How Does the FAFSA Work in 2025?

The Free Application for Federal Student Aid (FAFSA) is a foundational part of sourcing financial aid for college and career school students. Nearly 18 million FAFSA forms were submitted during the 2023-24 application cycle.

The form helps you understand your eligibility for federal financial aid - from grants and scholarships to student loans and work-study. Many schools also use your FAFSA information to determine your eligibility for state-funded financial aid programs.

If you're wondering how the FAFSA works, here's a detailed guide on how to apply, along with a quick look at what's changing in the 2025-26 academic year.

Current private student loan rates

What is the FAFSA?

The FAFSA is the official application the U.S. Department of Education uses to assess a student's eligibility for federal financial aid to pay for their higher education. Most undergraduates are considered dependent students, meaning their parents or legal guardians are continuing to provide financial support. As a dependent student, you must provide your personal and financial information, as well as that of your parents or guardians.

FAFSA eligibility requirements

You must meet the following criteria to be eligible for federal financial aid:

• Be a U.S. citizen or eligible noncitizen
• Have a valid Social Security number
• Demonstrate financial need (for need-based aid, such as grants)
• Be enrolled or accepted for enrollment in an eligible program
• Maintain satisfactory academic progress in school
• Hold a high school diploma or state-recognized equivalent
• Sign the FAFSA certification statement
• Consent to have your federal tax information transferred directly into your FAFSA form

How to complete the FAFSA

When you're ready to apply for federal financial aid, you'll need to follow a few steps:

1. Create a StudentAid.gov account: You (and your parents, spouse, or any other contributors) must create a StudentAid.gov account to access the FAFSA form.
2. Gather necessary documents: The FAFSA will ask for personal and financial information. To speed up the process, have documents like recent tax returns and child support records on hand.
3. Fill out the form as early as possible: Visit fafsa.gov and select “Start New Form” to get started. Ideally, complete the FAFSA form as soon as it opens, as some aid is only available on a first-come, first-served basis. The 2026-27 FAFSA form opened on Sept. 24, 2025.
4. Determine your dependency status: Answer the form questions to determine whether you're a dependent or independent student. Dependent students must report their parents' information.
5. Report your spouse's information, if applicable: If you're married and filing taxes jointly, you must report their information on the FAFSA — however, they won't be a contributor. If you're married and didn't file taxes jointly, then your spouse is considered a contributor and must complete their section of the form.
6. Provide financial information: Include all necessary financial information. Note that the 2025-26 FAFSA requires 2023 tax information, while the 2026-27 form asks for 2024 tax information. If you consented to have your tax information transferred from the IRS, that part will be completed for you.
7. List schools: You must list at least 1 school to receive your information, but you can list up to 20 - include all schools you're applying to. You can use the School Search tool to find the schools you're interested in.
8. Sign and submit the form: The final step is electronically signing the FAFSA. Any required contributors must also sign the form. After you've done so, submit the FAFSA.

How does the FAFSA work?

After you've submitted the FAFSA and it has been processed, you'll receive a FAFSA Submission Summary, which is an overview of your FAFSA responses. It gives you a chance to spot mistakes on your application and make corrections, if needed.

Your FAFSA is then sent to the schools you listed on your application. Each school reviews your FAFSA data and determines the aid programs you're eligible for, including award amounts.

The amount of financial aid you're offered is calculated based on:

• The school's cost of attendance
• Your Student Aid Index
• Your enrollment status
• Any existing financial aid you've received
• Your year in school
• Your financial situation

Certain states may also require you to submit the FAFSA to determine your eligibility for state-specific financial aid programs.

Good to know: Despite what many people think, there are no FAFSA income limits that prevent high-earning families from applying. That's because the FAFSA can unlock non-need-based financial aid programs, too.

How does financial aid work?

Financial aid provides funding to students and their families to cover the costs of college or career training. It can come from federal, state, institutional, or private sources and is awarded based on financial need, academic performance, or other qualifying criteria.

The information you provide on the FAFSA determines your eligibility for various types of college and career school aid. The financial aid categories include:

Grants

Grants are a form of financial aid that typically doesn't need to be repaid if you fulfill the requirements of the program. Note that most federal grants are awarded to students with financial need. For example, the Pell Grant is a need-based grant that offers a maximum award that varies by year. For the 2025-26 academic year, the maximum award is $7,395.

Scholarships

Scholarships don't need to be repaid, which makes them an excellent option for student aid. Although the Department of Education doesn't offer a federal scholarship program, nonprofit organizations, schools, state agencies, and private sponsors may evaluate your FAFSA for need- or merit-based scholarship eligibility.

Learn More: 5 Best Places To Search for College Scholarships in 2025

Work-study

Federal work-study offers financial aid in the form of part-time employment on or off campus. It's available to undergraduate and graduate students, including those enrolled in part-time programs.

The program guarantees you'll earn at least minimum wage, but your hours are capped so you don't exceed your award amount for the year. Not all schools participate in this program, so check with your school's financial aid department.

Federal student loans

Federal student loans are fixed-rate installment loans under the William D. Ford Direct Loan program. Eligible students with financial need may receive subsidized loans, while unsubsidized loans are available to those without financial need requirements.

Graduate students and parents of dependent undergraduates can also apply for Direct PLUS Loans for additional aid. PLUS loans require a credit check, and if you have adverse credit, you'll need to meet extra requirements. Note that due to recent legislation, new borrowers won't be able to take out grad PLUS loans starting in July 2026.

Federal student loan benefits include income-driven repayment plans that could offer lower monthly payments, loan forgiveness, and extended repayment relief options.

Updates to the 2025-26 FAFSA

A few helpful changes to the 2025-26 FAFSA include:

• The new Who's My FAFSA Parent? Wizard online tool helps dependent students in determining which parent should be listed as their required contributor.
• The homelessness question is now labeled “Student Homelessness,” replacing the previous “Student Other Circumstances.”
• When a student opts for school-determined eligibility for a Direct Unsubsidized Loan only and proceeds by selecting “Continue,” a warning pop-up notifies them that most federal student aid will no longer be available.
• A confirmation page indicates if IRS data was successfully matched to retrieve federal tax information for the financial sections.

FAFSA application deadline

• Generally, you can submit your FAFSA as early as October 1 of the year preceding the academic year you need financial aid for, and as late as June 30 of that academic year. For the 2025-26 school year, the FAFSA deadline is June 30, 2026. The deadline for corrections or updates to the form is Sept. 12, 2026.
• For the 2024-25 school year, the FAFSA deadline was June 30, 2025, and the deadline for corrections or updates is Sept. 13, 2025.

Keep in mind, different states and colleges might have their own FAFSA deadlines for determining state-based or school-funded financial aid. You can find state deadlines at StudentAid.gov, but you should also check with your school's financial aid office for its official deadline.

Renewing your FAFSA 

You must submit a new FAFSA for each academic year for which you wish to apply for financial aid. However, after filing your first FAFSA, renewing it each year is much easier.

After logging in to your StudentAid.gov account, some information from the previous year will be automatically filled in for your convenience. The fields you’ll typically need to update are financial information, such as new income and tax information, as well as any other personal details that have changed. 

You can also start a new FAFSA from scratch if you prefer. 

What if I’m not eligible for financial aid?

If you don’t meet basic eligibility requirements for federal financial aid, but need help paying for school, you have options, including:

• Third-party scholarships: Scholarship programs aren’t just offered through federal or state agencies. There are thousands of scholarship aid opportunities through private companies and organizations, professional associations, and nonprofit groups. 
• Find a job: Seeking paid employment while in college is a common way for students to help pay for their school expenses. In 2020, 40% of full-time undergraduate students were employed, according to the National Center for Education Statistics. 
• Find private student loans: Private banks, credit unions, and online lenders offer their own loan programs to help students finance their education. Rates, terms, and repayment plans vary among lenders, so always compare a handful before moving forward.