Chapter 13: Filling Out FAFSA
Written by Kaashvi, Dartmouth College
Welcome back to The College Countdown! If this is your first time stopping by our blog, I am Kaashvi, your friendly neighborhood college admissions enthusiast and your guide through this series. Whether you’re a returning reader or a newcomer, I’m pumped to have you join us for this thrilling journey. After our last installment on the essentials of need-based financial aid, we are ready to continue the conversation of bankrolling your college education with the next issue in this series: filling out your FAFSA form.
FAFSA, short for Free Application for Federal Student Aid, is a form that incoming and current college students are required to fill out with the help of their parents every October (though it was December for the 2024-25 academic year) to become eligible to receive federal aid for the upcoming school year. It takes all of your financial information—income, assets, expenses, savings—to produce a six-digit number called your Student Aid Index (SAI).
The old application had over a hundred questions but the updated one has reduced the number of questions to only forty-six. A lot of the removed questions were due to policy changes (like no more selective service or drug conviction questions) or were questions that didn't really apply to most students anyway. Besides English, the FAFSA is now available in eleven more languages: Arabic, Chinese, French, German, Haitian, Hindi, Korean, Russian, Spanish, Tagalog and Vietnamese. It can also still be completed as a paper application.
Another big improvement in the application has been that students can now add up to 20 colleges on the form, removing the hassle of re-submitting the application and waiting for it to process for students applying to many schools. As in the past, colleges cannot view which other schools have been added to the form. Be sure to check if you reside in a state that requires the in-state university to be listed first to be eligible to receive state aid grants.
The new FAFSA form also has required questions about a student’s gender, race and ethnicity. This information will not be visible to financial aid offices and state agencies, so it won’t impact aid and will only be used for research purposes. Unlike previous years, families now have the opportunity to appeal their aid package as well because colleges can no longer have a blanket policy to refuse all appeals.
The Department of Education has outlined much stricter guidelines for how colleges must present their costs. This push for transparency means that colleges are now required to break down expenses more clearly, exposing previously hidden costs. I actually didn’t know about this change until I noticed it on my own statement bill from Dartmouth this quarter—there was a lot more detail in the listing of college costs than before. TIL that we pay an additional $250 for our meal plan during orientation week.
While I won’t go into an extensive breakdown of my bill here (because it might make me cry), the important takeaway is that you can expect to see a more detailed (and often times higher) listing of college costs moving forward. But it’s not as bad as it sounds because this change also
gives the federal government more authority to regulate everything except tuition and fees. So, gear up to be prepared for some adjustments as schools adapt to these new rules.
The final upgrade introduced in the FAFSA this year is in how you’re expected to input your tax information. IRS-Data Retrieval Tool (IRS-DRT) has been replaced with the IRS-Direct Data Exchange (IRS-DDX), which means that your Federal Tax Information (FTI) will be automatically transferred from the IRS to your FAFSA form. Since you don’t have to manually enter your tax information anymore, you can expect to spend less time hovered over your old tax documents. People who have previously filed the FAFSA can also import non-financial information (like demographics) from their older applications.
Now that we have all of this out of the way, you’re ready to start the process of filling and submitting your FAFSA.
Creating your FSA ID & logins
Starting this year, every student, along with at least one parent (or both parents if they are married but file taxes separately), will need to create different FSA IDs in order to successfully use the mandatory IRS-Direct Data Exchange (IRS-DDX) tool.
Up until last year, students whose parents weren’t US citizens and/or didn’t have a Social Security Number (SSN) had to print and mail in their signatures to create their IDs, but with the updated form, that hassle has been removed completely. In fact, they’ve even added a slot for parents with ITIN numbers to provide that information.
The best time to create all of your respective FSA IDs is about a week before you intend to file the form. It can take over four days to process your account (possibly longer during those peak months of November and February) and without it, you cannot access the application. So, don’t put it off until the last minute.
Head over to studentaid.gov/fafsa and click on the ‘Start New Form’ button. It’ll redirect you to a new page where you need to click on the ‘Create an Account’ tab, fill out the required details and enable two-step verification to set up your FSA ID. Your parent/parents will have to repeat these same steps to create their IDs as well. In case your parents already have an FSA ID from filling out the FAFSA previously for your sibling or themselves, they can just use their existing logins. Last note on this, since you’ll be using your FSA ID for taking out loans, it’s really important to save your login information (all the usernames and passwords) in a safe place and not share it with people you don’t trust.
Before the FSA IDs are created, every contributor (that is, anyone who is required to provide information on the student’s FAFSA form) has to sign and consent to the IRS-DDX tool retrieving their federal tax information. Without obtaining consent from every contributor on the form, your aid eligibility cannot be calculated. Though, being a contributor on the FAFSA doesn’t imply an obligation to pay for the student’s education.
Figuring Out Your FAFSA Parent
For the purposes of FAFSA, if you’re a dependent student (as most of you likely are), you have to provide information about your legal parents on the form. A legal parent is either your biological (listed on your birth certificate) or adoptive guardian. A stepparent is only considered to be a parent if they have adopted you, otherwise they’re termed as a parent spouse. If you’re married, your spouse will also be a contributor to your FAFSA form.
Case I: If you live with both yours parents in the same household and your parents’ marital status is married
Both of your parents’ information has to be included on the FAFSA. If they didn’t file taxes jointly, then both of them are contributors. If they did file taxes jointly, only one parent is required to be a contributor and has to report information for both parents.
Case II: If you live with both your parents in the same household and your parents’ marital status is unmarried
This is the same situation as the first one (barring one detail) and both of your parents will be contributors to your form.
Case III: If you only live with one of your parents
This would apply if your parents are divorced/separated and only one has custody of you or if your parent is widowed. In this case, the parent you live with will be the contributor on your form.
Case IV: If you live with one parent sometimes and the other parent other times
In this scenario, your parents could either be divorced, separated, or were never married to begin with, but share custody of you. Here, the parent who you live with most of the time is the contributor on your FAFSA form. If you live with both your parents for an equal amount of time, then the parent who provided more financial support over the last twelve months is the parent whose information is to be provided. If it’s a 50-50 split again, the parent with the greater income and assets becomes the contributor.
Whichever parent ends up being the contributor, their marital status will also change things for you. If they’re single, there are no more additional steps, but if they married/remarried, your stepparent (otherwise called parent spouse) will also be a contributor on the FAFSA. Also, if your FAFSA parent hasn’t claimed you on their taxes, you might be flagged for verification. It’s nothing serious though, so don’t be scared if it does happen.
Case V (the trickiest of them all): If you don’t live with a legal parent at all
Unfortunately, for the purposes of the FAFSA, it doesn’t matter if you don’t live with your legal parents; you’re still required to report their information if you’re a dependent student. This is an awful situation to be in, even worse if you can’t contact your legal parents for any reason (examples include incarceration, abusive home environment, abandonment). If you’re in a similar position, you can still fill out the form but as a provisionally independent student—and if you can answer ‘yes’ to any of the questions listed here—you can be eligible to get a lot of grant aid.
If you’re an unaccompanied homeless student or someone who is at the risk of being homeless, you also don’t have to provide any parental information and can complete the form on your own. Just make sure you’re officially designated “McKinney-Vento” by your high school’s liaison or another eligible agency (your counselor can help you with this, plus it’s totally confidential) before you graduate. This way, you have a better chance of qualifying for non-loan financial aid.
If you’re estranged from your biological parents but have been adopted by another adult, then they’ll be your FAFSA parent on the form. Though if you live with another adult because they were entrusted legal guardianship of you (this is not the same as being adopted), you don’t have to submit any parent information and will be automatically granted maximum federal aid.
Clear so far? Amazing, full steam ahead!
Getting Your Documents in Order
The income tax information being asked for is from two years ago (prior-prior year). The tax return you’ll be using will be from your graduation year minus two. So, if you’re graduating from high school in 2025 and starting college in the fall of 2025, you would use your tax information from 2023 on the FAFSA. The reason for using information from two years ago is to help families submit their applications sooner and with finalized data. However, any information about your assets refers to what you own on the day you complete the form.
If there have been significant changes in your household income in the past two years (maybe one of your parents lost their job or had a big pay cut), you should reach out to your schools’ financial aid departments to bring this to their attention and appeal your aid award.
Here’s a checklist of all the documents you can gather on your own:
Your SSN (or Alien Registration Number if you aren’t a US citizen),
Your FSA ID,
Your driver’s license number (if you have one),
Statements about money you have in cash, savings, checking and investments,
Your federal income tax returns, W-2s and any other records of money earned (you’ll not
have to manually enter any information but it’s good to have it handy to cross-check),
and
A list of colleges you’re applying to.
And the ones you’ll need to ask your parents to provide:
Their SSNs (or Alien Registration Number if they aren’t US citizens),
Their FSA IDs,
Their exact home address as listed on their tax form,
Their month and year of marriage/divorce,
Statements about money the money they have in cash, savings, checking and investments,
Information about any other types of income or benefits they receive, and
Their federal income tax returns, W-2s and any other records of money earned (especially for the untaxed income section).
Filling the FAFSA
There are five sections on the updated FAFSA:
Student information,
Student spouse information (in case the spouse filed for taxes individually),
Legal parent information,
Other parent information (in case the ‘other parent’ is married to the ‘legal parent’ but
filed for taxes individually), and
Preparer information (a third person who fills out the FAFSA on your behalf free of
cost).
For most high school seniors, sections b and e won’t be relevant. Also, having multiple IDs this year onwards means that one person cannot simply login and fill out the entire form on their own. Each section of the application can only be accessed using the FSA ID of the person it’s asking questions about. So with this change, parents are now less likely to accidentally fill out their details in the student information section or vice versa. Plus, this setup lets students and parents work on their parts of the form simultaneously.
Okay, that was a lot of information but without you even realizing, all of it has set you up to get your FAFSA right. Let’s put your newly acquired knowledge to the test now. Go to studentaid.gov/fsa-id/sign-in to fill in your (the student’s) login credentials and verify your personal details. On the next page, you’ll be asked to provide your state of residence and the date you became a resident there. After this, you’ll be taken to a final page with the terms and conditions to provide approval for the FAFSA form.
Click ‘accept’ and then choose the form for the year you will start college. If you’re graduating from high school in 2025 and starting college in the fall of 2025, then you’ll fill out the 2025-2026 form. More students than you’d think mess up by filling the form for the wrong year, you don’t want to be in that group. If you get stuck anywhere while filling out the form, there are small blue “?” icons next to almost every question to give you extra clarification on what’s being asked. Happy FAFSAing!
Strategies to lower your Student Aid Index
Here are some lesser-known tips on how your SAI (Student Aid Index) is calculated:
Student Income: Half of your personal net income (you being the student, not your parents) above $7,600 (this number changes each year) will be included in your SAI. If you have a job that earns more than this, you are expected to use half of the overage on college expenses and will not receive need-based aid for that amount.
Parental Assets: Up to 12% of your parents' total assets will be included in your Adjusted Available Income (AAI). This means about 2-6% of assets will go to the SAI
(depending on how high that AAI is). Note that this is an annual amount, which is significant.
Parental Income: Parental income starts with the adjusted gross income (AGI) from
their tax return. Several allowances and deductions are subtracted (taxes, personal allowances, etc.). The remaining amount is allocated toward your SAI at varying marginal rates that increase with income, similar to income tax brackets. These go from 22% of the first $20,000 they earn up to 47% of any amount over $40,000. This is net available income with all deductions and exclusions considered. It's possible to have a $70,000 salary and be below the top bracket here if you have significant deductions.
Automatic Zero SAI: If your parents' earned gross income is below $29,000, you may qualify for an automatic SAI of $0.
So, how can you put this information towards lowering your SAI?
Credit Card Debt: Credit card debt is not counted against assets. For example, if your parents have $100,000 in assets, FAFSA counts $12,000 of that toward your SAI. If your parents have $20,000 in credit card debt, they could pay that off with other assets, reducing their FAFSA assets to $80,000. Now, only $9,600 is added to your SAI. Your parents saved $2,400 per year by shifting their assets around with no changes to their net worth.
Strategy: Parents should pay off credit card debt before filing FAFSA.
Home Equity: Home equity in a primary residence is not included in assets. If your parents have a $500,000 investment account and $100,000 of equity in their $600,000 home, that would be $60,000 added to your SAI. If your parents sold the investments and paid off their house, they would reduce that portion of the SAI to $0 without affecting their true net worth.
Strategy: Parents should move as much of their assets into their primary residence as possible. For some, it might be worth refinancing their home after you graduate or getting a HELOC to access those funds again.
Retirement Contributions: Retirement savings aren't included in assets. Since saving for retirement is deducted from income when calculating adjusted gross income, your parents should be maxing out their contributions to reduce both their income and assets for SAI calculation.
Strategy: Parents should max out 401k, 403b, and IRA contributions for a couple of years before filling out the FAFSA and the whole time you're in college. They can reduce contributions later to rebalance retirement vs. non-retirement assets.
Combining these approaches could significantly impact your final SAI. A family with a $2 million net worth could have an SAI of $0 with income deductions, a large retirement account, no credit card debt and substantial home equity. Another family with a $0 net worth could have a large
SAI with few income deductions, no retirement savings, no home equity and massive credit card debt.
Now that you're basically a FAFSA expert, how can you take advantage of this information? The answer lies in understanding the definitions and formulas for all these factors (assets, income, deductions). Then, you find the loopholes and strategic moves to present this information in the way that benefits you the most. Remember, the FAFSA process is complex and individual circumstances vary widely. Consulting with a financial aid advisor or using official resources like the Federal Student Aid website is always a good idea to get personalized advice.
And there you have it—a full, in-depth look at filling out the FAFSA. As you are looking for colleges for your list, remember to keep your financial needs front and center. Good luck and apply away to those colleges! I want to thank all of you for joining me today and sticking around till the end. I’ll see you soon with a new article. Until next time, keep dreaming big!
ABOUT THE AUTHOR
Hey there, college-bound crew! I’m Kaashvi, an undergraduate student at Dartmouth College from India. I’m the brains (and heart) behind the College Countdown series here at The Ivy Institute and I am stoked to be your guide through this process.
So, a little bit about me: I was a STEM kid through and through in high school and all my classes were the highest level ones offered at my school and graduated at the top of my class for three consecutive years. Outside of class, I was involved in activities that let me nurture my love for inventiveness, responsibility and storytelling. From designing a vehicle to aid oil spill cleanup to working as an elected representative for the youth advisory council to volunteering at the local deaf school—I devoted a lot of my time to projects that were true to my values.
When I’m not typing away at my keyboard, dishing out college advice to people in my inbox and on this blog, you can catch me exploring new hiking trails, whipping up some questionable (but oddly delicious) desserts at my bakery or getting lost in a gripping mystery novel.
As an international student, the application process wasn’t just about finding a spot at a prestigious university but also about finding a place that felt like a second home. Now that I’ve made it out alive to the other end (with a boatload of stories to tell), I'm here to spill all the tea on how you can do the same. With some guidance and a whole lot of oversharing, together we’ll crush this admissions game like absolute pros.
Catch you on the flip side,
Kaashvi
