Should I Fill Out FAFSA if My Parents Make a Lot of Money?

Laveta Brigham

If you’re planning to be in college next fall and are even considering applying for financial aid, Oct. 1 is a very important date for you. That’s the first day you can submit your Free Application for Federal Student Aid (aka FAFSA) for the 2021-22 school year. And the earlier […]

If you’re planning to be in college next fall and are even considering applying for financial aid, Oct. 1 is a very important date for you.

That’s the first day you can submit your Free Application for Federal Student Aid (aka FAFSA) for the 2021-22 school year. And the earlier you get it in — think within days — the better, as there’s likely to be more competition for those financial aid dollars, especially the free ones.

In fact, 38% of parents who didn’t plan to apply for federal aid now say they plan to apply, according to a survey by Discover Student Loans.

“Our survey found that 48% of parents lost income as a result of the pandemic, and 44% said they can’t afford to pay for as much of their child’s education as they had originally planned,” said Manny Chagas, vice president of Discover Student Loans, in a press release.

And even if you figure you can’t get financial aid because your parents still make too much money to qualify, it’s worth your time to fill out the FAFSA.


The FAFSA is the form you use to report family information used to determine your federal financial aid package, including student loans, scholarships, grants and work-study.

Eligibility for financial aid depends on a number of factors (we’ll explain in a minute), but families who assume their income is too high to qualify for need-based aid could be leaving a pile of free money and low-interest loans on the table by neglecting to fill out their financial information.

Do you think your parents make too much money for you to qualify for financial aid? We’re here to explain why you should still submit the FAFSA — and why you should be ready to send your application on Oct. 1.

Why Does My Parents’ Income Matter for FAFSA Anyways?

If you’re the one going to college and paying for it, why does your parents’ income matter?

Yeah, you might want to take that up with your Uncle Sam.

Even if you’re paying 100% of your college expenses, living on your own and filing your own taxes, you’ll still need to include your parents’ info if you don’t meet the FAFSA criteria for an independent student. Here’s the list of questions to determine your FAFSA dependency status.

Pro Tip

If there’s any question about whose information to include on your application, check out the Department of Education’s rulesfor determining who your parent is when it comes to filling out the FAFSA.

If you are considered a dependent, you’ll have to include both your and your parents’ financial info to calculate your expected family contribution (EFC).

Based on that number, your college financial aid office determines the amount of financial aid you’ll receive, using these two formulas:

  1. Cost of attendance – expected family contribution = need-based aid (includes federal Pell grants, direct subsidized loans and federal work-study)

  2. Cost of attendance – financial aid awarded so far (includes private scholarships) = non-need-based aid (includes direct unsubsidized loans, Plus loans and TEACH Grants)

When calculating a family’s EFC, the student’s income and assets count for more than the parents’. For most dependent students, that’s good news, as they typically do not earn as much as their parents or have as many assets.

My Parents Make Too Much — Why Should I Still Fill Out FAFSA?

Regardless of your family’s income and assets, you should still fill out the FAFSA. Here are three reasons why it’s worth your time.

1. Income Isn’t the Only Factor

Even if you think your parents make too much money to qualify based on financial need, there are other factors that go into deciding whether you’re eligible for assistance.

Besides your family’s income, here’s what else helps determine eligibility:

  1. Assets (like a house or bank account).

  2. Benefits (including unemployment and Social Security).

  3. Family size.

  4. Number of family members who will attend college or career school during the year.

  5. Your year in school.

And contrary to what you may have heard, federal student aid doesn’t have an income cut-off.

Pro Tip

Even if you think you won’t qualify, fill out the FAFSA before applying for private student loans. The low interest rates and benefits of federal loans make them worth at least trying for first.

Yes, a higher EFC may take you out of the running for subsidized student loans, but you may be eligible for unsubsidized loans, which still offer the federal student loan protections and low interest rates.

“Everyone should fill it out — it doesn’t matter if you’re a millionaire, billionaire or have no money,” said Billie Jo Weis, a client service manager with My College Planning Team.

2. It’s About More Than Federal Student Loans

Remember that financial aid is more than federal student loans and need-based scholarships.

When you fill out the FAFSA, you’re applying for funds from your state and your school, too.

Plenty of that aid isn’t based on need (aka merit-based aid), but the awarding institution will only consider you if you’ve filed the FAFSA.

Pro Tip

Some schools also require the CSS Profile to apply for financial aid. If yours does, you’ll find a link to the College Board site among the financial aid forms on your college’s website.

The smaller applicant pool for departmental scholarships within your major could offer greater chances to snag scholarship money, for instance.

And although international travel might not be in your plans this year, if you have any designs on studying abroad, scholarships and low-interest student loans can help cover your expenses.

To qualify for much of this money, you must have a FAFSA on file.

3. Consider It an Insurance Policy

Your parents assured you that they can cover your college costs. Congratulations! But if we’ve learned anything this year, it’s that nothing is guaranteed.

The FAFSA is more than an application for financial aid today — it’s a backup in case of a catastrophe tomorrow, according to Michael G. Thomas Jr., an Accredited Financial Counselor with a Ph.D. in Financial Planning from the University of Georgia.

Pro Tip

If your family experienced a job loss, illness or death that reduced your ability to pay for college this year, you can file an appeal with your college financial aid office for additional aid.

“When families don’t do it, it’s almost like saying you don’t have insurance in the event that an unexpected financial shock happens,” he said. “If you already have the information on file, the financial aid office can actually go back and look at your situation and award you or provide you with resources very quickly.”

In the midst of a crisis, do you really want to be tracking down your parents’ income tax return from two years ago?


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OK, You Convinced Me. How Do I Submit My FAFSA?

If you’ve never filed the FAFSA before, you and your parents must first each create your own FSA IDs.

Why the need for multiple accounts? Your FSA ID has the same legal status as your signature, so you can use it to sign legally binding documents electronically.

Give yourself some lead time for creating your IDs before you want to fill out the FAFSA — it can take up to three days for your ID application to process.

While you’re waiting (or even before), you can get an idea of what information you’ll need for the FAFSA by printing out the FAFSA on the web worksheet. Doing this pre-work will help you avoid getting overwhelmed when you’re filling out the actual FAFSA (and the printout can act as your cheat sheet).

Pro Tip

When the FAFSA application says “you” it’s referring to the student, not the parent — as in “your name” or “did you file.” Answer questions accordingly.

Once you have your IDs and pertinent info in hand, check out our guide to filling out the FAFSA.

You can find the deadlines for FAFSA here, but don’t let them lull you into complacency. Some financial aid is awarded on a first-come, first-served basis. And most states and colleges have their own (much earlier) deadlines.

Although much of the money gets distributed early, you can submit your FAFSA up until June 30 of the school year you just completed — and there often is aid still available. So if you haven’t filed a FAFSA yet for the 2020-21 school year, you have until June 30, 2021.

The first day you can file FAFSA for the following school year is Oct. 1 — so for the 2021-22 school year, you can file FAFSA starting Oct. 1, 2020.

You can file the FAFSA via the web, via the myStudentAid app, through a school or by mail. Filing electronically is faster and will alert you immediately if you make a mistake on the form.

Make the smart move by setting up your FSA ID now and gathering your financial documents so you’ll be ready to submit — and at the front of the line to claim funds for next year.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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