Do Online Colleges Accept FAFSA?

With college costs rising between 1.4% and 4% in the 2023-2024 academic year from the past year, it’s no wonder that many prospective online students asks the question, “Do online colleges accept FAFSA?” In the current academic year, the average cost of tuition ranged between $10,662 for ranked public colleges and $42,162 for private colleges. Financial aid for online students comes in handy regardless of your current financial status because of the inflation-influenced total cost of college attendance.

We want to emphasize that on November 15, 2023, the US Department of Education released a streamlined Free Application for Federal Student Aid form (FAFSA form) for the 2024-2025 academic year. The simplified and streamlined FAFSA form will enable 610,00 new students from low-income backgrounds to take advantage of the Federal Pell Grant and 1.5 million more students to enjoy its maximum amount.

For the information of new students, including prospective students of online colleges, the FAFSA is the United States government’s fundamental tool in facilitating access to financial resources for students in higher education institutions. The FAFSA form is crucial in the determination of eligibility for financial aid from federal and state programs as well as from the colleges and universities scholarship, grants and loans programs.

Students and their families must provide accurate, complete and detailed financial information, such as household size, income, and assets, which will be used in the determination of their financial need. Note that the financial information is used in the calculation of Expected Family Contribution (EFC), a key metric in the evaluation of demonstrated financial need.

Indeed, prospective and current students in online colleges will agree that federal financial aid is a crucial aspect in determining their access to higher education opportunities and the benefits that a college degree brings! By making a college education more affordable, federal financial aid is considered a key aspect of economic development - after all, an educated citizenry strengthens the nation’s civic engagement, social mobility, and global competitiveness.

Check out our ranking of the most affordable colleges and universities in America for more options.

An Overview of Online Colleges and FAFSA

Note that the Department of Education recognizes online colleges that accept FAFSA under its Title IV program. However, for these online schools to accept and administer federal financial aid, they are required to comply with rigorous eligibility requirements.

Only accredited schools are eligible to accept and administer federal financial aid for online students. Other general eligibility requirements include maintaining academic standards for their online programs, meeting state compliance requirements, and maintaining updated records of their students’ locations. Title IV online schools must also undergo regular federal student aid program reviews and compliance audits that demonstrate their responsible administration of federal aid.

For this reason, prospective online students must check the accreditation status of the online colleges they are interested in. Don’t rely on the attestation of accreditation on the online college’s website either - check with the official website of the regional or national accreditation agency.

Examples of regional accreditation agencies include the Southern Association of Colleges & Schools Commission on Colleges (SACSCOC), the Higher Learning Commission (HLC), and the New England Commission of Higher Education (NECHE). National accreditation agencies include the Distance Education Accrediting Commission (DEAC) and the Accrediting Commission of Career Schools and Colleges (ACCSC).

Furthermore, private organizations with financial aid programs for online students also consider the accreditation status of colleges and universities in their eligibility requirements. This makes sense, considering that scholarships and grants are intended for the promotion of higher education opportunities, and without appropriate accreditation, this purpose will be in vain.

We also want to dispel a few common misconceptions about online students and their access to federal aid. First, it isn’t true that online students have lower financial aid eligibility than on-campus students. In fact, both on-campus and online students complete the same FAFSA form and are evaluated for their demonstrated financial need based on family size, income, and cost of attendance, among other relevant factors.

Second, it is false that online students have limited funding even when they are approved for federal financial aid. Indeed, an online student with similar financial circumstances as an on-campus student will likely receive comparable amounts from federal financial aid programs.

Indeed, when it comes to federal financial aid programs, it’s best to request more information or ask clarifying questions instead of making assumptions. Furthermore, even if you have already accepted and received federal financial aid as an on-campus or online student in the past, you should be updated about changes in the FAFSA form, rules and regulations, and deadlines. Your vigilance in these matters will increase the likelihood of success, meaning being approved for federal aid instead of being rejected on a technicality.

Financial Aid Options for Online Students

Every accredited online college offering online programs usually has numerous options for financial aid for online students. Indeed, if you’re diligent and persistent about exploring your financial aid options, you will likely find one or two that best fit your financial needs!

In terms of federal financial aid, there are two types that online students and their parents can apply for using the FAFSA form - federal grants and federal loans.

First, federal grants are considered free aid or gift aid, meaning students don’t have to repay them. These are obviously the best forms of financial aid granted by the federal government to undergraduate students.

There are two types of federal grants, namely:

• Pell Grants are need-based grants with the intended purpose of providing financial assistance for students from low-income backgrounds who want to pursue their higher education aspirations. Applicants must have a demonstrated financial need based on the accurate and complete information on their FAFSA form.
• Federal Supplemental Educational Opportunity Grants (FSEOG), also a need-based grant, is intended for students enrolled in undergraduate programs who have exceptional financial needs. Due to the limited funds, even eligible students aren’t guaranteed approval, although Pell Grant recipients have preferential priority.

Eligibility for both Pell Grants and FSEOG is determined through information in the FAFSA. Note that the financial aid office of your online college distributes federal student aid.

Second, federal loans must be repaid by the student or parent who took them out. Be sure to check the specific terms and conditions of each type of federal loan so you know what you’re getting (i.e., amount) and what you’re getting into (i.e., repayment terms including payment period, regular payments, and interest rate).

• Direct Subsidized Loans are meant for undergraduate students with demonstrated financial need. There’s no interest applied on direct subsidized loans in three instances - when an online student is still enrolled in an undergraduate program at least half-time, during the deferment period, and during the grace period (i.e., six months after graduation).
• Direct Unsubsidized Loans, designed for both undergraduate and graduate students, aren’t based on demonstrated financial need. Instead, the online college will determine the amount that an online student can borrow based on several factors, including the cost of attendance and other financial aid received. Unlike direct subsidized loans, interest on direct unsubsidized loans will be charged and can even be capitalized. The maximum amount for these loans varies from $5,500 to $12,500 per year for undergraduate students for both direct subsidized and unsubsidized loans. For online graduate and professional students, the maximum amount is $20,500 per year.
• PLUS Loans are available exclusively for parents of dependent undergraduate students (Parent PLUS loans) and for independent graduate and professional students (Graduate PLUS Loans). Note that while these aren’t need-based loans, credit checks are required during the verification process, and these have higher interest rates than direct subsidized and unsubsidized loans.

Emphasis must be made that students whose parents are deceased, foster children, wards of the state, and students with court-appointed legal guardians are considered independent under federal student aid rules. This means legal guardians and foster parents aren’t considered parents under FAFSA rules, and thus, information on their household size and income shouldn’t be listed on the FAFSA form. If you fall under said category, then you need only to declare your income on the form.

For online students who live with one parent, only one parent can complete the FAFSA form. If you lived more often with one parent in the previous 12 months, then said parent will fill out the form. If you lived in equal periods with either parent, then the parent who provided the most financial support completes the form. If the parent who filled out the form has remarried, then the income and assets of their new spouse must be declared, and the step-parents’ children must be included in the household size.

Finding FAFSA-Approved Online Schools

Again, only accredited schools can qualify for and accept FAFSA. However, don’t assume that the online college you’re enrolled in that was accredited in the previous academic year still is. Check that its accreditation status remains relevant in the current or upcoming academic year. You must always check its accreditation status on the Department of Education’s Database of Accredited Postsecondary Institutions and Programs (DAPIP).

Among the best online colleges that accept federal financial aid include:

• University of Arizona Global Campus
• University of Maryland - Global Campus
• Purdue University Global
• Arizona State University
• Southern New Hampshire University
• Western Governors University
• American Public University
• Capella University
• Excelsior College

What can you do if the online school you’re planning on attending doesn’t accept FAFSA? You can either explore alternative financial aid options, such as private scholarships, grants and loans, or you can ask about the online college’s financial aid programs. You may also want to consider other online colleges that accept FAFSA if it’s in your best interest.

A few examples of colleges that don’t accept FAFSA and, thus, federal financial aid to maintain their independence are Grove City College, Southern Baptist Theological Seminary, and Wyoming Catholic College. These colleges offer online programs in several academic disciplines, too.

Applying for Federal Student Aid at Online Colleges

Whether you’re enrolled in an on-campus or an online college that accepts FAFSA, the application process is the same! Online students fill out the same FAFSA form as their on-campus counterparts and are evaluated for financial aid including tuition assistance, based on the same factors. Below are the steps every in-person and online student applying for FAFSA must take.

Prepare the required documents.

While the specific documents will depend on your unique circumstances, you must prepare these documents for the general eligibility requirements. You and your parents, if you’re a dependent, must have these documents in hand for easy reference:

• Social Security number for US citizens or Alien Registration number for eligible non-citizens
• Tax documents and recent tax returns
• Driver’s license number
• Other relevant financial statements and records

You may be required to produce more relevant documentation to support your financial aid application from the federal government. Just be sure that the documents you’re basing your FAFSA information on are valid, complete and accurate to the best of your knowledge.

Fill out the FAFSA form.

When filling out the FAFSA form as an online student, you must provide the following information:

• Your personal information, including your full name, date of birth, and contact information, as well as your Social Security number
• Your financial information if you’re an independent filer, or your filing parent’s financial information if you’re a dependent undergraduate student. This will include tax returns, income and assets; tax information can be directly linked to your FAFSA form using online tools.
• Your dependency status, which will influence the financial information you must provide

You must also include the names of the online colleges you’re planning on submitting your admissions application to. You must use the Federal School Code, the unique six-character code assigned to every college or university, on the FAFSA form. You can secure the code from the online college’s official website or financial aid office.

Create your federal student aid identification accounts.

You and your parents, if you’re a dependent, have to create your unique federal student aid identification accounts online. You will use these accounts in the management of your federal student aid, including signing the federal student loans master promissory note and completing the loan counseling requirement.

Submit your completed FAFSA form.

You can choose between a PDF download and an online form when you want to fill out the FAFSA form. Be sure to read, understand and follow the instructions and prompts, including the online colleges that should receive your FAFSA form (i.e., where you’re applying for admission or enrollment). You should check that every field has been filled in and that your parents, if necessary, have signed it.

Be mindful of the deadlines for submission of completed FAFSA forms to the online colleges of your choice. Submit it as early as October 1, before the start of the upcoming academic year. You can receive the federal aid funds for the current academic year on June 30, the deadline, but your online college may have its own deadline, too.

Tip: Submit your FAFSA at the earliest possible date instead of waiting until the last minute. Some scholarships and grants funded by online colleges have limited funds or are awarded on a first-come, first-served basis.

Wait for the verification results of your FAFSA form.

Your application for federal student aid may or may not be subjected to verification for the accuracy and completeness of information stated in the FAFSA form. If your application is chosen for verification, you may have to provide additional information through verification worksheets and tax transcripts. Your online college will likely have a financial aid portal for the submission of electronic copies of the required documentation.

Be sure to respond promptly to verification requests. Your financial aid package can depend on your promptness in this matter. Don’t be afraid of the verification process either, as it doesn’t mean that your application has a high risk of getting denied - it’s a routine procedure, at best.

Review your Student Aid Report.

You should be able to receive your Student Aid Report (SAR) after completion of the FAFSA form. You must confirm the completeness and accuracy of the details stated on your SAR and, if there are errors, make appropriate corrections to your FAFSA form.

Select your federal student aid.

You should ideally accept federal financial aid approved in your case. Your online college’s financial aid office or administrator’s office will provide information and guidance on the next steps in the federal aid process. You may, for example, be asked to undergo loan counseling and get your master promissory note signed before the federal aid can be released.

Students’ Submitted Questions on Colleges Accepting FAFSA

Neil asks, “What are the specific FAFSA eligibility requirements for online learners?”

Dr. James Barham’s answer: The following items are the general eligibility requirements for online learners who want to receive federal financial aid:

• Demonstrated need for need-based federal student financial aid programs
• Either be a US citizen or an eligible non-citizen
• Have a valid Social Security number (with exceptions)
• Be enrolled as a regular student in online degree programs or online certificate programs offered by accredited institutions.
• Maintain satisfactory academic progress in their online courses and be updated on payments on their federal student loans (i.e., not in default)

Applicants to federal student aid programs must also provide their consent and approval for the direct transfer of their federal tax information to the FAFSA form. Applicants must also sign the FAFSA form’s certification statement and demonstrate their capacity to obtain either a college degree or a career school education.

Note that the general eligibility requirements don’t specify a specific family income to qualify for federal student aid. Again, online students should apply even when they don’t think they will qualify.

Dorothy asks, “Is FAFSA only for US universities?”

Dr. Jed Macosko’s answer: Federal aid is primarily intended for students attending accredited colleges and universities in the United States. But eligible students attending foreign institutions can also fill out the FAFSA form and apply for federal student aid.

Joan asks, “Why is access denied for FAFSA?”

Dr. James Barham’s answer: More often than not, it isn’t the fault of accredited online schools if the application for federal student aid among their students is denied. Instead, the most common reasons are:

• Failure to meet the general eligibility requirements
• Inaccurate or incomplete information on the FAFSA form
• Default on federal student loans
• Not meeting the satisfactory academic progress requirement
• Conviction for a drug-related offense during receipt of federal student aid

Nick asks, “What majors get the most financial aid?”

Dr. Jed Macosko’s answer: Financial aid eligibility isn’t usually based on your chosen major in college - unless, of course, the financial aid program is intended for a specific field, such as for nursing students. In terms of academic disciplines getting the most financial aid, high-demand fields like engineering, healthcare and education, as well as some STEM fields, are at the top. Check out the loan forgiveness programs in these academic fields, too, especially as these have higher-than-average costs of attendance. It’s also important to remember that there are ways to stay financially smart in college outside of just seeking financial aid.

Josh asks, “Which colleges give out the most scholarships?”

Dr. James Barham’s answer: Many online schools are generous with their scholarships, and the scholarship amounts can start at $25,000 per year. Examples include Hendrix College, Berea College, Beloit College, Albion College, and Illinois Institute of Technology. Many of the Ivy League and top-tier universities also make it possible for students to enjoy full-ride scholarships, such as Columbia University, Yale University, Harvard University, Duke University, and the University of Chicago.