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It’s no secret that college is expensive. But there’s an underused financial planning tool that can help: the Free Application for Federal Student Aid, or FAFSA. In one survey, nearly 60% of parents with college-bound kids didn’t plan to fill it out and almost half had barely or never discussed it with their kids.

We encourage everyone to fill it out, even if you think you won’t qualify for any aid. That’s because:

• It can give you access to federal loans, which offer low rates and might have their interest subsidized.
• Many schools require it as part of their merit and need-based aid decisions.
• You might experience changed circumstances before move-in day. The FAFSA can be submitted almost a full year in advance. If someone in your family loses their job or suffers another financial hit, you’ll be glad you have an application on file.

If you’ve never submitted a FAFSA, you might wonder what you’re in for. Here’s what to expect.
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What’s the FAFSA used for?

The U.S. Department of Education awards federal aid, including Pell Grants, direct loans and work-study jobs using information on the FAFSA. Many states and some schools also use the data to make financial aid decisions.
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Who needs to fill it out?

College students and contributors, usually their parents, stepparents and adoptive parents. ��

A student can be considered independent in some cases (so they won’t need to have their parents provide information), but it’s not as common. For example, students who were born in 2001 or earlier, or who are married, orphaned, a parent, a member or veteran of the U.S. armed forces or emancipated can qualify as independent on the 2025-2026 FAFSA.
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When should you fill out the FAFSA?

You should fill it out as early as possible once it’s released, which is scheduled to happen by Dec. 1 this year. (It’s usually October.) Many states and schools distribute aid on a first-come, first-served basis. (Note that you don’t have to know all the schools you’re applying to in order to fill it out – you can add them later. You will have to identify at least one school to receive the information, though.)
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What kinds of information will you need to report?

Generally, there are three categories of information you’ll need:

• Family size. The number of people in your household.
• Student income and assets. Income information is imported from the IRS – you’ll need to give permission for it to transfer over. You’ll also need to report the value of any assets, like bank accounts, investments or businesses that the student owns.
• Parent income and assets. As with students, parent income information is imported from the IRS. You’ll need to report any assets as well, not including retirement accounts or the value of your primary home.

How is financial aid eligibility calculated?

Families are sometimes surprised by the results of the FAFSA calculations. At the end, you’ll find out your “student aid index,” which reflects your need for financial support, given your assets and income. The higher the number, the lower the need. (Need-based financial aid is generally awarded based on the gap between that number and the cost of the college your student attends.)

In a nutshell, for a dependent student, the student aid index is calculated by adding:

• 50% of student discretionary income
• 20% of student assets
• A percentage, typically between 22% and 47%, of parent “available” income and assets. (Additional formulas are used to determine how much is available for college, and income is weighted much more than assets.)

How FAFSA results might look for one family

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Previously, the amount a family could be expected to contribute would be divided by the number of children in college at one time. It’s not anymore, although family size is taken into account when determining a parent’s available income.

If your FAFSA results in a figure that’s far higher than you can afford and you have unique circumstances, a personal conversation with a school’s financial aid officer can go a long way.

Can you reduce your expected contribution?

Maybe, but be careful. You can get plenty of “tips” online or by going to a college planning specialist, but keep in mind that money moves that have a small impact on financial aid could have a larger, unintended effect on your overall financial plan, causing you to pay capital gains taxes, lose tax deductions or give up investment returns, for example. Before making any changes, be sure to check with your financial planner.
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Have a child heading to college?

Check out our guide to filling out the FAFSA. And make sure to talk to your planner about the best ways to use your college savings and how to balance your student’s financial needs with your own needs and goals.

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