College  |  September 18, 2023  |  Ed Recker and Arianna Blakely

FAFSA® eligibility: Who qualifies for financial aid?

What you'll learn
  • What FAFSA® eligibility is
  • How your citizenship, academic status, financial information, and more affects your eligibility

The Free Application for Federal Student Aid, more commonly known as the FAFSA®, is one of the most important things you can submit for college (besides college applications, of course). The FAFSA® is how you can get federal financial aid, like grants, scholarships, and loans for school. Anyone can fill out the application, but there are eligibility requirements for students to get any money from it. I asked 20+ year financial aid expert Ed Recker about them.

Here’s how a student can be eligible for federal financial aid through the FAFSA®. 

What is FAFSA® eligibility?

To understand FAFSA® eligibility, you first should know exactly how the FAFSA® works:

  1. The FAFSA® takes your and your family’s financial information and uses it to calculate your Student Aid Index (SAI) number.
  2. Once you get accepted, the school(s) then take the difference between the SAI and their Cost of Attendance (COA) to determine your unmet need.
  3. The school(s) will then use your unmet need to determine what types, and how much, aid you’ll be eligible for. 

To get financial aid, you have to be eligible for it. There are several criteria you can meet in order to qualify. Keep reading to learn what requirements you need to meet. 

Citizenship and residency

One of the ways you can be eligible for federal financial aid is through U.S. citizenship and residency. You can get this in two ways: by birth and by naturalization. A few common noncitizen options are being a U.S. national (includes natives of American Samoa or Swains Island) or a U.S. permanent resident with a “green card” (Form I-551, I-151, or I-551C). Other eligible citizenship and residency statuses can be found here.

Some documentation options that are required to prove citizenship status include:

  • U.S. passport book or wallet-sized passport card
  • A birth certificate showing a student was born in the U.S. or in a U.S. territory
  • A Certificate of Naturalization (N-550 or N-570)
  • A Certificate of Citizenship (N-560 or N-561)
  • A copy of Form FS-240 (Consular Report of Birth Abroad), FS545 (Certificate of Birth Issued by a Foreign Service Post), or DS1350 (Certification of Report of Birth).

Academic enrollment status

Getting financial aid for school is key, but your enrollment status can impact your eligibility. Students can only qualify for federal student loans if they are enrolled at least part-time. Part-time is determined by each college or university, so it can vary from school to school.

Other types of federal financial aid, like the Pell Grant, are modified based on your enrollment status. If a student is attending school full-time, they’ll receive more Pell Grant aid than a student who’s only attending part-time.

If you choose to attend school for fewer hours than a part-time student, you won’t be eligible for any federal student loans. You can still be eligible for a Pell Grant, but you won’t receive as much aid as a part-time or full-time student.

Degree and program type

The type of degree you’re getting can also affect your financial aid eligibility—and no, I don’t mean whether you’re getting a degree in physics or art history.

You can qualify for federal student loans and grants if you’re pursuing your first undergraduate, or bachelor’s, degree. Students aren’t eligible for the majority of federal grants for a second bachelor’s degree, but could still qualify for federal student loans.

If you’re pursuing a graduate or professional degree, you can be eligible for federal student loans, but not for state grants or federal grants, like the Pell Grant.

If you’re interested in a certificate program or vocational training, whether you can get financial aid or not will depend on the institution or program you apply to. I encourage you to contact the school you plan on going to find out what the eligibility requirements are.

Dependency status

You can be considered a dependent or an independent—what does that mean? If you’re a dependent, this just means that you’re assumed to have parental support according to the U.S. Department of Education. If you don’t have parental support, you’re considered to be an independent. Here are several FAFSA® questions that can determine which one you are:

  • Were you born before January 1, 2001?
  • Are you currently serving on active duty in the U.S. armed forces for purposes other than training?
  • Are you a veteran of the U.S. armed forces?
  • Do you have children or other people (excluding a spouse) who live with you and receive more than half of their support from you now and between July 1, 2023 and June 30, 2024?
  • At any time since you turned 13, were you an orphan (no living biological or adoptive parent)?
  • At any time since you turned 13, were you a ward of the court?
  • At any time since you turned 13, were you in foster care?
  • Are you or were you a legally emancipated minor, as determined by a court in your state of residence?
  • Are you or were you in a legal guardianship with someone other than your parent or stepparent, as determined by a court in your state of residence?

If you answer “yes” to any of these questions, you’re seen as an independent by the U.S. Department of Education. If you answer “no” to any of them, then you’re a dependent. 

Family income and assets

Your household income is one of several factors when it comes to your financial aid eligibility—although you should submit the FAFSA® regardless of income.

When it comes to how your eligibility is calculated, not all of your assets will count against you. Remember the SAI mentioned earlier? It used to be the Expected Family Contribution (EFC), but now has a new name. Its formula has a built-in asset protection allowance, and it increases based on the age of your oldest parent.

Additionally, only specific assets and investments have to be reported on the FAFSA®.  Individual investor accounts need to be disclosed, but retirement investments, like a 401(k) or 403(b), don’t need to be reported.

Reporting tax information

If you’re submitting the FAFSA®, it’s required to report your tax information to help determine how much financial aid you need. The FUTURE Act Direct Data Exchange, or FADDX, is how the FAFSA® gets your tax info. By using the FADDX, you’re providing consent within the FAFSA® to allow the U.S. Department of Education to request your tax info straight from the Internal Revenue Service (IRS). The FADDX is replacing the IRS Data Retrieval Tool, making the FAFSA® a lot simpler and quicker, too. A lot of the financial questions on the FAFSA® are gone thanks to the FADDX.

High school diploma or GED

In general, students tend to need a high school diploma or a General Equivalency Diploma (GED) to qualify for federal financial aid. However, there are options for students without these. Some institutions and programs allow students to get financial aid by demonstrating an “ability-to-benefit.” This means that students will need to pass an ability-to-benefit test, complete six credit hours, 225 clock hours, or some form of comparable coursework toward a certificate or degree. If you’re interested in ability-to-benefit, reach out to your school’s financial aid office for more information.

Takeaway

The FAFSA® is a major part of getting federal financial aid for school—you just need to make sure you have everything you need to qualify for it. To recap, make sure you:

  • Have the right documentation to prove your citizenship or residency status
  • Determine how your enrollment status (part-time, full-time) impacts your eligibility
  • Know what kind of degree you’re pursuing and how your financial aid can be affected
  • Find out whether you’re considered to be a dependent or independent
  • Understand how your family’s income and assets are considered in the FAFSA®
  • Be prepared to share your financial information through the FADDX
  • Have a high school diploma, GED, or demonstrate “ability-to-benefit”

Give yourself plenty of time to explore the FAFSA® (the earlier, the better!) and reach out for help if you need it. Check out our FAFSA® tips for more information on applying.


footnote Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own financial advisor, tax advisor, or attorney about your specific circumstances.

footnote External links and third-party references are provided for informational purposes only. Sallie Mae cannot guarantee the accuracy of the information provided by any third parties and assumes no responsibility for any errors or omissions contained therein. Any copyrights, trademarks, and/or service marks used in these materials are the property of their respective owners.

footnote FAFSA® is a registered service mark of U.S. Department of Education, Federal Student Aid.