The FAFSA has been the subject of many myths and misconceptions. Perhaps it is because colleges and high schools don’t do enough to help students with financial aid. It could also be because it is a government service, and unlike private companies, the government doesn’t respond as well to correct misconceptions.
Either way, people make a number of errors when it comes to the FAFSA, and these mistakes can be costly. We have previously addressed many of the FAFSA myths.
Recently, I was asked if FAFSA money ran out. This is a tricky question because the answer is no, but borrowers should still try to file as quickly as possible.
Why the FAFSA doesn’t run out
The FAFSA is the key to getting federal grants, student loans, and qualifying for work-study. The government sets very late deadlines for the FAFSA.
While there are limits, for example, on Pell grants and federal student loans, you are not going to miss out on them by not being the first to apply. The size of your Pell grant will depend upon factors such as family size and income, but whether you apply in January or March, the federal Pell grant will be for the same amount. The same could be said for student loans. There are limits to how much an individual can borrow, but there is not a set limit on how much total borrowing takes place.
In this sense, the FAFSA doesn’t run out. To find out the absolute last-second deadline to fill out the FAFSA in your state, be sure to check out the Federal and State FAFSA deadline page.
Early Completion of FAFSA is Still Preferred
Applying early for FAFSA funds is still advisable in nearly every circumstance.
Most colleges offer need-based aid in addition to the available federal funds. This college aid is limited, so it is best to apply for it as soon as possible. In most cases, a part of the application process is filling out the FAFSA. Many schools have forms in addition to the FAFSA, but getting the FAFSA done early will always be a positive step towards some extra aid. Even if you don’t think you have any chance of qualifying, keep in mind that 20 minutes of paperwork could be worth hundreds or even thousands of dollars. This is one situation you don’t want to make any assumptions about your ability to qualify.
The same can be said for work-study jobs. The FAFSA merely qualifies you for a work-study job. It doesn’t actually set you up with a specific job. The sooner you qualify for work-study, the better your odds of finding work that you like.
Everyone Should Complete the FAFSA Promptly
Even if you don’t qualify for any need-based aid, an early FAFSA application is still highly recommended.
If you will be taking out a federal loan, you have the money to be in place before the semester starts. Some colleges are better than others at processing this information, but because the system is not error-proof, you want to give yourself some extra time. The campus bookstore will not take an IOU while you wait for your FAFSA funds to hit your account.
The last thing you want to do is be forced into taking an emergency private student loan because your federal student loan is processing too slowly.
Final Thought: Don’t Procrastinate
The government won’t be denying you student loans or grants because you were not one of the first 500 people to submit an application. However, with each day that passes, potential opportunities are lost. Submitting your FAFSA as early as possible is the best practice.