Earning too much for grants is no reason to skip the FAFSA. The same form is your application for federal Direct Unsubsidized Loans, which have no income test, and some state and college merit scholarships require it too. File it every year, whatever your income.
Families who skip it may be right about the grants. The mistake is thinking grants are all the form decides. Take parents earning $250,000 who never file because their daughter won’t qualify for need-based aid. When her first-year bill leaves a $5,000 gap, they turn to a private lender. It prices the loan on their credit, needs a parent to cosign, and charges a higher rate than the federal loan she could have had.
The federal loan she missed is a Direct Unsubsidized Loan, open to students at every income level. Interest builds while she’s in school, which is what unsubsidized means, but the rate is fixed, repayment can be tied to income, and she needs no credit history or cosigner. Private lenders don’t typically offer that combination.
The form also reaches aid that has nothing to do with need. Tennessee’s HOPE Scholarship, for one, is a merit award that takes at least a 3.0 GPA or a 21 on the ACT, and students apply for it by filing the FAFSA. Some other states and colleges use the form for their own scholarships, so check each school’s aid page before deciding it doesn’t apply to you.
The FAFSA’s formula also counts less than families expect. It ignores the home you live in and the balances in 401(k)s, IRAs, and pensions.
File every year, including the years you expect nothing. Federal Student Aid says most people complete their part in 12 minutes or less. A current FAFSA also helps if the family’s money changes mid-college. If a parent loses a job, the aid office can adjust the student’s numbers for the drop in income, starting from the FAFSA it already has.
Filing commits you to nothing. You can turn down any loan on the award letter, but you can’t accept one you never applied for.
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