Parent's Guide to Understanding College Financial Aid

Father and son talking together about college financial aid and paying for school
Photo: Steve Debenport / Getty Images

If you're the parent of a child who is about to attend college, or who is already in college, you may feel overwhelmed by the huge sums of money involved. You may look at the tuition, room and board, living expenses, and travel requirements, and think that you cannot afford to give your child a quality education.

Fortunately, help is available. Millions of dollars in college financial aid and scholarships exist. You just need to know where to look and apply for them properly. Here are four things for parents to do to come out a winner in the college financial aid game.

Key Takeaways

  • Filling out the Free Application for Federal Student Aid (FAFSA) is key to receiving student financial aid.
  • As long as your child is considered a dependent, you'll need to fill out at least part of the FAFSA.
  • Your family's financial strength is evaluated in determining federal aid, though you are not obligated to pay for your child's college.
  • Correct any errors on the FAFSA, or your application could be delayed or disqualified.
  • You may need to look beyond federal student aid to, for instance, state aid or scholarships from private organizations.

Fill Out the FAFSA

The Free Application for Federal Student Aid (FAFSA) is your key to unlocking federal grants, loans and work-study funds. Many states and colleges also use the FAFSA to determine your eligibility for state and school aid. Some private financial aid providers may even use your FAFSA information to determine whether you qualify for their aid.

If you're the parent of a student who's considered a dependent (mostly those who are unmarried and younger than 24), you'll typically need to fill out at least part of the FAFSA. The department of education and colleges consider it primarily the family's responsibility to pay for higher education. That doesn't mean you're obligated to pay for your child's college, but your financial assets will help determine their expected family contribution (EFC). The EFC then influences how much need-based aid the student is eligible for.


The expected family contribution will be phased out and replaced with the student aid index beginning with the 2024-2025 award year. This change is part of the FAFSA Simplification Act, designed to make the FAFSA easier to fill out and easier to understand for students and families.

It's important to fill out the FAFSA even if you think your family makes too much to qualify the student for aid. First of all, you won't know for sure until you apply, and secondly, many organizations that offer non-need-based aid require a FAFSA too.

For the application, you'll need to provide information about your tax payments, income, and some assets. But personal property, annuities, retirement accounts, the cash value of life insurance policies, and 529 plans owned by people other than the parent or students should not be included. Neither should information about home equity.

Note that the student's income and assets are weighted more heavily than the parents' in assessing the need for financial aid.

Make Sure Your FAFSA Information Is Accurate

Unfortunately, your child risks not receiving the full amount of financial aid to which they are entitled because of errors or incomplete information on the FAFSA. If you accidentally report the wrong income or Social Security number, for instance, it can delay processing of your application or even disqualify the student.

After you complete the FAFSA, you will receive a student aid report (SAR) summarizing the data you submitted. Check this information carefully to be sure there are no errors, as this could impact the amount of financial aid your student receives.

If there is an error on the SAR due to incorrect information on the FAFSA, you can take steps to correct it. There are several ways you can do this:

  • Log into your account at, go to the "My FAFSA" page and choose "Make Corrections." From there, you'll create a save key, change your information, and submit the changes.
  • Make corrections on your hard copy of the SAR, sign it, and mail it to the address listed on the SAR.
  • Contact the financial aid office at your chosen college and see if they can make changes for you electronically.


If you receive student aid based on incorrect or fraudulent information, you'll not only have to pay it back but you may face fines and fees. If you intentionally gave false or misleading information on the FAFSA, you could be fined up to $20,000, sent to prison, or both.

Look for Other Financial Aid Opportunities

If federal student aid is not enough to cover all of your child’s expenses, you may have to do extra work. Make sure you have maximized the amount of financial aid from your state and your child’s college.

Always be on the lookout for scholarships that can help cover some of the costs. It’s better to use “free” money through financial aid and scholarships first, but sometimes you may have to access federal and private student loans to bridge any remaining gaps. Make sure you understand the student loan basics so you can help your child make smart financial choices.

Don’t Wait To Talk With Your Child About Money

Sometimes parents feel obligated to shoulder the entire financial burden for their children’s college education. While this is a nice thought if it’s possible, it may not help your children down the road as they are forced to make their own financial decisions in life.

Start having money discussions when your student is a high school junior, just beginning to think about college. Help your child understand the full costs and get them involved in the decision-making process.

Parents don’t have to do all the work for college financial aid themselves. Involve your child and you’ll both get a great education.

Frequently Asked Questions (FAQs)

Is information reported on the FAFSA kept private?

The information you submit on the FAFSA is encrypted and is not sold or shared with anyone but the colleges the student names on the form, the state agencies of the states where those schools are located, and the state agency for the state where the student lives.

At what age does the FAFSA not look at parents' income?

The short answer is when the student turns 24 years old. But a student can also be considered independent (and therefore no longer needing to report their parents' income) if they're:

  • a grad student
  • married
  • on active military duty
  • a military veteran
  • financially supporting dependent children
  • an orphan
  • a ward of the court
  • an emancipated minor
  • unaccompanied and homeless or self-supporting and at risk of being homeless.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Student Aid. "Do I Have To Provide My Parents' Information on the FAFSA Form?"

  2. Federal Student Aid. "(Application Processing) Subject: Issue Alert - Upcoming CPS Reprocessing of Records With Questionable Income Earned from Work Values."

  3. Federal Student Aid. "Financial Aid Toolkit for Counselors. Learn About Parents' Role in the Federal Student Aid Process."

  4. Federal Student Aid. "How To Correct or Update Your FAFSA Form."

  5. Federal Student Aid. "Importance of Submitting Accurate Information."

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