The Biggest Reasons Why Every College Student Should Sign Up for FAFSA

FAFSA is one of the most important financial aid applications out there, all because of its ability to give you access to the largest source of financial aid for college. When it comes to the process of college financial planning, we recognize that parents and students may need a hand with frustrating FAFSA paperwork. No need to worry, we are here to help! We offer some of the best advice and information for college planning in the state and around the Western New York and Buffalo area. You can meet with one of our Certified College Planning Experts by filling out the form on our FAFSA Help page. 

In this blog, we will run through the biggest reasons why you should fill out a FAFSA form and explain how those reasons make the process smooth and hassle-free. 

The Ability to Understand Cash Flow

The biggest reason we recommend someone sign up for FAFSA is to understand the flow of cash through this application. Recently, there has been a change to the federal loan limits that affects how parents and students understand how the money is utilized. 

The new federal loan limits will cap borrowing for master’s and academic doctoral degree programs at $20,500 per year and $100,000 in total. Professional practice postgraduate degrees, such as medicine and law, will have higher limits of $50,000 per year and $200,000 in total. These are examples to show that researching into this as best as possible before finalizing your decision on FAFSA is integral. 

Because a student’s financial package needs to be tracked and estimated from the start of college through graduation, you can find where the losses are, how to reduce potential debt accrued, and know when something like federal loan limits affects your money. One of our most important pages deals with handling a student loan crisis if it ever happened, and we recommend you read it!

How FAFSA Helps With Federal Loans

Piggybacking off that, let's continue discussing how FAFSA can help with federal loans in other ways. Several of the big reasons we are making this blog come from learning more about federal loans and how FAFSA affects them:

Using Them As An Incentive Program

Remember when we mentioned that a student’s financial package needs to be tracked and estimated from the start of college through graduation? That will come in handy when parents set up an incentive program by calculating their kids’ GPAs to pay off the loans by the time graduation comes around. None of this is possible unless you sign up and qualify for FAFSA. Loans can help pay for college in full, and an incentive program is a great way to make that happen.

Options for When You Have to Repay and Forgive

To repay a loan means to pay back the money borrowed, plus any agreed-upon interest. To forgive a loan means to discharge or cancel the obligation to repay some or all of the debt.

FAFSA is perfect for both of these instances surrounding loans! There’s a good chance a lot of debt will be accrued over time while your kid is at college, and on July 1, 2026, you will see a change to that. According to the new Big Beautiful Bill Act, families can only borrow up to $92,000 for the first four years without undergoing a formal loan underwriting process. This makes planning an even bigger deal for parents and students to adjust to come next year when this goes into effect. 

How Does This Affect Interest Rates?

If you’re an undergraduate, you will get some added help from interest rates when it comes to your financials. Federal Direct undergraduate loans are low-interest loans from the U.S. Department of Education to help students pay for higher education. It is determined by FAFSA that it is limited only to undergraduates who need financial assistance.

Think about it like this, if you’re an undergraduate student… A lower interest rate is better for college loans because it reduces the amount you will have to repay over the life of the loan. By the time you get around to graduation and then go on to become a graduate student or fully complete school, you’re feeling good about how much you will have to pay for. 

Our job is to make sure you feel good about college financials, and interest rates are great to learn about as time goes on through all four of your years at school.

How Federal Loans Affect Who Signs the Application

Given how important handling your college finances is, you’ll probably be interested to know how the signing of FAFSA works for both parents and students. We mentioned it earlier, but the Big Beautiful Bill Act completely changes how this will work. 

The bill affects something called Grad PLUS loans, which are federal student loans available to graduate and professional students. Due to the Big Beautiful Bill Act, that’s also being eliminated for new borrowers starting in July 2026, amongst other changes within it for education. 

Due to this change, parents will need to be a cosigner for the private loans, whereas before they didn’t have to be, and it was more on the student to handle that. Financially speaking, this is good for everyone, especially because having the parent sign on will affect other areas of finances, like your debt-to-income ratio (adding up all your monthly debt payments and dividing them by your gross monthly income), which could affect interest rates going higher than before.

Life Changes and How You Can Show Your Ability to Pay

Finally, more than anything, colleges and other educational institutions will know if you have big life changes going on or if you can show your ability to pay for financial aid. 

Whether you start or lose a job, need to move out and find a new place to live, or even bigger than all of that, transfer to a new college, that affects what you pay for, even outside of more direct education finances, like school supplies, for example. 

If colleges can see that you have the ability to pay for it all, that’s a good way to help your chances of being eligible for something like FAFSA or other financial aid applications. This is calculated through the Student Aid Index (SAI), a formula that helps your school determine how much financial support you may need. If the SAI is negative, it will indicate that you have a high financial need for aid. 

Tools like this are your best way to help with figuring out your goals with financial aid before you sign up for FAFSA. Other great tools that can assist you can be found on our website, and you can get in contact with us with any questions you have. The best way to reach out to us is through our contact form, and you can check out our FAFSA page fully dedicated to the application form, and eventually fill out the form there when you’re ready.