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The FAFSA opens October 1—here's how to complete it, in 6 simple steps

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Every year, the Department of Education distributes $150 billion in federal student aid through grants, loans and work-study.

Most students qualify, but in order to get their share of these funds for college they need to complete the Free Application for Federal Student Aid, otherwise known as the FAFSA. Students can begin completing the FAFSA for the 2020-2021 school year on October 1st, and because FAFSA funds are distributed on a first-come, first-serve basis, they will want to complete the form as soon as possible.

While the process of applying for federal student aid may feel overwhelming, recent updates to the FAFSA have made it simpler and more stream-lined.

CNBC Make It filled out the FAFSA ourselves to see what it takes. Here is a step-by-step guide:

Step 1: Make a list of schools

Students will need to share their FAFSA with schools they are interested in applying to. For this reason, students should make a list of schools they are potentially interested in before they even begin filling out the form. 

As part of completing their application, students will be able to look up the federal school codes of colleges and universities they are interested in sending their information to.

Making a list of target schools is a good way for students to inspire and motivate themselves to complete the FAFSA.

Step 2: Gather financial documents

The FAFSA determines how much financial assistance students qualify for, which is why applicants must submit documentation about their family's financial status. Before starting the FAFSA, applicants should be sure to gather all of the forms and documents they'll need.

To complete the FAFSA, students will need:

  • A Social Security number
  • An Alien Registration number (For non-U.S. citizens)
  • Federal income tax returns, W-2s, and other records of money earned (Thanks to the newly-updated IRS data retrieval tool, applicants may be able to automatically transfer their tax return information instead.)
  • Bank statements and records of any investments
  • Records of any untaxed income
@eddie_rios via Twenty20

Step 3: Create a Federal Student Aid ID 

Having prepared a list of schools and documentation, the next step is for applications to visit the FAFSA website (https://studentaid.ed.gov/sa/fafsa) or the myStudentAid app.

To log into the site, students and parents need to create a Federal Student Aid (FSA) ID, which will require making a username and password. Once applicants have created an FSA ID, they can start the FAFSA, save their progress and log in and out as they wish.

Step 4: Start the FAFSA for the desired year

Each year there is a nine-month period during which students can submit financial aid applications for both the current year and future years.

Students should carefully select which year's FAFSA application they would like to complete:

  • Students attending college from July 1, 2019 to June 30, 2020 can file the 2019 - 2020 FAFSA between October 1st, 2018 and June 30th, 2020 using their 2017 tax information.
  • Students attending college from July 1, 2020 to June 30, 2021 can file the 2020 - 2021 FAFSA between October 1st, 2019 and June 30th, 2021 using their 2018 tax information.

Step 5: Follow the instructions carefully

The FAFSA itself is broken into seven sections: student demographics, school selection, dependency status, parent demographics, financial information, sign and submit, and confirmation.

Complete each of these sections carefully, making sure that the information is accurate:

  • Student demographics: The student's name, social security number, date of birth, address, email, gender, telephone number, driver's license number (if the student has a driver's license), marital status, citizenship status, education history and interest in work-study.
  • School selection: The name and location of the high school the student attended and the colleges they're interested in applying to.
  • Dependency status: Whether the student has children or dependents and the size of their household.
  • Parent demographics: Parents' marital status; parents' names, social security numbers and birthdays; parents' email address and household information, such as who lives with them. (Note: If the student is an independent, they will not need to complete this section.)
  • Financial information: Applicants can either use the IRS Data Retrieval Tool or input information from their W-2s manually.
  • Sign and submit: Applicant's signature.
  • Confirmation: Applications will receive a confirmation when their FAFSA has been completed.
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Step 6: Submit

Once applicants have accurately input all of the necessary information, press "submit."

The Department of Education says that online FAFSA applications are typically processed within three to five days, and that paper applications are typically processed within seven to 10 days.

After their application is processed, students should receive a copy of their Student Aid Report, which includes their Expected Family Contribution and determines their eligibility for Pell Grants. An applicant's aid report will be shared with the colleges they listed on their FAFSA application.

After a student has been admitted to a college, colleges use the information on their aid report to determine how much they will provide. Many schools will ask students to verify the information on their aid report, or to complete a College Scholarship Service Profile, which is administered by The College Board. The profile is used by hundreds of schools across the country and can help students access their share of $9 billion in non-federal financial aid.

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