Should I Apply for FAFSA if My Parents Make a Lot of Money?

If you think you can’t get financial aid for college because your parents make too much money, it’s worth your time to fill out the FAFSA, aka the Free Application for Federal Student Aid.

Why?

Eligibility for financial aid depends on a number of factors (we’ll explain in a minute), but families who assume their income is too high to qualify for need-based aid could be leaving a pile of free money and low-interest loans on the table by neglecting to fill out their financial information.

Do you think your parents make too much money for you to qualify for financial aid? We’re here to explain why you should still submit the FAFSA — and how you may still get money for the school year that’s drawing to an end if you apply by the June 30 deadline.

Should I Apply for FAFSA?

Yes. Regardless of your or your parents’ income, you should fill out a FAFSA application. Federal student aid doesn’t have an income cut-off and additional factors are taken into consideration. Plus, the FAFSA may be required for merit-based awards you qualify for.

Why Does My Parents’ Income Matter for FAFSA Anyways?

If you’re the one going to college and paying for it, why does your parents’ income matter?

Yeah, you might want to take that up with your Uncle Sam.

Even if you’re paying 100% of your college expenses, living on your own and filing your own taxes, you’ll still need to include your parents’ info if you don’t meet the FAFSA criteria for an independent student. Here’s the list of questions to determine your FAFSA dependency status.

If you are considered a dependent, you’ll have to include both your and your parents’ financial info to calculate your expected family contribution (EFC).

Based on that number, your college financial aid office determines the amount of financial aid you’ll receive, using these two formulas:

1. Cost of attendance – expected family contribution = need-based aid (includes federal Pell grants, direct subsidized loans and federal work-study)
2. Cost of attendance – financial aid awarded so far (includes private scholarships) = non-need-based aid (includes direct unsubsidized loans, Plus loans and TEACH Grants)

When calculating a family’s EFC, the student’s income and assets count for more than the parents’. For most dependent students, that’s good news, as they typically do not earn as much as their parents or have as many assets.

My Parents Make Too Much — Why Should I Still Fill Out FAFSA?

Regardless of your family’s income and assets, you should still fill out the FAFSA. Here are three reasons why it’s worth your time.

1. Income Isn’t the Only Factor

Besides your family’s income, here’s what else helps determine eligibility:

1. Assets (like a house or bank account).
2. Benefits (including unemployment and Social Security).
3. Family size.
4. Number of family members who will attend college or career school during the year.
5. Your year in school.

And contrary to what you may have heard, federal student aid doesn’t have an income cut-off.

Yes, a higher EFC may take you out of the running for subsidized student loans, but you may be eligible for unsubsidized loans, which still offer the federal student loan protections and low interest rates.

“Everyone should fill it out — it doesn’t matter if you’re a millionaire, billionaire or have no money,” said Billie Jo Weis with My College Planning Team.

2. It’s About More Than Federal Student Loans

Remember that financial aid is more than federal student loans and need-based scholarships.

When you fill out the FAFSA, you’re applying for funds from your state and your school, too.

Plenty of that aid isn’t based on need (aka merit-based aid), but the awarding institution will only consider you if you’ve filed the FAFSA.

The smaller applicant pool for departmental scholarships within your major could offer greater chances to snag scholarship money, for instance.

If you have any designs on studying abroad, scholarships and low-interest student loans can help cover your expenses.

To qualify for much of this money, you must have a FAFSA on file.

3. Consider It an Insurance Policy

Your parents assured you that they can cover your college costs. Congratulations! But if we’ve learned anything recently, it’s that nothing is guaranteed.

The FAFSA is more than an application for financial aid today — it’s a backup in case of a catastrophe tomorrow, according to Michael G. Thomas Jr., an Accredited Financial Counselor with a Ph.D. in Financial Planning from the University of Georgia.

“When families don’t do it, it’s almost like saying you don’t have insurance in the event that an unexpected financial shock happens,” he said. “If you already have the information on file, the financial aid office can actually go back and look at your situation and award you or provide you with resources very quickly.”

In the midst of a crisis, do you really want to be tracking down your parents’ income tax return from two years ago?

How Do I Submit My FAFSA?

You’ll need to gather essential documents like tax returns and Social Security numbers before completing the FAFSA form. If you’ve never filed the FAFSA before, you and your parents must first each create your own FSA IDs.

Why the need for multiple accounts? Your FSA ID has the same legal status as your signature, so you can use it to sign legally binding documents electronically.

Give yourself some lead time for creating your IDs before you want to fill out the FAFSA — it can take up to three days for your ID application to process.

While you’re waiting (or even before), you can get an idea of what information you’ll need for the FAFSA by printing out the FAFSA on the web worksheet. Doing this pre-work will help you avoid getting overwhelmed when you’re filling out the actual FAFSA (and the printout can act as your cheat sheet).

Once you have your IDs and pertinent info in hand, check out our guide to filling out the FAFSA.

You can find the deadlines for FAFSA here, but you basically need to know that the deadline is June 30 of the current school year. The opening date to submit is Oct. 1 before a school year begins. So you have a 21-month window from opening date to deadline to submit your FAFSA form each year.

Don’t let the lengthy application period lull you into complacency. Some financial aid is awarded on a first-come, first-served basis. And most states and colleges have their own (much earlier) deadlines.

Although much of the money gets distributed early, you can submit your FAFSA up until June 30 of the school year you just completed — and there often is aid still available. So if you haven’t filed a FAFSA yet for the 2021-22 school year, you have until June 30.

The first day you can file FAFSA for the following school year is Oct. 1 — so for the 2022-23 school year, you could have filed FAFSA starting Oct. 1, 2021. And for the 2023-24 school year, you can file the FAFSA starting Oct. 1, 2022.

You can file the FAFSA via the web, via the myStudentAid app, through a school or by mail. Filing electronically is faster and will alert you immediately if you make a mistake on the form.

Make the smart move by setting up your FSA ID now and gathering your financial documents so you’ll be ready to submit — and at the front of the line to claim funds for the following year.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.