Pursuing higher education is a noble endeavor. Doing it while not getting buried under heaps of student loan debt can be a full-time job. The Free Application for Federal Student Aid or FAFSA is a relatively easy way to get financial assistance while attending college. However, there are some rules to know so that your stellar status is not put at risk.


The amount you receive from FAFSA is dependent on whether your housing plans are a parent or off-campus arrangements.

FAFSA Off Campus vs. On Campus

The FAFSA specifically requests information about your housing status. FAFSA housing plans directly impact how much aid a student will receive. There are three options when filling out the FAFSA housing information:

  • On Campus – This includes the dorm cost and meal plan, making it the highest cost of attendance for FAFSA students.
  • With Parent – This is the lowest cost of attendance due to reduced room and board costs. However, this housing status has a higher transportation cost due to the student’s need to commute to the school. 
  • Off Campus – This depends greatly on where the student will reside in relation to the campus. It takes into account the need to commute, lack of a meal plan compared to on campus living and rent.

How FAFSA Is Calculated

The eligibility for federal aid depends on the student’s year in college, the cost of attendance at the school, enrollment status and the expected family contribution. Where you plan to live, either on or off campus, greatly affects the cost of attendance.

Once the school receives the FAFSA, it calculates the cost of attendance based on the student’s housing status. They deduct the expected family contribution from the cost of attendance to determine the amount of financial aid. The amount can increase if the student’s housing status causes an increase in their cost of attendance via rent or transportation.

Other Ways FAFSA Can Be Jeopardized

The federal guidelines state that a student using FAFSA must continue to work toward graduating in a timely manner. This is called the Satisfactory Academic Progress Policy and means if you lag behind in your course load you may be in jeopardy of losing your qualifying FAFSA status. If your grades go down during any semesters or terms in which you are receiving financial aid, you could be in jeopardy of having it suspended.

Other reasons financial aid may be suspended include:

  • Your parents’ income increases beyond the required limit of the program.
  • The student isn't taking the required amount of classes.
  • The school may have changed tuition requirements or increased fees.

Federal aid programs have specific eligibility or renewal requirements and need to be reviewed annually so that you don’t inadvertently lose your status.

When to Use the Offset

Both parents and students are offered offsets against their income. These include federal, state, local and FICA taxes and employment expenses.

There are also income protection allowances. This allowance can range from around $17,000 to upward of $50,000. It is based on the family size and the number of family members currently enrolled in school. There are income protection allowances for independent students with dependents as well.

Adjusted Available Income Information

Once the offsets from the total income are subtracted, the remaining denominator is the available income. The available income is added with the assets to come up with the adjusted available income or AAI. This is where it can get complicated. A portion of the AAI is multiplied by 22 to 47 percent to get the total contribution.

An additional predetermined assessment is also considered in the multiplying of that number. The higher the income that a parent or independent student with dependents makes, the higher the percentage.

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