What is the income cutoff when I do not need to file the FAFSA” (Free Application for Federal Student Aid)? This is a question I am frequently asked by families I work with, and unfortunately, there is not a cut-and-dry answer. There is sometimes a debate about who should file the FAFSA when applying to college. Some independent advisors do not recommend that everyone files a FAFSA. Then there are those of us who believe that most everyone should file the FAFSA regardless of income level. So let’s discuss the reasons why even families who are “well off” financially should file the FAFSA.

It is true that many students do not fill out the FAFSA because they do not believe they will qualify for need-based aid. However, what they fail to recognize is that most families are entitled to some type of aid. The FAFSA is required for any student who wants to be eligible for Direct Loans from the Federal Government. I am a believer that students should have a little “skin in the game” and that student loans are not a bad thing, even
if the family can afford to write a check for college! But if a student does not submit the FAFSA, they are not eligible for these loans.

In addition, the private schools are very generous with financial aid and even wealthy families can sometimes be eligible for financial aid at the more expensive colleges. Some colleges even require the FAFSA in order to award students with merit aid (merit aid is based on the merit of the student, NOT on the family income and assets). Some of the more generous private colleges may give need-based financial aid to families making more than $200,000 per year!

There are some other less obvious reasons to file the FAFSA. Financial situations may change from one year to the next. So just because you do not get need-based aid one year does not mean you will not get it the next year. If your situation changes (illness, lost job, etc) you can always appeal if you filed the FAFSA. Did you know that the amount you are expected to pay for college can drop by 50% when you have two students in college? And it can drop even more if you have 3 in college. And yes, you can count students when they are in graduate school! This is another reason why all students should file the FAFSA.

It is not too late for seniors to file. Although need-based aid is distributed on a first-come-first-served basis, the deadline in California is not until March 2nd. Although there are some exceptions, for the most part, we recommend that everyone file the FAFSA. Many parents underestimate their eligibility for need-based aid. According to Edvisor “…unless the parents earn more than $350,000 a year, have more than $1 million in reportable net assets, have only one child in college and that child is enrolled at a public college, they should still file the FAFSA…regardless of their income and assets.”