Higher education is a worthwhile—but expensive—investment. The cost of one year at college can surpass the cost of a new car! Affording this opportunity isn’t easy, which is why federal and state governments provide help.

Federal Student Aid, a part of the U.S. Department of Education, provides more than $150 billion in federal grants, loans and work-study funds each year to more than 13 million students. Any student can apply for a share of this aid through the Free Application for Federal Student Aid (FAFSA).

What is the FAFSA?

The FAFSA is a form used to determine financial aid eligibility for students. This includes federal funding such as Pell Grants, federal student loans and federal work-study, but the FAFSA is also used by many schools and states to determine eligibility for other funding. That’s why it’s important to submit a FAFSA even if you don’t anticipate receiving federal aid for school. Submitting the FAFSA may allow you to receive state grants, and your school may offer additional aid based on the information you provide.

How Do I Apply?

The FAFSA can be submitted online at fafsa.ed.gov and takes about 30 minutes to complete. The website includes step-by-step instructions, and you can access a real-time, private online customer service representative if you have questions. You can also obtain a paper FAFSA from a high school counselor or a prospective college financial aid office, or request one to be sent to you by calling 1-800-4-FED-AID. The FAFSA is always free to complete.

Common Misconceptions

Myth: Our income is too high to qualify for aid.
Fact: Many families who could qualify for aid mistakenly don’t apply, assuming they don’t have sufficient need. However, factors like the value of your home and retirement savings aren’t counted in financial aid calculations since the Department of Education doesn’t expect parents to sell their homes or withdraw from a retirement account to finance college. Even families with high income may qualify, especially if they have several kids in college. And, because applying is free, you have nothing to lose.

Myth: It doesn’t matter when I apply.
Fact: The season for submitting the FAFSA starts in January and the cutoff for submission is the end of June, but don’t wait to apply. Some states award aid on a first-come, first-served basis, so waiting may cost you. Deadlines may also vary depending on the college you’re applying to and your state of residence. Apply as soon as you can to get the required information together.

Myth: I have a college savings plan, so I won’t qualify.
Fact: College savings plans, such as a 529 account, won’t automatically reduce your aid. You should still apply for the FAFSA.

Myth: My grades aren’t good enough for financial aid.
Fact: While your grade point average (GPA) may affect the schools you’re accepted to, it won’t disqualify you from most federal student aid programs, which are largely based on financial need, not your academic record. However, you must maintain satisfactory academic progress in your program of study to continue qualifying for most aid.

Closing the Gap

After completing your FAFSA and receiving financial aid, you may still need financing to match the cost of tuition, books, housing and other expenses. Responsible use of private student loans can help you fill those gaps. Be sure to look for a lender with low rates and responsible repayment options like Navy Federal Credit Union's option on mycollegecentral.net

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.