How Federal Financial Aid Organizations Work

Getting the Financial Aid Money

Applying for federal financial aid requires a bit of time and organization, but it's worth the effort, because you could end up with a lot of money to help you get through college.

Start off by collecting all the documentation the government will want to examine. This includes your Social Security Number, driver's license, income tax returns, bank statements, investment records, and alien registration or permanent resident card if you're not an American citizen.

Next, you should apply for a Federal Student Aid Personal Identification Number (PIN). This number takes the paper out of paperwork by allowing you to complete the federal aid application process electronically, sign promissory notes online, make any corrections and view your aid records online. This PIN protects your personal information and is much like the one you get with a debit card, so you shouldn't give it out to anyone. Otherwise you could risk being a victim of identity theft.

Once you have your Federal Student Aid PIN, you can fill out the Free Application for Federal Student Aid, also called FAFSA. You can submit the FAFSA either online or by downloading a paper application and mailing it in. The benefit to completing the online application is that it's processed more quickly, which can put you at the front of the line for some of those limited grants we mentioned earlier. A paper application will take two to three weeks to process. With an electronic FAFSA, you can also submit your information to up to 10 schools; the paper version can only be sent to four schools. Also, you have to reapply for financial aid every year, and the electronic records make this process a lot simpler.

Once you've sent in your FAFSA and the government processes it, you'll receive a copy of your Student Aid Report (SAR). This is a summary of your financial aid application, so you should review it to make sure all the information is correct. Each school you've chosen to send your information to will look at your SAR, and they'll decide if you're eligible for federal financial aid. The school will send you an award letter telling you how much aid you'll be able to receive. Once you select the package best for you, you sign the award letter and return it to the school, and they'll process it.

Once you've gotten your federal aid, the stress of paying for college may not be over. If you've received loans, you'll have to repay them. Next we'll look at that process.