'Do yourself a favor' and file this key college form ASAP to maximize your chances of getting financial aid: Expert

"Even if you don't think you need financial aid, you should file the FAFSA."


The Free Application for Federal Student Aid, more commonly known as the FAFSA, opened October 1 for the 2022-'23 academic year — and the time to file is now, experts say. Luckily for parents and students, filling it out and turning it in has never been easier.

Of all the forms families with college students fill out, experts say FAFSA is one of the most important because colleges and other entities use it to determine eligibility for need-based financial aid, including federally backed loans and grants. It can also help you get merit-based scholarships.

Filing early can give students an extra edge: Many schools and states award aid and grant money on a first-come, first-served basis. Students who file the FAFSA in the first three months tend to get twice as many grants as those who file later, according to college planning expert Mark Kantrowitz.

"Everybody should file the FAFSA," Kantrowitz recently told Grow. "Even if you don't think you're going to qualify for financial aid, even if you don't think you need financial aid, you should file the FAFSA."

Why it's so important to fill out the FAFSA early

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In the past, FAFSA was one of the most onerous forms that families with college students had to fill out, but in recent years, the Department of Education has streamlined the process, says Justin Draeger, president of the National Association of Student Financial Aid Administrators. "Each and every year the department has simplified the form by simply prepopulating questions," he says. Most of the time what's been cut from the application has been through "skip logic," which omits irrelevant questions or entry fields based on a user's previous responses.

Before those reforms were enacted, the FAFSA process could take hours. Now, however, many filers can finish the application in about 30 minutes, Draeger says, adding that the newly streamlined process means few people have an excuse to not file. "From our neediest students to even our middle-income families that are struggling to pay a college bill, before you discount yourself, do yourself a favor and complete the FAFSA," he says.

'The biggest changes are going to be in the years to come'

The recent streamlining of the FAFSA is thanks to congressional legislation that gave the IRS permission to share tax information with the Department of Education, meaning that many of the details that FAFSA requires now automatically populate once you provide the proper tax identifiers.

Cutting out the individual data entry that used to gum up a lot of the filing process is just the first phase of a bigger overhaul to the FAFSA, Draeger says. The Department of Education is currently reworking the formula for calculating aid, and should roll that out in the next two years. The new formula will shield more of a family's income and assets, for example, but eliminate the automatic discount for families with more than one student in college, according to the legislation.

"We've made pretty big strides, but the biggest changes are going to be in the years to come," Draeger says. "If everything holds steady, we'll have more people qualify for Pell Grants and need-based aid, and it'll be a much simpler form because it's largely relying on tax elements that people have already submitted to the IRS."

The change to that formula comes at a crucial time. The total amount of student debt in the U.S. is now at a historic high, totaling more than $1.57 trillion, according to the Federal Reserve Bank of New York. Out of every $8 Americans owe (not including mortgages), almost $3 are from student loans.

If more people are eligible to receive Pell Grants, they may be able to take on less debt, as the grants are federal subsidies that don't need to be repaid. The amount of each grant changes from year to year, based on a student's financial need, but in the 2021-'22 school year, the maximum award was $6,495, according to the Department of Education.

There are two small changes going into effect with the 2022-'23 FAFSA that will expand access to aid. Previously, applicants with drug convictions and young men who hadn't registered with the selective service were barred from receiving federal financial aid. This year's FAFSA will still ask applicants those questions, but their answers won't prevent them from receiving aid.

Fewer students are filing a FAFSA

Filling out the FAFSA is probably more important than ever, not only because of the skyrocketing amounts of student debt, but also because there's a lot of financial aid being left on the table, experts say.

Tuition at private, four-year schools increased more than 2% between the 2020-'21 school year and the year before, according to the College Board; the total cost to attend a four-year private school averages $50,770. An in-state, four-year public school runs $22,180.

Suze Orman's 2 rules for borrowing student loans

Video by Stephen Parkhurst

Despite the uptick in college costs, however, almost a third of families with college students didn't file a FAFSA for the 2020-'21 school year, according to a recent survey from Sallie Mae. Some of that drop-off might be explained by the pandemic shift to remote schooling, Draeger says, namely because some students couldn't talk to their guidance counselors face to face to "walk them through this process and keep them on deadline."

Some of it, however, is also due to lower enrollment rates in college across the board, from four-year universities to two-year community colleges. Usually, enrollment in higher education jumps during recessions, Draeger says.

"That was not the trend during the pandemic," Draeger says. "Are people going to school? Do people want to go to a school in a year where they might be facing financial distress?"

Regardless, don't let pandemic uncertainty stop you from filling out the FAFSA, Draeger says. "Too many people discount that these programs are for them," he says. "People self-select out of the financial aid process and therefore out of college without ever giving it a chance."

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