Your financial aid may change from year to year, based upon a number of factors — but it does not automatically increase each year. In fact, sometimes the amount may decrease.
Your financial information is used to calculate the amount of financial aid you receive each year. If your financial circumstances change, you may be eligible for more or less need-based gift aid (the kind you don’t pay back) each year. The maximum amount you can take out in federal Direct Loans, however, does increase for each year you’re in school.
Here’s a closer look at how your financial aid is calculated each year you are in school and why it might go up or down after freshman year.
Do You Have to Apply for Financial Aid Every Year?
You must apply for financial aid each year by filling out the Free Application for Federal Student Aid (FAFSA®). Any changes in your family’s circumstances can affect the amount of need-based aid you are awarded. Need-based aid includes grants, scholarships, work-study, and subsidized federal student loans (in which the government pays your interest while you are in school and for six months after you graduate).
It’s a good idea to fill out your FAFSA soon after it becomes available. This ensures you’ll be considered for all types of federal financial aid, including state aid and financial aid funded directly by colleges and universities. Typically the FAFSA opens October 1 for the following academic year. Due to an overhaul and simplification of the form, however, the 2024-25 FAFSA is slated to open some time in December 2023. In future years, the FAFSA will go back to opening on October 1.
You’ll want to check the FAFSA filing deadline for your chosen school by going to their financial aid website. Some schools also require other applications for financial aid (such as the CSS profile).
💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.
How Do You Fill Out the FAFSA?
You can fill out the FAFSA online at studentaid.gov. Here’s how:
1. Create an FSA ID. This is a username and password that you will need to complete the FAFSA (as well as take out loans and log in to all Federal Student Aid websites). Keep in mind that parents need to create their own account using their own unique email address and password.
2. Gather documents. You’ll find a list of the documents you need to complete the FAFSA right here.
3. Fill out the application. You’ll need to supply both personal and financial information. If you have any questions as you go along, you can go to the FAFSA Help page. You’ll also have the opportunity to list the schools you are interested in applying to, even if you have yet to apply. This list is not shared with the schools you list.
4. Review your FAFSA Submission Summary. Once your FAFSA has been submitted and processed, you’ll receive an email letting you know your FAFSA Submission Summary is ready to review on studentaid.gov. This contains a summary of the information you entered on the FAFSA and your Student Aid Index, or SAI (formerly called Expected Family Contribution, or EFC). Your SAI is used to determine your eligibility for federal financial aid programs. It’s sent to the colleges you listed on your FAFSA.
Does the Government Decide How Much Money You’ll Be Awarded?
The U.S. Department of Education doesn’t decide how much money you’ll receive in federal student loan funding. What they do, through the information collected on your FAFSA, is determine your eligibility for federal student aid. This information is then forwarded to the schools you’ve listed on your FAFSA.
The Department of Education does set certain limits on the amount of aid any student can get, which can change each year. For example, if you are a dependent student you can borrow up to $5,500 (no more than $3,500 of this amount may be in subsidized loans) for your first year in college. For your second year, you can borrow up to $6,500 (no more than $4,500 in subsidized loans). The amount increases each year.
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What Role Does Your School of Choice Play?
The financial aid office at each college you apply to will determine how much financial aid you’re eligible to receive. How much you’ll receive depends on several factors, including your:
• SAI (this number is an indicator of your financial need)
• Enrollment status (full-time students receive more aid than part-time students)
• Cost of attendance at the school
The basic formula for distributing federal financial aid looks like this:
School’s cost of attendance – SAI = Financial need
Can You Keep Your Financial Aid Amount Consistent?
There are no guarantees that you’ll receive the same amount of federal student aid from year to year. But there are some things you can do to maintain your financial aid eligibility.
One is to make sure that you achieve Satisfactory Academic Progress (SAP) each year. Each school has an SAP policy for federal student aid purposes; to see your school’s, you can check your school’s website or ask someone at the financial aid office.
The other way to keep your financial aid as consistent as possible is to fill out the FAFSA each year. Financial aid eligibility does not carry over from one year to the next.
Can You Appeal Your Financial Aid?
If you discover that you’ve been denied financial aid or you’ve received less than what you need, one option is to write an appeal letter. Your school may or may not change its decision, but it may be worthwhile to try, especially if you believe you have other information that they didn’t take into account, or if something significant has changed.
If, for example, one of your parents lost a job recently or someone in the family experienced a medical emergency, then an appeal letter might help. Tips that might help you to write a successful one include:
• Look for a contact in your school’s financial aid office (ideally the person who has been assigned to your case) and address that person directly.
• Be polite, professional, and respectful.
• Be clear about what you’re requesting, including how much aid you need and why.
• Be concise and compelling, keeping in mind that the financial aid office is likely busy.
• Provide relevant documentation, such as a doctor’s note or eviction notice. Perhaps give them a breakdown of how you’d spend the money you’re requesting.
• Carefully proofread your letter and ask a trusted friend or family member to do so, as well.
Paying for College If You Didn’t Receive Federal Financial Aid
If you didn’t receive the federal student aid you anticipated or hoped for, and if an appeal letter isn’t successful (or if you don’t qualify for need-based aid), then other options for paying for college include:
• Applying for additional scholarships There are smaller scholarships and grants available through private companies, community organizations, and nonprofits. Though each scholarship may be small, if you can cobble together a few, they can help make a dent in your college costs. You can talk to your school’s financial aid department for leads or use one of the many online scholarship search tools.
• Tapping federal student loans Your financial aid package will tell you what federal student loans you qualify for. These may include Direct Subsidized Loans and/or Direct Unsubsidized Loans (in which students are responsible for all interest accrued). Federal student loans come with low interest rates and valuable protections, such as income-driven repayment plans and generous deferment and forbearance programs.
• Private student loans If your financial aid package (including federal student loans) isn’t enough to cover all of your school costs, you may next want to look into private student loans. These are available through banks, credit unions, and private lenders. Loan limits vary by lender, but you can often get up to the total cost of attendance at your chosen school, minus any financial aid you received. Interest rates may be fixed or variable and are set by the lender. Generally, borrowers (or their parent cosigners) who have strong credit qualify for the lowest rates.
• Part-time job Your financial aid package may include the opportunity to find a job through the Federal Work-Study program. This program funds part-time jobs for college students with financial need. Even if you don’t qualify for work-study, you can look for a job on or off campus to help cover your expenses.
💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.
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If you received financial aid for freshman year, remember that you must apply for financial aid each year you are in college. Any changes in your family’s financial circumstances can affect your SAI and, in turn, the amount of money you are awarded. To make sure you get the same amount of aid (or potentially increase your aid), you’ll want to fill out the FAFSA every year.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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