How Does Fafsa Student Loans Work
The FAFSA is a form students fill out to apply for financial aid. It’s used by the federal government, as well as schools and some states, to determine how much money students can expect to receive in grants and scholarships as part of their financial aid package.
The FAFSA helps determine what types of loans a student might be eligible for, too—and when it comes to student loans, there are two different kinds: Federal Direct Loans and Federal Family Education Loans (FFEL).
Federal Direct Loans are the more common option, but FFELs are still available for some borrowers. Both loan types have different repayment options with different benefits and drawbacks.
How Does Fafsa Student Loans Work
Many people are surprised to learn the FAFSA is about a lot more than federal student aid. In fact, the FAFSA is so important that financial aid officers say skipping the FAFSA is the most-costly mistake you can make when pursuing your education.
FAFSA determines your eligibility for:
Federal need-based grants, including the Pell Grant and Federal Supplemental Educational Opportunity Grants (FSEOG)
Subsidized federal student loans, which are based on need
Unsubsidized federal student loans, which most students qualify for regardless of need
Federal work-study
Some state-based financial aid, including grants, scholarships, and loans
School-based financial aid, including need-based grants and scholarships
School-based merit aid, since many schools require you file a FAFSA to consider you
Here’s a weird wrinkle with the FAFSA: You apply for aid through the U.S. Department of Education, but you’ll be notified of your financial aid awards through the schools you’ve applied to.
If your FAFSA qualifies you for federal grants, loans, or work-study programs, that money is disbursed directly to your school. With grants or loans, your school will apply that money toward your tuition, fees, and room and board (if you live on campus). Your school will notify you each time money is disbursed to cover expenses, typically twice a year. Any money left over will be paid to you to use for other expenses associated with school. You may be able to choose how you receive that money: via check, cash, a credit to your bank account, or a prepaid debit or ATM card.
If you qualify for a work-study program, your school will pay you directly unless you request that money be applied to your student account.
financial aid for students
Some public and private universities offer financial incentives for students to attend their institution. Most of the institutional aid available to international students is reserved for graduate study in the form of assistantships and fellowships. Because it is uncommon for U.S. institutions to offer aid to undergraduate international students, such scholarships are often quite competitive. Remember that both private and public institutions may waive application fees in some situations; be sure to consult with your university to take advantage of any supplements or waivers they may offer.
Merit-based scholarships are granted on the basis of special skills, talents, or abilities. Your university may have scholarships based on TOEFL scores, academic record, artistic ability, musical ability, or athletic ability. Merit-based scholarships are usually very competitive. To be considered, you will need to demonstrate exceptional ability in the area required.
Need-based scholarships are awarded based on financial need. Those students who can demonstrate need at a predetermined level are eligible for this type of aid.
Academic departments within the university may have funds allocated to assist international students with exceptional need and/or talent. Consult with your university and/or your major department to take advantage of any special funding opportunities they offer.
Many scholarships for undergraduate study are available only to U.S. citizens and permanent residents. However, there are free scholarship databases as well as private, corporate, nonprofit, and government scholarship funds that serve undergraduate international students.
Some scholarship databases charge fees to users, and other databases provide their services at no cost. In general, the same information is available from both types of database services, so it is not necessary to pay any fee. Ask in advance, and choose the database service that is free of charge. Be especially aware of dishonest scholarship offers: do not send money, bank account numbers, or credit card numbers to any organization that promises a scholarship in return. If you doubt the truthfulness of any scholarship source, consult with the admissions office or the international student office at the university to which you are applying.
The U.S. Department of Education and EduPASS offer tips and resources to protect students from dishonest organizations.