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Key takeaways
- The FAFSA typically opens for annual submissions in early October.
- Financial aid is available in the form of student loans, grants and work-study.
- The amount you’re eligible for depends on your enrollment status and year of study, how much your family is expected to contribute and the overall cost of attendance.
If you need to borrow money to pay for college, you have a few options. Depending on your year in school, your status and your financial need, it’s possible you can get enough financial aid to cover the entire cost of your attendance, but in many cases, there are limits.
You should apply for the Free Application for Federal Student Aid (FAFSA) even if you don’t think you qualify. The FAFSA considers many factors, not just income, and you may be eligible for more aid than you realize. The FAFSA also assesses eligibility for programs like Federal Work-Study and aid available through your school.
How much is the average financial aid package?
The average amount of financial aid awarded to a student from 2024-2025 was $16,360. The maximum amount of financial aid a student can receive varies by school, year, type of aid and more. For instance, the Pell Grant and TEACH Grant maximum awards are subject to change yearly. The maximum amount you can get through Direct Loans also increases for each year you’re in school.
You can complete the FAFSA to determine how much federal aid you potentially qualify for in the upcoming 2025-2026 school year. Federal financial aid includes federal grants, student loans and work-study programs. You may not qualify for the published maximum for some grants since schools have limited funding available, and most financial aid is calculated based on your financial need.
Below are the published maximums for all the major federal financial aid programs:
| Federal student aid type | Maximum amount (2025-2026) | Who is eligible? |
|---|---|---|
| Pell Grant | $7,395 per year | Undergraduate students with financial need, some postbaccalaureate teacher certification students |
| Federal Supplemental Educational Opportunity Grant (FSEOG) | $4,000 per year | Undergraduate students with financial need |
| Teacher Education Assistance for College and Higher Education (TEACH) Grant | $4,000 per year | Undergraduate, postbaccalaureate and graduate students who agree to complete a teaching service obligation |
| Direct Subsidized Loan | $3,500 to $5,500 per year, depending on year in school | Undergraduate students with financial need |
| Direct Unsubsidized Loan | $5,500 to $20,500 per year, depending on year in school and dependency status | Undergraduate and graduate students |
| Direct PLUS Loan | Total cost of attendance (determined by the school) minus any other financial aid received | Graduate and professional students |
| Federal work-study | Varies by school | Undergraduates, graduates and professionals with financial need |
How to maximize your financial aid eligibility
Configuring income, assets, savings and other financial college preparations in the right places is important to maximize how much you receive in federal financial aid. Make sure to do the following:
- Complete the FAFSA as soon as possible: The FAFSA normally starts accepting applications on Oct. 1 every year for the following year. Since some need-based aid goes out on a first-come, first-served basis, you could get more aid the sooner you apply.
- Enter income correctly: Be sure you’re reporting your adjusted gross income, meaning your income after you’ve deducted things like retirement and health savings account (HSA) contributions. Similarly, you should report the amount of taxes paid, not the amount of withholding, when completing the FAFSA.
- Reduce your available cash: Some investments — like retirement accounts, HSA, life insurance and tax-deferred annuities — won’t be considered when FAFSA evaluates a student. Sheltering income in these investments will reduce your available cash and increase your eligibility for aid. You can also pay off credit card balances and auto loans or pay ahead on your mortgage to reduce your available cash.
- Move your assets to nonreportable asset accounts: If you have any reportable assets, you may want to move them into nonreportable asset accounts. For instance, if you have a 529 college savings plan, you could move those funds into a Roth IRA.
- Sell off bad assets: You’ll incur a capital gains loss, reducing your tax liability and improving your financial aid eligibility.
- Attend college together: When a family sends two or more children to college at the same time, the family’s Student Aid Index (SAI) is cut in half, making both students eligible for more aid. This is also true when a parent attends college with their child.
How to estimate your financial aid package
Every student’s financial aid offer will look a little different. There are a number of tools you can use to estimate what your offer will look like as well as what your degree may cost:
- SAI calculators: Your SAI is used to determine your eligibility for aid. FinAid.org, College Money Monthly and Get2College offer SAI calculators with instructions for correctly entering your financial information.
- School costs calculators: The U.S. Department of Education’s Net Price Calculator Center can help you find calculators specific to schools you are interested in attending.
- Student budget calculators: There’s more to college costs than tuition and fees. Bankrate’s Student Budget Calculator can help you figure out how much you need to cover monthly bills and living expenses.
- Federal Student Aid Estimator: Provided by StudentAid.gov, you can use this tool to estimate how much financial aid you might receive.
In addition to calculating what college will cost and what aid you might receive, you can also crunch the numbers to see what your student loan monthly payments and overall costs could look like:
- Loan payment calculators can help you estimate your monthly payment on student loans. Use Bankrate’s Student Loan Calculator to experiment with different amounts, rates and terms to see what options would work best for you. FinAid.org has a similar calculator as well.
- Prepayment calculators will show you how much you could save by paying ahead on your student loans.
- Loan comparison calculators allow you to enter information for multiple different loans and see the difference in cost. These are helpful if you decide to use private student loans and need to choose from different lenders.
How is financial aid calculated?
Once you complete your FAFSA and are deemed eligible for federal student aid, your school’s financial aid office will calculate how much aid you are qualified for based on a few factors:
- Cost of attendance: This includes tuition and fees, living expenses, expenses related to childcare or disabilities, and miscellaneous expenses like school supplies and transportation.
- Student Aid Index (SAI): The SAI replaced the estimated family contribution (EFC) in 2024-2025. It largely relies on tax information and is calculated differently depending on whether the student is dependent or independent.
- Non-federal financial aid: This includes any scholarships or grants you have received from sources other than the federal government.
Calculating financial aid
Your financial aid is calculated by subtracting your SAI from your cost of attendance to determine how much need-based aid you qualify for. If you have any financial aid from other sources, that will be subtracted as well.
Bottom line
As you plan your college future, funding will play a big role. Your financial aid package may cover many of your education costs, but you may have to look beyond the FAFSA for help. Do your best to exhaust all your free money resources through grants and scholarships first, so you’ll rely less on student loans.
If you still need cash, student loans are a useful tool to fill in the gaps. Depending on your needs, you may even be able to find one that doesn’t require a cosigner.
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