Congratulations on your high school graduation! You put in a lot of hard work to get that degree, and you deserve to celebrate. This might be your last summer of “freedom,” but that doesn’t mean you don’t have any responsibilities to take care of.
If you haven’t submitted the FAFSA—a crucial step toward receiving financial aid or taking out student loans—now is the time to buckle down and get to work. Even if you don’t think you’ll qualify for financial aid, we recommend getting familiar with the FAFSA, understanding its potential impacts on your credit score and financial future, and submitting an application.
Here’s what we’ll cover in this piece:
FAFSA stands for Free Application for Federal Student Aid. It’s a one-stop application for all federal student loans, grants, work-study opportunities, and other financial aid sponsored by the US government. In order to qualify for federal financial aid, you must fill out a FAFSA.
Filling out a FAFSA is free, and the federal government provides more than $120 billion in FAFSA funds each year. States and other aid organizations may require you to fill out a FAFSA as part of their loan, scholarship, or grant applications as well.
The FAFSA is just an application for financial aid, which means it won’t affect your credit scores. You complete it to find out what type of financial aid you might be eligible for. The fact that you completed the FAFSA never shows up on your credit report—it’s not considered a credit inquiry—so it can’t impact your credit score.
The results of your FAFSA could impact your score depending on how you handle them. Financial aid that you don’t have to pay back, such as scholarship or grant money, doesn’t hit your credit report. It’s not debt, so there’s no reason for it to. But student loans can show up on your credit report.
Student loans, whether you qualified for them via the FAFSA or took out private student loans, are a form of debt. They may be reported to the credit bureaus. Paying those loans on time and as agreed could help improve your credit—and this is one way young people can start building credit.
Missing payments or defaulting on student loans can hurt your credit. In this way, the outcome of the FAFSA could have an impact on your credit score.
Anyone who is planning to attend a college or university in the next academic year can complete the FAFSA to find out what they qualify for. Completing the application isn’t a guarantee of any financial aid and it doesn’t create an obligation on your part—other than to tell the truth on the form. You may want to complete it each year to see what you qualify for.
Parents of dependent students can also complete the FAFSA. In these cases, it would be the parental household income that would be considered in determining what someone is eligible for.
The federal government does not consider credit scores or credit history when determining what someone is eligible for. The financial aid is decided mainly on financial need and income. You do have to meet some other requirements, such as having a valid Social Security number.
The deadline for the FAFSA differs for each academic year. Applications for the 2020–21 school year are due June 30 of this year. You can complete the FAFSA anytime between October 1, 2020, and June 30, 2022 to qualify for aid for the 2021–22 school year.
However, many schools have their own deadlines, as do states. They may process some financial aid based in part on the FAFSA. You may want to complete the application as soon after October 1 each year as you are able to ensure you’re early enough to be eligible for the highest number of opportunities.
First, you have to create an FSA account. This is the account you use to complete the FAFSA, review any requests for additional information, and see what student aid you might be eligible for. Once you have an account, you will need the following to complete the application:
If you make a mistake or information changes, you can modify the FAFSA. If your income situation has changed drastically and is not well reflected by the tax return required by this year’s FAFSA, you can speak to the financial aid office at the school you’re attending or applied to. Those offices sometimes have options for addressing this issue.
Whether or not you have to pay back FAFSA money depends on the type of aid you receive. Certain need-based grants don’t have to be paid back. Student loans do.
Federal student aid isn’t the only way to pay for college. For some, private student loans can be an option. Check out the student loan marketplace at Credit.com to see some of your options. And if you get some FAFSA money but it’s not enough to cover all your college expenses, you might consider applying for a college student credit card. Use it responsibly to help build your credit as you go through school.
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