If your financial circumstances have changed due to COVID-19, you should still complete the FAFSA® based on the information in your tax return. Then contact the colleges where you are applying to discuss any changes. Click here for more information.

It is common for people to think they make too much money to qualify for financial aid. But the truth is most people qualify for some financial aid, so it’s always a good idea to complete  the Free Application for Federal Student Aid (FAFSA®) each year your child is in college. Before you skip the FAFSA, learn more about the basics and the truth about income requirements.

What is the FAFSA?

The federal government uses the FAFSA to provide more than $150 billion in scholarships, grants, student loans and work-study funds each year. Completing and submitting a FAFSA is the first — and most important — step in accessing those funds.

How is the FAFSA Used?

The FAFSA determines your eligibility for federal and state aid, and many colleges also use it to award institutional aid and merit scholarships. Some private scholarship decisions can also be based on this information.

It is always a good idea to file the FAFSA because costs can add up quickly.

What is the Income Cap for Federal Student Aid?

This may come as a surprise to you, but there are no income requirements or cap to the amount of money you can earn to qualify for federal student aid. Many factors go into the financial aid equation, such as as taxed and untaxed income, assets, number of children in college and parent age.

Should we file a FAFSA if we apply to low-cost schools?

It is always a good idea to file the FAFSA no matter where your child is applying because costs can add up quickly — even at a college with lower tuition. Make sure you factor tuition, books, meals, fees, travel, data plans, living expenses and miscellaneous expenses into your student’s college budget. Once you start tallying everything up, it may be too late to get any help for qualified education expenses if you haven’t filed a FAFSA.

Remember that filing a FAFSA isn’t an obligation to take any funds, and your student could end up qualifying for free money you wouldn’t have access to otherwise.

Our child isn’t eligible for merit aid, so what’s the point?

There are different types of financial aid. Merit-based aid takes your student’s high school grades into account, but federal student aid is based on financial need, which does not take academic progress into consideration.

When in doubt, fill it out. As the title implies, it is free to submit and there’s no requirement to take the funds if you don’t need them. Although it does cost you some time in gathering information and completing the form, most parents feel it is worthwhile if their child is awarded any type of college financial aid.

About the Author

Jodi Okun is founder and president of College Financial Aid Advisors. She is also the About.com Money Expert on “Paying for College,” and acknowledged as one of the “Top 30 Social Influencers in Personal Finance & Wealth.” She has been featured in The Wall Street Journal, Mashable, US News & Education and The Huffington Post. The opinions expressed in this article are Jodi’s and do not necessarily reflect the opinions of Discover Student Loans.

FAFSA is a registered service mark of the US Department of Education.