Why the FAFSA Matters For Your Student Loans

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The Free Application for Federal Student Aid (FAFSA) is one of those documents that people treat like some kind of mystic, unknown entity. Few people really feel knowledgeable about the process of completing the FAFSA, how to go about completing it, or why it the FAFSA matters.

Why does the FAFSA matter for student loans?

The FAFSA is a critical document in the life of nearly all college-bound students for a number of reasons. As the name implies, it serves as the application to see if a student will qualify for any federal financial assistance to pay for college (e.g., Pell Grants). But, that’s not all it does.

The FAFSA is used in many cases as a general marker for the financial circumstances of the student and their family. It’s like a credit check without the credit check.

In combination with the CSS Profile, which is required by some colleges, the FAFSA is used to determine a student’s eligibility for need-based grants and scholarships that are awarded by the college or university. These funds are awarded in addition to any federal aid the student may be receiving.

But, the FAFSA also plays another hugely important role: It determines that student’s eligibility for federal student loan programs. And in almost every case, federal student loans are advisable as a first line of defense to pay for college, and are generally preferable to financing through private lenders.

Here’s how the FAFSA will impact you loan eligibility:

1. FAFSA determines how much you’ll need to borrow

Want to reduce the amount of debt that you’ll have upon graduation? You should.

One of the most important reasons for all students to fill out the FAFSA is that they will not be eligible to receive most forms of scholarships, grants, or other financial aid without it. And it could mean a significant difference.

Even for students whose family earns too much to qualify for federal assistance like PELL Grants, may still be eligible to receive thousands of dollars in grants and scholarships from the colleges to which they apply. But, these funds, too, are almost entirely dependent on the student completing the FAFSA.

Sallie Mae logo.

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2. FAFSA determines which loan programs you qualify for

The U.S. Department of Education has many federal loan programs for borrowers, but they are only available to students who complete the FAFSA.

Once students fill out the FAFSA, they’ll receive award notifications indicating which types of loans they are eligible to receive.

Keep in mind that it is almost always preferable for students requiring loans to exhaust all of their federal loan options before looking for outside or private lenders. You won’t be able to receive any funds from federal loan programs without completing the FAFSA.

3. FAFSA determines the loan amounts that you can borrow

Not only are the types of loans that you can take out dependent on completing the FAFSA, but the amount of each loan type that you qualify to receive is also based on the information you provide.

Again, it’s advantageous to use federal loan programs whenever possible if you need loans to pay for college. Completing the FAFSA could mean that you qualify for thousands of dollars in loans based by the U.S. Department of Education.


Lender Rates (APR) Eligibility
Citizens logo.
6.97%-15.03%* Variable
5.99%-14.00%* Fixed
Undergraduate and Graduate
Sallie Mae logo.
6.37% - 16.70% Variable
4.50% - 15.49% Fixed
Undergraduate and Graduate
Credibe company logo.
4.98% - 16.70% Variable
4.07% - 15.66% Fixed
Undergraduate and Graduate
Lendkey company logo.
6.07% - 11.31% Variable
4.39% - 10.39% Fixed
Undergraduate and Graduate
Ascent company logo.
6.22% - 16.08% Variable
4.09% - 15.66% Fixed
Undergraduate and Graduate
6.54% - 11.08% Variable
3.95% - 8.01% Fixed
Undergraduate and Graduate
Earnest company logo.
5.62% - 18.26% Variable
4.11% - 15.90% Fixed
Undergraduate and Graduate
4.98% - 12.79% Variable
8.42% - 13.01% Fixed
Undergraduate and Graduate
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.