FAFSA & Financial Aid Breakdown

What is the FAFSA?

The FAFSA, or Free Application for Federal Student Aid, is an online form that can be completed annually by current and prospective college students. Aid is available to both undergraduate and graduate students. Tax information is used to determine a student's eligibility for federal student loans and grants. Most colleges, including two-year schools, participate in the federal financial aid system. After completing the FAFSA you'll receive letters from the universities you selected to receive your financial aid information. These letters will provide a list of what type of aid you qualify for and how much so you can make informed decisions about your financial future.

Loans Defined

A loan is money a student or their parents can borrow and must pay back with interest. Student loans can come from the federal government by filing the FAFSA or from private sources such as banks or other financial institutions. Federal student loans usually offer borrowers lower interest rates and have more flexible repayment options.

Gift Aid Defined

Grants and scholarships are referred to as "gift aid," or money that doesn't have to be paid back. Grants are often issued by the federal government or educational institutions and are based on financial need. Scholarships are offered by a variety of organizations and are often merit-based, although some may be financial need-based.

Loan Caps

$5,500 to $12,500 per year in Direct Subsidized Loans and Direct Unsubsidized Loans.

Approximately $5,500 maximum Pell Grant. Average grant award for 2015-2016: $3,724.

Common Terms

  • FAFSA: Federal Application for Financial Student Aid
  • Direct Subsidized Loan: Loans made to eligible undergraduate students who demonstrate financial need.
  • Direct Unsubsidized Loan:  Loans made to eligible undergraduate, graduate and professional students. Financial need does not need to be demonstrated.
  • Direct PLUS Loans: Loans made to graduate or professional students and parents of dependent undergraduate students.
  • Pell Grant: A federal grant for undergraduate students that does not have be repaid.