Federal Financial Aid for Online College: Tips for Your FAFSA Application

Did you know that you can receive free money in college? It’s true! Over 87.3% of college students receive financial aid from the government annually. FAFSA offers almost entirely need-based financial aid. If you’re not sure what that means check out our guide on need-based vs. merit-based financial aid.

The FAFSA, shortcut for Free Application for Federal Student Aid, determines how much financial aid a student qualifies for. It offers both need-based programs (for students with limited financial resources) and merit-based programs (for students who excel academically or in other areas).

By completing the FAFSA application, you open the door to various types of aid, including:

1. Scholarships and Grants
2. Work-Study
3. Federal loans

Despite their obvious cost-saving benefits, online colleges will still require financial investments. Completing the FAFSA application as an online student will help offset some educational expenses, giving you more financial flexibility.

Navigating the FAFSA application can be overwhelming, especially without clear instructions. In this article, we will discuss everything you need to know about navigating the federal financial aid application. You’ll learn where to start, what to expect, and how to maximize online education financial aid.

Getting Started with Your FAFSA Application

It’s important to know the necessary documents for the FAFSA application. Gathering documents late could cause delays or errors in your application. Here’s a checklist of all the documents you need:

Proof of Identity:

• Student’s Social Security Card or Alien Registration Card.
• Parent’s Social Security Card (if applicable; use 000-00-0000 if not a U.S. citizen or resident).
• Studen’s and Parent’s FSA IDs (ensure they are separate to avoid issues).
• Student’s Driver’s License (optional).

Tax Records for the Prior-Prior Year:

• W-2, 1099 forms, and other income records for FAFSA and verification.
• Federal tax returns (1040, 1040A, 1040EZ), including foreign and U.S. territories’ tax returns if applicable.
• IRS Data Retrieval Tool can simplify transferring information but isn’t available to everyone.

Records of Untaxed Income:

• Child support received.
• Tax-exempt interest income.
• Veterans non-education benefits.
• Untaxed IRA and pension distributions (excluding rollovers).

Exclusions from Income:

• Student aid is included in AGI (e.g., taxable scholarships, AmeriCorps benefits, and taxable federal work-study earnings).
• Child support paid.
• Combat pay.

Records of Assets:

• Recent bank and brokerage account statements.
• Balances of cash, savings, and checking accounts.
• Records of stocks, bonds, mutual funds, business, and real estate, including mortgages.
• Provide updated balances if recent changes occur.

To fill out the FAFSA, you must create an FSA ID. It will serve as your electronic signature. Here’s how to create it:

1. Go to the FSA ID Website: Visit the official FSA ID website at fsaid.ed.gov.
2. Provide Your Information: You must provide your Social Security Number, name, date of birth, and other personal details. Make sure the information matches what’s on your tax returns and other official documents.
3. Create your Username and Password: Pick a username and password you’ll remember. You’ll also need to create a set of security questions for account recovery.
4. Verify Your Email: After you’ve submitted your information, you’ll get an email for verification purposes. Follow the instructions in the email to complete this step.

Step-by-Step Guide to Completing the FAFSA

After gathering the necessary documents and creating an FSA ID, it’s time to complete the form.

Before filling out the form, remember these two most important financial aid tips:

1. Maintain accuracy
2. Check for errors

Step 1: Start the FAFSA application.

Go to fafsa.gov to get started. Click “Start A New FAFSA” or “Login” if you are a returning user. Students should start the FAFSA by entering their FSA ID and logging in. Parents should first enter the student’s information, including their name, Social Security Number, and date of birth.

Step 2: Supplement the Student Demographic section.

Your personal information will be pre-filled if you’ve used FAFSA or log in with your FSA ID. Ensure it matches your Social Security card exactly. Parents should note that the FAFSA is the student’s application, so “you” or “your” refers to the student. The left-side banner indicates whether you’re on a student or parent page.

Step 3: List all schools of your liking.

In the School Selection section of FAFSA, list all schools you’re considering, even if you haven’t applied yet.

Step 4: Answer dependency questions.

Dependency guidelines for FAFSA, set by Congress, differ from IRS guidelines. Even if you live independently and file taxes alone, you might still be considered a dependent student for financial aid purposes. If deemed dependent, you’ll need to include your parents’ information; if independent, you can skip this step.

Step 5: Complete the parent’s demographic section.

Your parent(s) will provide their basic demographic information in this section. Even if you don’t live with them, you must include their details if you were classified as a dependent student. Begin by identifying who qualifies as your parent for FAFSA purposes.

Step 6: Supply your financial information.

Using the IRS Data Retrieval Tool (DRT) simplifies this process by allowing you to import your IRS tax information directly into the FAFSA form with a few clicks. This tool, which has enhanced security and privacy protections, can also reduce the paperwork you must submit to your school. If eligible, it’s highly recommended to use the IRS DRT.

Step 7: Sign and submit.

To complete the FAFSA form, you (and your parent if you’re a dependent student) must sign it. The easiest way to do this is online using your FSA ID.

The FAFSA for online students is the same as the application process for on-campus students. However, as online students spend less on educational expenses, available financial aid is very limited.

Understanding Federal Financial Aid Options

Scholarships & Grants

Essentially considered free money for education, scholarships, and grants are often provided by the government or universities. They are referred to as “gift aid” because they don’t need to be repaid.

Grants are meant for deserving students who are evaluated based on their financial needs, as shown in your FAFSA. There are four types of grants:

1. Pell Grant
2. Federal Supplemental Educational Opportunity Grants (FSEOG)
3. Teacher Education Assistance for College & Higher Education (TEACH)
4. Iraq and Afghanistan Service Grants

The Pell Grant is the most popular. Pell Grant eligibility is primarily based on your Expected Family Contribution (EFC).

On the other hand, scholarships are merit-based and are given for achievements. Securing merit scholarships might require extra effort. You may need to submit additional applications or essays.

Work-Study

The Federal Work-Study Program provides part-time jobs with flexible hours and the ability to work around your school schedule. Common positions include roles like a campus tour guide or library assistant.

Federal loans

The FAFSA will also determine how much student loans for online college a student can avail.

Many colleges include student loans in their financial aid offers, but loans aren’t truly “aid” since they add to your debt. While they might seem like a good option at the time, they often lead to long-term financial strain.

The calculation of federal financial aid for online students is quite similar to on-campus students. However, the specifics of the aid package can vary slightly due to differences in cost structures and enrollment patterns for online education.

Nevertheless, as an online student, your financial aid will be calculated by:

1. Cost of attendance
2. Enrollment status
3. Satisfactory Academic Progress (SAP)
4. State and institutional policies

Tips for Maximizing Your Financial Aid

Gathering your materials and completing your FAFSA early is important because the process can be lengthy. Moreover, many states award financial aid on a first-come, first-served basis. Filing earlier, such as in December rather than April, may increase your chances of receiving more aid than filing near FAFSA deadlines.

After submitting your FAFSA, save copies of the completed form and all related documents safely. This ensures your proof of timely submission and can reference the documents if needed, as late applications are not accepted.

Did you know that you can actually add many schools, even if you haven’t applied to some of them? Adding more schools won’t harm your application, and colleges can’t see which other schools you’ve listed. You can remove schools or update your list as needed and list up to 10 schools simultaneously.

Before completing FAFSA online application, you should triple-check for errors. There’s almost no room for errors, as even small mistakes can result in delays and complications. Regularly monitor your application status and address any issues promptly.

What Happens After You Submit Your FAFSA

The Student Aid Report (SAR) estimates your federal student aid and summarizes your FAFSA answers. Sent via email or accessible through your FAFSA account, it provides a preliminary aid amount, not including any aid from your college or state. Schools use the SAR to finalize your financial aid package, and you can use it to correct any FAFSA errors, which could adjust your aid amount.

Here are the steps on how to correct information:

1. Log In to FAFSA: Access your FAFSA account using your FSA ID.
2. Select “Make a Correction.”: This enables you to update or correct any information.
3. Update Information: Correct any inaccuracies or add new information as necessary.
4. Submit Changes: After making the corrections, submit the updated FAFSA. Your corrections will be processed, and a new SAR will be generated.

Important Deadlines and Common Mistakes

Remember, you’re competing with millions of other students for financial aid. Some might have stronger academic records or greater financial needs than others. To raise your chances of securing financial aid, staying on top of important deadlines and avoiding common mistakes is crucial.

Keep these few tips in mind:

1. Know all the deadlines for application submissions, required documents, and any supplementary forms.
2. Triple-check all your information for accuracy.
3. Be thorough in your application.

Avoid these common mistakes:

• Missing FAFSA deadlines
• Incorrect personal information
• Leaving fields blank
• Mixing student and parent Sections
• Incorrect tax information
• Wrong asset reporting
• Wrong financial year
• Counting household members incorrectly
• Forgetting to list colleges
• Not monitoring email

Resources for Further Assistance

If you have further questions about the FAFSA application, you can relay them to these financial aid resource centers/services:

• StudentAid.gov: The official website offers comprehensive resources, including FAQs, guides, and the IRS Data Retrieval Tool.
• FAFSA Help Line: Call 1-800-433-3243 for direct support from FAFSA representatives.
• Financial Aid Toolkit Website: This site offers outreach tools, including fact sheets and recorded webinars, to assist with FAFSA changes.
• Financial Aid Office: Get in touch with the financial aid office to get personalized assistance from the colleges you’re applying to.
• Federal Student Aid Information Center (FSAIC): Visit StudentAid.gov/contact for live chat and email support.
• FSA Training Center: Access on-demand training, webinars, tools, and resources related to FAFSA Simplification and the FUTURE Act, including presentation slides and Q&A transcripts.
• Online Forums and Communities: Websites like College Confidential and Reddit’s r/FAFSA offer advice from other students and experts.

Utilizing Federal Financial Aid

Online college can be affordable but will never be free. However, you can do things to make online education expenses more manageable by completing the FAFSA application.

• The FAFSA application is the first step toward managing college expenses.
• Gather documents and complete the FAFSA application early to have ample time to address any issues that may arise.
• Ensure the information you entered is accurate to avoid delays or rejection of your application.