial Aid

It is important to learn how to apply for financial aid since it's an essential part of your college admissions journey. In the 2021-22 school year, undergraduates and graduate students received about $234.6 billion in financial aid. However, every year over $2 billion go unclaimed because some students eligible for federal student aid did not complete the FAFSA.This guide will help you understand some financial aid basics to empower you as a consumer.

Your first step to apply for financial aid is to fill out the Free Application for Federal Student Financial Aid (FAFSA). If you have also applied to private colleges, you might have to submit the CSS PROFILE too. Both applications are available on October 1 each year. Check out these frequently asked questions below.

What is financial aid?

Financial aid is made up of money you receive from a college, federal government, or state government to help pay for college. These funds can come in the form of a scholarship or grant (gift money), loans or self-help (work study).

You’ll have to submit a completed FAFSA to get your piece of the pie. The FAFSA and CSS Profile are both available on October 1 of your senior year in high school. When you’re applying to a private college, you may also be asked to submit the CSS PROFILE. Around 400 colleges use the CSS PROFILE. At those schools, the CSS PROFILE is used in addition to the FAFSA.

Afterwards, you'll receive a student aid report (SAR) generally within two weeks of filing your FAFSA. This report will contain your Expected Family Contribution (EFC). Your EFC is used in a formula to determine your “financial need” which is the Cost of Attendance minus your EFC. Some colleges meet 100% of your financial need, most do not.

This practice of not meeting full need is called gapping. Even when a college meets gull need, it doesn't mean it will happen with grants and scholarships alone. There are only a few colleges that will meet your full demonstrated need without loans.

In many cases, you will need to consider loans to fund your education. Loans are not necessarily a bad thing. It’s more about how much you borrow. As a rule of thumb, you should not borrow more than the amount you expect to earn in your first job after graduation.

What type of financial aid is available to pay for college?

The main types of financial aid are:

  • Grants can come from federal or state government, or the college itself. This is a form of gift-aid which means it does not have to be repaid.
  • Scholarships are considered gift aid too. They can be awarded based on financial need or on merit.
  • Student Loans are considered self-help financial aid that must be repaid. Loans are available through the federal government, colleges, banks, and other private institutions.

Here are the different types of federal loans available to undergraduate students and parents:

    • Subsidized loans are only available for students that demonstrate financial need. The government pays the interest while you are in college. Students must begin repaying these loan with interest after they graduate.
    • Unsubsidized loans are available for all students. Students have the option to pay the interest while they are in college (the recommended option). Alternatively, you could allow the interest to accrue (not recommended) and begin repaying the interest with principal when you graduate.
    • Parent Plus Loans are available to parents of undergraduate dependent students.
  • Work-study is considered self-help financial aid. If you receive a work-study award, you will basically earn income through part-time work on-campus and, in some cases, off campus. Work-study jobs are not guaranteed, you must apply for these positions.

The main sources of financial aid the federal and state governments, colleges and private organizations.

How to apply for financial aid?

Your first step is completing the Free Application For Federal Student Aid (FAFSA) which is available every year on October 1. In addition to the FAFSA, some private colleges may require the CSS PROFILE.

Check with the college’s website or office of financial aid to determine what, if any, additional forms you are required to submit.

How do I know if I am eligible for financial aid?

If you meet the basic criteria, you will be eligible for some kind of financial aid. You must be a US citizen or eligible legal resident with a social security number to qualify for federal financial aid. Some states like Texas offer state financial aid for undocumented students who are classified as state residents.

Some of the main factors that will impact your eligibility for need-based aid includes you and your family’s income and assets. While most of the need-based federal financial aid is reserved for low-to-moderate income families, you may qualify for need-based aid from some private colleges even if your family is classified as high-income.

Most of the highly selective colleges that do not award merit based aid will generally award need-based aid to students even from upper middle class families. Rice University, for example, awards students from families earning between $75K to $140K a full tuition discount. And students from families earning between $140K and $200K are eligible for a 50% tuition discount. 

To find out how much aid you are likely to receive try using the Net Price Calculator. Each college has one on its website. After you answer a few questions about your family’s income and assets before, you'll be able to see your net price. This is the amount you are likely to pay for college.

Your Net Price is an estimate of the amount you are likely to pay to attend that college. The only way you'll really know how much financial aid you’ll  be awarded is when you apply for financial aid.

>>RELATED POST: How to Use The Net Price Calculator

What is the FAFSA?

The Free Application for Federal Student Aid, also known as the FAFSA, is used to apply for financial aid.

It is used by colleges to determine your eligibility for federal grants and loans, state grants and scholarships, and the institution’s funds. The FAFSA is your first step towards accessing financial aid to cover your college costs.

>>RELATED POST: 16 Basic Financial Aid Terms You Should Know

When do I file the FAFSA?

You should be aware of three deadlines when completing the FAFSA – the federal deadline, the state’s deadline, and the college’s deadline.

The FAFSA becomes available on October 1 each year and allows you to apply for financial aid almost a year ahead of the academic year in which you plan to attend college. Although the federal deadline to submit the FAFSA is approximately 20 months after it becomes available, you will need to meet most colleges and states deadline much sooner. In addition, some financial aid funds are available on a first-come, first-served basis so submitting the FAFSA very close to when it becomes available in October has its advantages.

Here are the three financial aid deadlines you should be aware of:

  • College deadline: Each college has its own financial aid deadline, and it is generally the first of the three deadlines. Some colleges will have a priority deadline and a regular deadline. Priority deadlines allow you to access the most funds for college so plan to submit the FAFSA and any other required applications as early as possible. To find the deadline for a specific college, you should check on the college’s financial aid website.
  • State deadline: Many states offer financial aid and have different deadlines for eligibility for state funds. To find out more about any state’s program and deadline and what, if any, aid you might qualify for, please visit the National Association of Financial Aid Administrators’ (NASFAA) website.
  • Federal deadline: If you are applying for federal funds, the FAFSA can be filed approximately one year before you begin college, beginning on October 1. The deadline is about 20 months later. For e.g., if you plan to attend college in the 2020-21 academic school year, the FAFSA will be made available on October 1, 2019 with a deadline of June 30, 2021 (the end of the academic year). However, you should be aware that some federal funds are limited and are awarded on a first come, first served basis, so the earlier you file the greater your chances of receiving an award. In addition, the FAFSA you submit will, in many cases, be used for federal, state and institutional funds so following the earliest financial aid deadline would be prudent.

You are required to list at least one college (maximum of 10 colleges) on the FAFSA to receive a Student Aid Report (SAR). This report is generated when you file the FAFSA. You will have the option to add more colleges on your list after you submit the FAFSA.

>>RELATED: How to Review Your Financial Aid Award

Should I submit the FAFSA if my parents make too much money?

Yes, you should absolutely submit the FAFSA even if you think you will not qualify for need-based aid. Even if you don’t qualify for need-based aid, you might have to complete the FAFSA to be eligible for merit-based aid. Plus, some colleges award need-based aid to high income families.

Many private colleges and universities, including highly selective colleges, will provide “need based” aid to families with high-income. For example, Rice University listed by US News & World Report as #6 for 2022-23 Best Value Schools in the country, offers a 50% tuition discount to families earning as much as $200,000.

Another reason to apply for financial aid is to access student loans with decent interest rates. For example, even if you don’t qualify for subsidized loans (need-based), you could access unsubsidized loans with fairly decent interest rates. Parent PLUS loans are also available to parents of undergraduate dependent students. These loans generally have lower interest rates and more favorable repayment options than private loans.

You should also note that many colleges will ask you to submit the FAFSA (and, in some cases, the CSS PROFILE) to qualify for scholarships and other merit-based aid. So even if your family earns “too much” money to receive need-based aid, filling out the FAFSA is still well worth the effort.

What happens after I submit the FAFSA?

After you submit the FAFSA, a Student Aid Report (SAR) will be emailed to you. This will happen within a few days (sometimes it can take a few weeks). You can use the same FSA ID you created when you submitted the FAFSA to access your SAR at Federal Student Aid. The report summarizes everything you listed on your FAFSA and will also be sent to the college/s listed on your FAFSA.

The Student Aid Report will list your family’s Expected Family Contribution (EFC) and your eligibility for federal financial aid. Colleges use the EFC listed on your SAR as a basis for making financial aid awards.

Sample of Expected Financial Contribution

 Sample Student Aid Report (SAR) Source:

Once you receive your SAR, check it for any errors. If you find an error, you may be able to make changes to your FAFSA. Check with the Federal Student Aid for more information on what you can or cannot change.

If you are accepted to one of the colleges that received your SAR, the college will prepare a financial aid award letter. The award letter will outline your Cost of Attendance and the amount you have been awarded. in scholarships, grants, loans and/or work-study.

You should contact the office of financial aid at each college is you have any questions about your award. They will be able to tell you when and how your financial aid award will be paid out.

>>RELATED POST: FAFSA – 6 Things You Should Know

How do I apply for scholarships?

Each college has a very different process. However, many colleges will ask you to submit the FAFSA and, in some cases, the CSS PROFILE for all type of aid – merit and need based. Some colleges might also have a separate scholarship application. Yet at other colleges, your college application will allow you to be considered for all available scholarships.

Check the college’s website or reach out to the Financial Aid Administrator to learn about all the scholarships available at that college.

In addition, if you would like to know the average amount of scholarships and grants a college typically awards to a student, visit College Board’s Big Future website.

Then, search for the college by name or location, then click on “Paying”, and “Financial Aid by The Numbers” to access this data.

You will learn, among other things, the average dollar amount in scholarships and grants students receive, the average financial aid award, and the average amount of debt students have upon graduation.

When will I receive my financial aid award?

In many cases, students receive an award at the same time they receive their offer of admission or shortly thereafter.

The financial aid award letter will list, among other things, the full cost of attendance and any grants, scholarships, work-study and/or loans you’ll receive. Not all financial aid packages will contain student loans.

For example, Davidson College in North Carolina, one of the most generous colleges in the country, prides itself on meeting 100% of demonstrated need and making financial aid awards that are loan free. Students and parents still have the option to take out loans to cover their Expected Family Contribution (EFC).

After you receive the financial aid awards from all the colleges on your list, carefully review and compare the awards. Sometimes at first glance you might think one college offered you a larger package than another. However, it’s important that you pay attention to how much of the offer is made up of loans.

At the end of the day, you want to get the best education for the least amount of money.

Can I appeal my financial aid award?

Yes, you can appeal a financial aid award, and, in most cases, you should. However, you need to provide documented changes in your financial circumstances to be successful. Although some colleges will try to match a financial aid award you received from another college.

To succeed, you will have to present a compelling case. If your circumstances have changed – for e.g., job loss, illness in the family, or other circumstances — since you submitted your application, you should appeal your financial aid award.

However, you will need to provide documentation of the changed circumstances – medical bills, a dismissal letter, etc. You should also follow the instructions for submitting a financial aid appeal. This information is generally available on the college’s website or you can contact the office of financial aid.

Here are 5 Tips to Appeal Your Financial Aid Award.

Do I have to apply for financial aid every year I am in college?

For federal aid – yes. For other types of aid (for e.g., scholarships from the college), you will have to read the fine print in your award letter. Some scholarships might be a one-time award while others may require you to reapply every year you are in college. Then there are other scholarships that may automatically renew each year you are in school.

Most scholarships have some requirements for renewal. For example, you may have to maintain a certain GPA or full-time enrollment status.

When you receive your financial aid award letter, it is important to read all the details for the award. If the information is available on your letter, contact the Financial Aid Administrator to find out if the award is renewable or only good for your freshman year. You should be aware that some colleges might offer a one-time scholarship award to lure students to attend. Don’t be afraid to ask for clarification before you accept an offer of admission. Therefore, it’s not only important to learn how to apply for financial aid, but also the details of the award.

How can I tell what college will really cost before I apply?

Most students never pay the full cost of attendance or sticker price listed on a college’s website. They receive some type of financial aid. The discounted cost to attend that college is known as your Net Price. Everyone will have a different net price based on your own personal financial circumstances.

To find your Net Price – cost of attendance minus any scholarships and grants you might be eligible to receive – you can use a college’s Net Price Calculator. Each college has a Net Price Calculator (NPC) on their website. This will display your Net Price after you answer a series of questions about your family’s income, assets and household (for e.g., number of children in college).

Remember, the Net Price is only an estimate and is not a guarantee of financial aid. In addition, all Net Price Calculators are not created the same. The better NPC (for e.g., the College Board’s version) available will take you about 15-20 minutes to complete and the questions will range from family income, assets and makeup of household (how many students in college) to GPA, ACT/SAT scores and class rank. Some Net Price Calculators ask only a few basic questions and, as a result, do not provide the most accurate estimate of Net Price.

In the end, applying for financial aid is the only way you will know your exact financial aid award. When in doubt, check with the Financial Aid Office at the college you plan to attend. They will be able to give you the most accurate information.

>>RELATED POST: How to Use the Net Price Calculator

How can I get financial aid through your state?

In many cases, you will apply through your college. Most students will only have to submit the FAFSA to be eligible for financial aid available through the state, federal and college funds. However, to receive state financial aid in some states you will have to complete a separate application.

To learn more about each state’s financial aid program, please check with the college’s financial aid office or visit

How many colleges can I list on the FAFSA?

You must list at least one college when filling out the FAFSA, and no more than ten. If you would like to add additional colleges, you will need to remove one or more of the other colleges on your list so that it does not exceed ten colleges. Alternatively, you could provide the Financial Aid Administrator at the college you want to add with your Data Retrieval Number. The Data Retrieval Number is a four-digit number found on your Student Aid Report.

Do I have to list colleges on the FAFSA in any specific order?

To be eligible for state financial aid, some states require that you list an in-state college on your FAFSA, sometimes in a specific order.

Find your state’s financial aid policy at under “Order of Schools on Your List”.

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