What Increases Your Total Loan Balance on FAFSA?

You may have heard that there are a few things that can increase your total loan balance on FAFSA. But what are they? And how can you avoid them?

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The Cost of College

The cost of college can seem like a lot, but there are ways to make it more affordable. One way is to understand what increases your total loan balance on FAFSA. This can help you know what to avoid so you don’t end up paying more than you have to.

The price of tuition

The price of tuition is one of the biggest drivers of your total loan balance on FAFSA. If you’re attending a school with high tuition costs, you’re likely to have a higher loan balance than someone attending a school with lower tuition costs. The type of degree you’re pursuing can also impact your total loan balance. For example, degrees in STEM fields tend to be more expensive than degrees in other fields.

Other factors that can impact your total loan balance include the cost of living in the city where your school is located and whether or not you have scholarships or other financial aid to cover some of your costs. If you’re concerned about how much your loans will cost you, be sure to speak with a financial aid advisor at your school. They can help you understand your options and make a plan that’s right for you.

Room and board

Your cost of attendance (COA) is the estimated amount it will cost you to attend college for one academic year. This includes tuition and fees, books and supplies, room and board, transportation, and personal expenses.

If you are attending school away from home, your school will use a standard estimate for room and board expenses. For the 2020-2021 school year, the average cost of room and board at a public 4-year university was $10,560. For a private 4-year university, the average cost was $12,990.

If you are living at home with your parents or another relative while attending college, your school may allow you to use a reduced estimate for room and board. The reduced estimate for the 2020-2021 school year is $5,710.

Your actual costs for room and board may be higher or lower than these estimates depending on your living arrangements. If your costs are higher than the standard or reduced estimates, you may be able to get additional financial aid to help cover these expenses.

Other expenses

In addition to tuition and fees, there are other expenses that can contribute to the total cost of college. These include:

-Room and board: This is the cost of housing and food for the academic year. It can vary significantly depending on the college and whether you live on or off campus.
-Books and supplies: This is an estimate of the books and materials you will need for the year. It can also vary depending on your major and whether you are taking classes online or in person.
-Transportation: This includes the cost of transportation to and from campus, as well as any necessary travel for field trips or internships.
-Other expenses: This may include costs such as child care, personal expenses, or disabilities services.

Your Family’s Contribution

FAFSA uses your family’s “expected contribution” to calculate your total loan balance. The expected contribution is the amount your family is expected to pay towards your education. Your family’s contribution is based on their income, assets, and the number of family members attending college.

Your parents’ income

While your parents’ income alone doesn’t determine your financial aid award, it’s one of the factors that’s used to calculate your Expected Family Contribution (EFC). The higher your parents’ income, the higher your EFC — and the less financial aid you’re likely to receive.

If you’re considered a dependent student for financial aid purposes, your parents will need to report their income on your FAFSA form. In addition to their income, we’ll consider other factors, such as the size of their family and how many family members are in college.

If you’re considered an independent student for financial aid purposes, we’ll only consider your own income and assets when calculating your EFC.

Your parents’ assets

Your parents’ assets are considered when determining your Expected Family Contribution (EFC), but not all assets are assessed equally.

The FAFSA does not consider the value of your primary home, any money in savings accounts designated for retirement, or small businesses with fewer than 100 employees. However, it does consider the value of your parents’ investment and bank accounts, as well as any non-retirement investments like stocks and bonds.

The FAFSA also takes into account the value of any family-owned business with more than 100 employees. Businesses in this category are typically assessed at a rate of 5.64% when determining your EFC.

Your own income and assets

You’re expected to contribute a percentage of your own earnings and assets (money or property) to your education.
Earning money and having assets both increase your total loan balance on FAFSA.

Your earnings are assessed at a rate of 50% – meaning that for every dollar you earn, 50 cents is counted towards your total loan balance.
For example, if you earn $10,000 over the course of a year, $5,000 of that will be counted towards your total loan balance.
The same goes for any money you have in savings or investments – every dollar is counted at a rate of 5.64%.

This means that if you have $10,000 in savings, $564 will be counted towards your total loan balance on FAFSA.


There are two types of loans that you may receive from the federal government to help pay for college: Direct Subsidized Loans and Direct Unsubsidized Loans. Your total loan balance is the sum of all the money you have borrowed from the government through these two types of loans, plus any interest that has accumulated on your loans.

Federal loans

Federal loans are student loans that are provided by the US government to eligible students and their parents to help pay for college. There are four main types of federal student loans:

-Direct Subsidized Loans: These loans are available to undergraduate students with financial need. The US Department of Education pays the interest on these loans while the borrower is in school, during a grace period, and during deferment periods.
-Direct Unsubsidized Loans: These loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need. The borrower is responsible for paying the interest on these loans from the time the loan is disbursed.
-Direct PLUS Loans: These loans are available to graduate/professional students and parents of dependent undergraduate students to help pay for college. There is no requirement to demonstrate financial need for Direct PLUS Loans; however, borrowers must have a good credit history to be eligible for these loans. The borrower is responsible for paying the interest on these loans from the time the loan is disbursed.
-Direct Consolidation Loans: These loans allow borrowers to combine all of their eligible federal student loans into a single loan with one monthly payment.

Private loans

If you have private loans, your school or the Department of Education will not be able to consolidate your loans. You will need to contact your loan servicer to inquire about consolidating your private loans. It is important to note that consolidating your private loans with a federal consolidation loan will cause you to lose any benefits that are specific to your private loans, such as interest rate discounts, principal rebates, or deferred repayment options.

Grants and Scholarships

The federal government and your state government offer grants and scholarships to eligible students to help with the cost of college. You don’t need to repay these funds. Grants and scholarships can come from the federal government, your state government, your college or career school, or a private or nonprofit organization. You might also hear about “merit-based” or “need-based” grants and scholarships.

Federal grants

Federal grants are funds that do not have to be repaid. Grants are typically need-based, meaning that your eligibility is determined by your financial circumstances. The U.S. Department of Education is the largest provider of federal grants, and you can learn more about the types of federal grants available by visiting the Federal Student Aid website.

State and institutional grants are also available, but they vary widely in terms of eligibility requirements and amount. You should contact your state’s higher education agency or the financial aid office at the school you’re interested in attending to learn more about state and institutional grant programs.

Scholarships are another type of financial aid that does not have to be repaid. Scholarships are generally merit-based, meaning that your eligibility is determined by your academic performance or other achievements. You can learn more about finding scholarships by visiting the U.S Department of Education’s StudentAid website or contacting the financial aid office at the school you’re interested in attending

State grants

State grants are need-based, meaning that you have to demonstrate financial need in order to be eligible. You also generally have to be a resident of the state where you’re attending college in order to qualify. The amount of the grant varies by state, but it can be as much as a few thousand dollars per year.

Most state grants are administered through the same office that handles your federal student aid, so you should be able to find out if you’re eligible when you complete your FAFSA form. If you’re not sure, contact your financial aid office and they should be able to tell you what’s available.

Private scholarships

Private scholarships are gifts that don’t have to be repaid. Many come from businesses, religious organizations, community groups, and professional associations. Some are restricted to students in specific majors or who plan to attend specific schools.

There are also scholarships awarded by individual colleges and universities. These are called institutional scholarships. Like other private scholarships, they don’t have to be repaid, but they may be available only to students who plan to attend the sponsoring school.

Institutional grants are need-based or merit-based awards from colleges and universities that don’t have to be repaid.
Federal Supplemental Educational Opportunity Grants (FSEOG) are for undergraduates with exceptional financial need – that is, students with the lowest Expected Family Contributions (EFCs). Grant amounts can vary from $100 to $4,000 a year, depending on when you apply, your financial need, the funding level of your school, and whether your state offers FSEOG funds.

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