How to Maximize Your FAFSA for Better Need-Based Scholarship Opportunities

What Is FAFSA and Why It Matters

Here, we’ll discuss the ways that you can maximize your federal aid through effective FAFSA tips. You’ll also know how to fill out FAFSA to ensure its completeness and accuracy.

What is the FAFSA in the first place? The Free Application for Federal Student Aid is a form that qualified students must complete to determine eligibility for federal financial aid. The U.S. Department of Education oversees the FAFSA process.

The FAFSA is the main gateway to the three different types of federal financial aid.

• Federal grants that don’t need to be repaid (i.e., free money).
  • The Pell Grant is for undergraduate students with exceptional demonstrated financial need. The current maximum award amount is $7,395 (2024-2025).
  • The FSEOG varies in amount ($100-$4,000/year).
  • The TEACH Grant awards up to $4,000/year for aspiring teachers and has a service obligation.
  • The Iraq and Afghanistan Service Grant is for students who lost a parent/legal guardian due to military service in Iraq or Afghanistan after 9/11.
• Federal work-study opportunities offer eligible students part-time jobs. Students can then use their income to pay for their college costs.
• Federal student loans are borrowed funds that should be used for education expenses. There are many types of federal student loans, too.
  • Direct subsidized loans
  • Direct unsubsidized loans
  • Direct PLUS loans
  • Direct consolidated loans

The FAFSA gathers relevant information about your household. These include your family size, income, assets, and siblings in college.

The information is then used to determine your Student Aid Index (SAI). Then, your SAI will affect the federal financial aid you’ll receive.

In general, the lower your SAI, the more federal financial aid you’ll receive. But other considerations, such as your cost of attendance, affect your final aid offer. You can also appeal your financial aid if your financial circumstances have changed.

But the FAFSA isn’t only your gateway to federal financial aid, including student loans. Your FAFSA is also a vital document in applying for other need-based financial aid.

States, colleges and universities, and private scholarship programs use the FAFSA, too. Examples include:

• California, Texas, and New York
• University of Michigan, University of Southern California, and Ohio State University
• Dell Scholars Program, Gates Scholarship, and Jack Kent Cooke Foundation

But completing and submitting your FAFSA isn’t the most important aspect. You must submit a complete, accurate, and up-to-date FAFSA. Then, you should submit it as early as possible, preferably before the deadline.

When you do, you’ll maximize FAFSA and the financial aid you can get. Again, programs offering need-based scholarships use the FAFSA for their own purposes.

Related Articles:

• Step-by-Step Guide to Completing the FAFSA Online
• How to Maximize Your FAFSA for Better Need-Based Scholarship Opportunities
• Avoid These Common Mistakes When Applying for FAFSA Online
• Top 5 Online Services for FAFSA Assistance Compared

Key Parts of the FAFSA You Need to Understand

The 2024-2025 FAFSA is more streamlined because of the FAFSA Simplification Act. But there are still two ways in which students can fill in the FAFSA.

• The paper FAFSA is four pages long, along with eight pages of instructions.
• The online FAFSA is the most popular form because it’s convenient to access, fill out, and submit.

When you scan the FAFSA, you’ll observe four key parts, too:

Expected Family Contribution (EFC)/Student Aid Index (SAI)

The EFC, now known as the SAI, is the formula used to determine the amount of financial aid a student is eligible for. The SAI formula is a complex federal formula (i.e., not a simple math equation). But it uses your household and financial information in the computation.

Again, the lower your SAI, the more financial aid you’re likely eligible for.

Income Reporting

The income reporting aspect is the most sensitive part because of its impact on the final aid offer. The lower your family’s income or your income, the higher your financial aid will likely be.

You must report both your student income and your parent’s income from the “prior-prior year.” If you’re filing the 2025-2026 FAFSA, you’ll report 2023 income.

Tip: Be honest in your reporting of income. However, you can use legal methods to improve your aid eligibility. Think of delaying capital gains or contributing to a traditional 401(k) or IRA.

Dependency Status

There are two types of dependency status on the FAFSA. Your dependency status determines whose information you’ll report on the FAFSA.

• If you’re a dependent student, you’ll report your information and that of your parents.
• If you’re an independent student, you’ll report your information. If you’re married, you must also report your spouse’s information.

A dependent student is presumed to be financially supported by their parents. Other eligibility requirements include:

• Under 24 years of age
• Unmarried
• Without dependents
• Not an active-duty military personnel or veteran

An independent student under FAFSA rules meets at least one of the following:

• 24 years of age or older as of December 31 of the award year
• Married
• An active-duty military service member or veteran
• A graduate degree or professional degree student
• With at least one legal dependent
• In a court-ordered legal guardianship
• A court-ordered emancipated minor
• An orphan, a ward of the court, or in foster care after reaching age 13
• An unaccompanied youth categorized as homeless or at risk of becoming homeless

Independent students usually have higher loan limits.

Tip: If you have unique circumstances, you can apply for a dependency override. Once approved, you’ll be considered an independent student. This can result in more financial aid besides higher loan limits.

School List

Your list of schools has a significant impact on your financial aid. If you add schools early, you’ll have a better shot at receiving financial aid from them.

You can list as many as 20 schools on the online FAFSA and 10 on the PDF version. Adding more schools to your list even after submitting your FAFSA is allowed.

Tip #1: List in-state public colleges. You may be eligible for state-specific financial aid if you do.

Tip#2: List all the colleges you’re considering for FAFSA for scholarships. Do this even if you’re unsure about sending in applications. Your FAFSA information will be sent to your listed colleges. This boosts your chances of being considered for need-based scholarships.

Tips to Accurately Report Income and Assets

Your reported income and assets have a significant impact on your financial aid offer. Even the smallest mistake can decrease it, if not delay its release. Be sure to make a complete and accurate report of your income and assets.

Here are effective tips to keep in mind:

Use the IRS data retrieval tool when possible.

The IRS Data Retrieval Tool allows for automatic transfer of tax return information into the FAFSA. It’s a convenient, fast, and accurate method that reduces the risks of costly mistakes.

Tip: Always double-check the imported tax return information on your FAFSA before submitting. The IRS DRT may make automatic importations, but it doesn’t transfer everything. You may have to make corrections and add items manually.

Understand whose income to include.

When in doubt, ask a financial aid officer. Your dependency status determines whose financial information must be reported.

If you’re a dependent student, you must report:

• Your income from employment, savings, and investments
• Your biological or adoptive parents’ income if they are married or living together
• Your stepparent’s income if your custodial parent has remarried
• Both your parents’ income if they live together even if they are unmarried

But income from your grandparents, foster parents, legal guardians, and siblings shouldn’t be reported.

Tip #1: Avoid over-reporting income by excluding child support you pay. Only report the child support that you receive.

Tip #2: Report your net income on business or farm operations only. Neither reports gross income nor total revenue.

Learn what counts as assets (and what doesn’t).

Not every asset you and your parents have should be reported. You must also avoid over-reporting assets so know which assets count and which don’t. Otherwise, you’ll likely receive less financial aid.

Here are the assets that count:

• Investments, including bonds, stocks, and mutual funds
• Real estate property but excluding your family home
• College savings plans, namely 529 Plans and ESAs, reported as parent assets

Here are the assets that don’t count on FAFSA:

• Your primary residence or home
• Retirement accounts, namely (401(k), IRA, and Roth IRA
• Personal possessions, such as jewelry, cars, and furniture
• Life insurance policies
• Value of small, family-owned or controlled business with less than 100 full-time employees

Tip #1: Avoid providing estimates. Instead, report the actual values of your income and assets on the day you file your FAFSA.

Tip #2: If possible, file your FAFSA after paying major expenses. This way, you can report lower liquid assets.

Common FAFSA Mistakes to Avoid

Here are the common FAFSA mistakes to avoid that, if you do, will likely increase your financial aid offer.

Missing Deadlines

None of the financial aid tips featured here will matter if you miss the FAFSA deadlines. Every state and college has its deadlines, too, which you must be aware of. 

Follow these tips to avoid missing deadlines.

• Set up reminders on your digital calendar and mark the deadlines on a printed calendar.
• Submit your FAFSA as soon as it opens in October every year.
• Check the colleges’ websites for additional financial aid forms and documents.

Leaving Blanks Instead of Entering $0

Don’t skip questions even when these don’t apply to your situation. Blank fields can result in errors and delays in FAFSA processing.

Here are tips to avoid leaving blanks.

• Enter “0” if you don’t have income and/or assets to report or if a question doesn’t apply.
• Fill in the parental information section with complete and accurate information if you’re a dependent student. This is true even if they aren’t providing financial support.
• Use the symbols provided for blank fields, such as “0” or “N/A.”

Listing Too Few Schools

List as many colleges as you can, usually up to 20 schools. This way, you’ll maximize your chances of getting financial aid. List public and private schools even if you don’t apply to all.

Incorrect Social Security Numbers or Tax Information

Even a misplaced number or letter on your tax information and SSN can result in delays or, worse, ineligibility.

Remember these tips so it doesn’t happen on your FAFSA.

• Double-check for the correct and complete SSN on your FAFSA
• Ensure that your full legal name and birthdate on your FAFSA match the information on your official documents
• Use the IRS DRT for automatic importation of your tax information

Don’t be complacent even if you’ve submitted the FAFSA many times in the past. Use every FAFSA application help available.

How FAFSA Helps You Qualify for Need-Based Scholarships

Think of college financial aid opportunities as a door. Then, think of your accurate and complete FAFSA as the key that will open it.

Remember that it isn’t only federal financial aid that’s available. States, colleges, and private organizations offer them, too.

How Schools Use FAFSA Data to Award Institutional Aid

Colleges analyze your SAI to determine your eligibility for institutional aid and its amount. You may receive offers for scholarships, grants, or tuition discounts.

State- And Private-Based Scholarship Eligibility Tied to FAFSA Info

States and private organizations use your FAFSA information, too. Their need-based scholarships and grants use your financial data to determine eligibility and awards.

Final FAFSA Tips for Getting the Most Aid Possible

Accurate and complete information, on-time submission, and a few tricks up your sleeve. These actions matter when it comes to how to get more money from FAFSA.

Again, you must submit as early as possible. Many financial aid opportunities are on a first-come, first-served basis. So, the earlier you pass your FAFSA, the better your chances.

Then, be sure to reapply every year. If you don’t reapply, you’re not in the running for any federal financial aid.

Also, always double-check your FAFSA for errors before submitting it. Ask for help in completing your FAFSA, too. College counselors and FAFSA help centers are your best resources.