Start Building Your Child’s Credit
Filing the Free Application for Federal Student Aid (FAFSA) form can help you receive additional funding for college, making it easier to cover expenses like tuition, fees, books, and supplies. However, the amount of aid you may get depends on factors like your or your parent’s income, assets, family size, and marital status.
Since income plays a major role in determining your federal aid eligibility, you may be wondering what the FAFSA qualifications for income-based aid are and how they impact the outcome of your application. In this article, we’ll reveal if there are any FAFSA income limits and explain what types of income impact your chances of getting financial aid.
What Are the FAFSA Income Limits?
There’s a common misconception that students from higher-income families aren’t eligible for federal financial aid. However, there’s no maximum income limit that determines your FAFSA eligibility. While your or your parent’s income—depending on your dependency status—impacts your chances of receiving need-based aid, the FAFSA form also gives you access to non-need-based aid. The latter typically includes basic requirements like:
- Being a U.S. citizen or an eligible non-citizen
- Having a Social Security number (SSN) and a high school diploma
- Being enrolled in a qualified degree or certification program
If you meet these and several other eligibility requirements, you can apply for financial aid by filing the FAFSA form, regardless of your family’s income.
How Is Financial Aid Calculated?
While income does play a part in calculating the amount of financial aid you’re eligible for, it’s not the primary deciding factor. Your aid amount is calculated by subtracting your Student Aid Index (SAI) from the cost of attendance (COA). Here’s what these two factors represent:
- SAI—Formerly known as Expected Family Contribution (EFC), this is an index number that’s calculated by using the data you provided on the FAFSA, including information like your family’s income, assets, size, and federal benefits
- COA—This number represents how much your chosen college costs for one year of attendance, including expenses like tuition, fees, room and board, transportation, and books. This information is typically accessible on the school’s site
After SAI is subtracted from the COA, the remaining amount represents your financial need, which helps determine how much financial aid you qualify for. Meanwhile, your eligibility for non-need-based aid is determined by calculating the difference between your school’s COA and the financial aid you’ve already been awarded, such as grants and scholarships.
What Income Is Counted on the FAFSA?
The income information you should include on the FAFSA mainly depends on your dependency status. If you’re an independent student, you don’t have to include your parent’s information on the form. You’re considered independent for FAFSA purposes if, for example:
- You’re 24 or older
- You’re married
- You’re a ward of the court, an orphan, or an emancipated minor
- You’re on active duty in the U.S. Armed Forces
- You financially support people other than your spouse
If none of the above applies to you, then you’re a dependent student. This means your parents still provide most of your support, and you must include their income information on the FAFSA. If you’re an independent student, you’re only required to report your income and your spouse’s information (if you’re married).
Your or your parents’ income on the FAFSA refers to earnings from work and other sources for the prior-prior tax year (since FAFSA considers tax information from two years before the application). So, if you’re filling out the 2024–25 FAFSA form, you should include the tax information from 2022.
Types of income considered reportable on the FAFSA include:
- Income from work (your parents’ and yours if you work)
- Earnings from asset sales
- Dividends and capital gains
- Taxed income and untaxed income
- Child support
- Retirement fund withdrawals
- Disability benefits
- Veteran’s benefits
What Income Doesn’t Count on the FAFSA?
Certain types of income you or your parents earn fall under the income protection allowance—money meant to cover living and other expenses. These funds are excluded from the FAFSA calculation for financial aid, and their amount depends on your family size and dependency status. For example, for the 2024–25 academic year, the income protection allowance for a family of four is $35,870.
The types of income that aren’t considered counted on the FAFSA include:
- Loan proceeds
- Withdrawals from 529 plans
- Grants and scholarships
- Work-study payments
- Welfare benefits
- Employer-provided tuition assistance
- Employer’s contributions to health benefits and retirement plans
- Veteran’s Administration (VA) education benefits
How To Pay for College Without Federal Financial Aid
If you were counting on getting need-based federal financial aid but think you may not meet FAFSA qualifications for income-based need, additional college funding options you can explore include:
- Tuition reimbursement
- Institutional scholarships
- Private loans
Tuition Reimbursement
Some employers offer tuition reimbursement benefits to employees or their children. If you have a job, you can ask your HR department if your employer offers such benefits, and if they do, whether they cover all expenses or only a part of your tuition and fees. If you’re a dependent student, your parent can do the same if they have a full-time job.
Institutional Scholarships
Scholarships are a great way to pay for college as they offer you money that you don’t have to pay back. Besides federal need-based scholarships, you can also apply for merit-based scholarships. These are typically awarded by colleges and universities, and your eligibility is based on your performance in academics and other extracurricular activities instead of your financial need.
Check if your school offers any merit-based scholarships, and if it does, research the programs it offers to see if you’re eligible to apply based on your achievements.
Private Loans
Private loans are usually issued by banks and credit unions, and they’re a good option if you need extra money to pay for the expenses you’re unable to cover using your savings, scholarships, and federal aid. Private lenders typically determine your eligibility based on the following:
- The minimum income requirement that depends on the lender (it can be as little as $24,000 a year)
- Your citizenship and age (you must be at least 18)
- Your debt-to-income ratio (the lower, the better)
- Your or your parent’s credit score (the higher, the better)
While some of these eligibility requirements are also considered when applying for other types of financial aid, only private loans and federal Direct PLUS loans require a credit check to determine whether you qualify for financial aid.
If your or your co-signer’s credit profile doesn’t meet the lender’s standards, you may not be able to obtain the loan. However, building a good credit history early can help you increase your chances of obtaining private loans and secure more financial aid options.
The best way to establish a good credit score is to rely on credit building services like the ones FreeKick offers. This platform lets children build strong credit with the help of their parents, starting as early as the age of 13.
FreeKick—Premium Credit Building and ID Protection
Provided by Austin Capital Bank, FreeKick is an FDIC-insured deposit account that offers credit building services to minors and young adults aged 13 to 25. The platform also provides comprehensive identity monitoring and protection services for your entire family of up to two adult parents and six children.
Start Building Credit Early With FreeKick
Kickstarting your credit building journey early can help you potentially save over $200,000 in your lifetime by improving your chances of obtaining loans with favorable terms and interest rates. This way, you can more easily do any of the following:
- Obtain a credit card
- Secure financing for a house or a car
- Get better job opportunities
FreeKick helps you establish a strong credit profile and secure these financial breaks as early as the age of 13 through parent-sponsored credit building. Here’s how to activate the service:
- Create an Account—With help from a parent, visit FreeKick.bank and choose a plan that best suits your family’s needs and budget
- Set It and Forget It—As soon as your parent activates the account, FreeKick automatically starts building your credit over the next 12-month period
- Keep Growing—Once the initial 12 months end, your parent can either renew the account and keep building your credit or close it and get a refund of your initial deposit
Keep Your Identity Protected With FreeKick
Protecting your personal data can help ensure that your financial aid won’t fall into the wrong hands. If your information is unprotected, identity criminals may steal it and use it to apply for financial aid in your name, automatically making your application invalid.
The risk of identity theft is especially concerning when it comes to children and students. Shocking data shows that a child’s identity is stolen every 30 seconds, and college students are among the groups most often targeted by identity criminals.
To reduce the risk of identity theft and its negative effects on your financial aid, FreeKick offers identity monitoring and protection features for both adults and minors. Here’s what the service includes:
Services for Adult Children and Parents | Services for Minor Children |
Credit profile monitoring SSN monitoring Dark web monitoring for personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Lost wallet protection Court records monitoring Change of address monitoring Non-credit (Payday) loan monitoring Free FICO® Score monthly FICO® Score factors Experian credit report monthly | Credit profile monitoring SSN monitoring Dark web monitoring for children’s personal information Up to $1 million identity theft insurance Full-service white-glove concierge credit restoration Sex offender monitoring—based on sponsor parent’s address |
FreeKick Pricing
FreeKick has a plan for any family’s needs and budget, and both available plans are FDIC-insured up to $250,000. Find more details in the table below:
FDIC-Insured Deposit Amount | Plan Fee |
$3,000 | $0 (Free) |
No deposit | $149/year |
Start building your credit early to lay a solid financial foundation and protect yourself from identity theft—sign up for FreeKick today.
Freekick provides a double dose of financial empowerment and security for your whole family. It helps teens and young adults build strong credit profiles and offers identity motoring for up to two adult parents and six children under 25.