Filling out the Free Application for Federal Student Aid (FAFSA) is the first step in qualifying for financial aid like grants and loans. However, many students still skip it. According to the National College Attainment Network (NCAN), just 57% of high school graduates from the class of 2021 completed the FAFSA.
As a result, many of those students didn’t get the financial aid they were entitled to receive. In fact, NCAN reported that $3.75 billion in Pell Grants went unclaimed in 2021.
Students often skip filling out the FAFSA because they think their families make too much money to qualify for aid. However, there are no FAFSA income limits, so you can submit it—and potentially get valuable financial aid—regardless of how much money your family earns.
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What Are the FAFSA Income Limits for 2022?
Both students and their parents often think that their household income makes them ineligible for the financial aid. However, there is no income limit for the FAFSA, and the U.S. Department of Education does not have an income cap for federal financial aid.
Most students are eligible for the FAFSA as long as you meet these general requirements:
- You are a U.S. citizen, eligible noncitizen or qualifying permanent resident.
- You have a valid Social Security number (students from the Republic of the Marshall Islands, Federated States of Micronesia or the Republic of Palau are exempt from this requirement).
- You completed a high school diploma or its equivalent, such as a General Educational Development (GED) certificate or approved homeschooling program.
- You’re enrolled at least half-time in an eligible degree or certificate program
How Your Financial Aid Is Calculated
After submitting your FAFSA, the government will send you an email with your Student Aid Report (SAR). This is a summary of the information that you provided on the FAFSA, and it also includes your expected family contribution (EFC). This is the amount of money the Department of Education estimates your family can hypothetically contribute to your schooling.
Colleges use your EFC to calculate your financial need. Your EFC isn’t how much you have to pay; it’s an index that schools use to evaluate your aid eligibility. It determines how much of the school’s total cost of attendance will be covered by grants and other need-based aid. The smaller your EFC, the more financial aid you are eligible to receive.
Many families find the EFC confusing, so the government will be replacing the EFC with the Student Aid Index (SAI). The switch will take effect in July 2023. The SAI was designed to help low-income students since it will allow for adjustments due to extenuating circumstances, such as drops in income due to a death in the family, that may not be reflected on the FAFSA.
Some FAFSA Aid Is Based on Income
While there are no FAFSA income limits, some federal financial aid is distributed only to low-income students. For example:
The Pell Grant is a federal grant worth up to $6,895 for the 2022-23 school year. Pell Grant income limits don’t exist. However, Pell Grants are solely for students with exceptional financial need, and your need is determined on your EFC. The maximum EFC you can have to qualify for a Pell Grant is $6,206.
Direct Subsidized Loans
With federal direct subsidized loans, the government covers the interest that accrues while you’re in school, during your loan’s grace period and during any eligible deferments. Subsidized loans are only available to undergraduate students with significant financial need.
Some financial aid distributed by states is based on income. You can find financial aid opportunities by contacting your state education agency. States that offer need-based grants include:
- New Jersey: Through the New Jersey Tuition Aid Grant program, students can receive an award that covers some or all of their tuition at an eligible school in New Jersey.
- Washington: The Washington College Grant covers some or all of the tuition costs at approved in-state public colleges for low- and middle-income students.
Colleges often provide their own need-based grants, and they use the information you submit on your FAFSA to determine your eligibility. For example:
- Penn State University: The Penn State Academic Grant is a need-based award for undergraduate students who are enrolled full time.
- Colorado State University: The university has several need-based financial aid opportunities, such as the CSU Ram Grant. It provides Colorado residents enrolled in an undergraduate program with up to $6,900 to help with the cost of tuition and other expenses.
Students with financial need—as determined by the FAFSA—may be eligible for federal or state work-study programs. Through these programs, students get part-time jobs related to their majors and use their earnings to pay for some of their education-related expenses.
Other Forms of Financial Aid
Although there are no FAFSA income limits, some forms of federal, state and institutional aid have restrictions based on your EFC. However, there are other financial aid options that are available to all students, such as:
- Scholarships: You may be eligible for scholarships from your college, state, nonprofit organizations or corporations. Typically, scholarships are awarded based on your achievements rather than your financial needs.
- Unsubsidized loans: Federal direct unsubsidized loans are available to undergraduate and graduate students that need additional funding for college.
- PLUS loans: Parent and grad PLUS loans allow you to borrow up to the total cost of attendance, and there is no income limit to qualify.
When it comes to the FAFSA, it’s wise to fill it out as early as possible—even if you think your family makes too much money. The FAFSA takes into account many factors, including your family size and the schools you wish to attend, so you may be surprised by how much financial aid you can receive.