The first step for most students toward paying for school is the Free Application for Federal Student Aid, or FASFA. Most universities require students to fill out a FASFA before any decisions are made regarding financial aid, whether assistance comes in the form of merit-based scholarships or need-based grants or loans.
The primary function of the FASFA is so the U.S. Department of Education can calculate the student's Expected Family Contribution (EFC). The EFC helps determine eligibility for a range of government programs beyond Perkins, Stafford and Parent PLUS loans, such as Federal Supplemental Educational Opportunity Grants and Federal Work Study positions.
Factors considered when determining eligibility include the income and assets of students (and parents, if the student is a dependent) the size of the family and the number of family members that will attend college or another form of postsecondary education [source: Department of Education]. Once the FASFA has been processed, the applicant receives a Student Aid Report and the institution to which they are applying will receive an Institutional Student Information Record that includes the EFC information. Because schools have a finite amount of Perkins funding and it is distributed on a first-come, first-served basis, the application process should be completed as early as possible.
Now that you're familiar with the application process, let's explore what happens if you qualify.