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Blog » Money Tips » Hack the FAFSA: How Fintech Can Streamline Your Financial Aid Application?

Hack the FAFSA: How Fintech Can Streamline Your Financial Aid Application?

Posted on July 31st, 2023
Guide to Paying for College

Standing at the crossroads of high school and college, the key to shaping your academic journey lies in strategizing your college funding. While you desperately apply for Free Application for Federal Student Aid (FAFSA), the elusive nature of these funds makes you think of alternate funding sources. There’s no denying that FAFSA has lots of holes. As an informed student, you need to make the most of it. So, how you fill out the FAFSA does matter!

Filling the FAFSA can be a time-intensive and daunting process for most families and students. You must gather your financial credentials, fill out multiple forms, and understand the complicated eligibility criteria. No wonder the process turns out to be utterly overwhelming for most applicants.

Well, funding your college expenses isn’t as challenging as it appears. With the inception of fintech companies, applying for FAFSA has turned out to be amazingly easy. So, you simply need to hack FAFSA, make the most of these government funds, and then move on to private loans. The generous loans from top fintech firms are easy-coming! It’s time to explore alternative funding opportunities and streamline your financial aid application.

4 FAFSA hacks all college students should know

Federal education loans may be your first choice as a student, considering the ease of repayment and provision of loan forgiveness. However, the funds may not turn out to be easily accessible. Apart from the upper cap for different academic levels, FAFSA has lots of less-known clauses.

Let’s unleash these facts before explaining how fintech loans can put your finances on track!

Make sure to empty all your accounts

Have you secretly stashed some funds to finance your college education in a savings account? Well, if you hold the account under your name, empty it immediately. Before sanctioning the federal loans, the government will deduct 50 cents for each dollar from the financial aid package. However, this deduction doesn’t apply to your savings in 529 accounts.

The same applies to government grants as well. For instance, if you qualify for a Pell Grant and the authorities get to know that you saved a thousand dollars through your side hustle, your financial package will be slashed by $500.

Make sure to move all these funds to your parents’ account. This way, you will have only 20 cents deducted per dollar rather than 50. However, it’s wise to move your college funds to a relative’s account or your grandparent’s account. The government won’t include these funds while calculating federal financial aid.

Now, if your grandparents or relatives are uncomfortable with the tax implications, simply put your money by opening a 529 plan. Educational funds in 529 plans attract a deduction of just 5.6 cents per dollar.

Show all educational expenses

Do you have any siblings going to school? Is one of your parents heading back to the university for a professional course? You can show all the educational expenses of your family to maximize FAFSA benefits. When you make education a family affair, you can qualify for higher amounts as federal loans. The government would notice your financial need and grant you higher financial aid.

Clear off your debt

The federal government scrutinizes the amount of money in your bank while deciding on your financial aid. However, what they don’t consider is your debt. So, if you or your parents have credit card debt, clear it before applying for FAFSA.

The authorities also don’t check funds in your home equity, life insurance policies, or retirement plans. Therefore, it makes sense to fund these accounts through your savings before applying for FAFSA.

Apply for Simplified Needs

If the adjusted gross income of your family is $50,000 or less, you may get the opportunity to fill up the Simplified Needs Test. This is a lighter variety of the FAFSA the government has designed for low-income households. If you qualify for the Simplified Needs Test, the government won’t consider any financial assets you have. Thus, college students can be eligible for more financial aid from the government.

Can you apply for federal loans through fintech platforms?

While fintech firms don’t directly get involved in the FAFSA application process, you can use their platforms to streamline your application.

Remember, the actual submission of the application is made on the official FAFSA website. So, students simply use the fintech platforms to fill up the forms through a better interface. The intuitive interfaces ease up the tedious application process. Fintech platforms break down complex sections into smaller and easily understandable segments. They also provide clear instructions and explanations to assist the applications at every stage.

Previously, students could apply for FAFSA only through the official website of the government. This platform continues to be the authorized channel through which you can submit your FAFSA application and gain access to federal aid programs.

How can fintech streamline your financial aid application?

Fintech platforms go a long way in de-cluttering the application process. However, students should note that the application submission process is not directly handled by fintech companies. Rather, you can benefit from a plethora of tools and services that are meant to streamline the FAFSA filling process.

Let’s delve into the benefits that fintech platforms have rolled out for FAFSA applicants.

Automated data retrieval fast-tracks your application

Fintech solutions have rolled out features such as automated data retrieval from credit bureaus and banks, simple application interfaces, document management systems, and financial aid estimators. Besides, applicants can remain updated through real-time updates on fintech platforms. Thanks to this assortment of tools, students enjoy a better application experience.

Unlike the tedious process of filling up FAFSA through the official platform, the process becomes breezy. You can gather and furnish the necessary details in a quick time. Most importantly, you can estimate the tentative financial aid you might receive.

Dedicated progress tracker and error-checking tools

While applying at FAFSA through a fintech platform, you can check your progress through a dedicated progress tracker. This would help you get an idea of the tentative time required to complete your FAFSA application process.

Moreover, some fintech companies have integrated their platforms with inbuilt tools for error-checking. These tools flag potential mistakes or alert students in case they miss out on furnishing some details. Naturally, using fintech platforms to apply for your FAFSA mitigates errors that could have delayed your application.

Seamless data integration and retrieval

Smart technologies on robust fintech platforms seamlessly connect applicants to different financial institutions. This internal mechanism aids in fetching crucial data from databases of tax authorities and credit bureaus. Thus, applicants need not manually collect and furnish information through multiple sources.

On fintech platforms, applicants simply need to link their respective accounts or authorize these platforms to retrieve tax return data, bank statements, and income data. This significantly saves time and ensures accuracy.

Real-time updates and tracking

Among other features, real-time tracking and updates through fintech platforms keep the applicants informed about the status of their FAFSA application.

You will receive notifications at various stages when applying for your federal financial aid through fintech apps or websites. For instance, it’s crucial to know when your application is fully submitted, when your documents are received and processed, and whether the authorities need additional information. Thus, federal loan applicants can stay informed about the progress and follow up on any issue that might potentially delay the process.

Automated document submission

Submitting your supporting documents during the FAFSA application happens to be a critical task. Through fintech platforms, applicants can submit these documents directly. You need not submit these documents in person or manually mail them to the authorities.

Automated document submission goes a long way in mitigating paperwork and processing time. You can also benefit from their document management systems. This keeps your credentials organized, and you can easily track them for future reference.

Optimal data security and privacy

Established fintech companies demonstrate a high sense of responsibility to their clients. They secure students’ data and their credentials through robust encryption techniques. Thanks to their stringent data security regulations, the sensitive financial information of the applicants remains secure.

Most of the leading fintech platforms adhere to the prescribed security protocols when it comes to data handling and storage. Applicants, therefore, can rest assured that their information will remain secure on fintech platforms.

Financial aid estimators

Leading fintech platforms have developed sophisticated tools for estimating the probable financial aid you are likely to qualify for. Using historical data and algorithms, these platforms can help students generate accurate estimates.

The tentative amount is based on different factors like family size, income, and the cost of attendance. Accordingly, fintech platforms generate an expected family contribution (EFC) and approximate aid amount. By accessing these tools, applicants can be better informed about their eligibility for the aid and plan accordingly. Once you get an idea of the tentative aid you are likely to receive, you can start applying for private loans on these fintech platforms.

Bridging the loan gap: Why are students counting on loans from fintech companies?

There’s no denying that filling out the FAFSA turns out to be a tedious process. Besides, the government regulates how you use the money. Thus, finances tend to run dry while managing your living costs, socialization expenses, and incidental costs while in college. With generous private loans pouring in from fintech firms at low-interest rates, funding your college education is way easier now!

Fintech firms have developed some of the most groundbreaking business models, such as peer-to-peer lending. With access to sophisticated technologies such as big data, AI, blockchain, and advanced data security mechanisms, fintech firms are making a visible impact in the student loan market.

Easy application, less stringent scrutiny, and instant disbursal define the popularity of fintech loans. Most surprisingly, these lenders are offering student loans at competitive rates. So, if you have ticked the boxes for your scholarships, grants, and federal loans, it’s time to explore fintech loans. If you are financially resilient, you can also consider refinancing your federal student loan through a fintech loan to enjoy greater repayment flexibility.

Fintech’s the way!

The advent of fintech applications has been a strategic win for students. Now, you can ditch the time-intensive ordeal of applying for your FAFSA through traditional platforms. Fintech applications have revolutionized the process, offering valuable tools like application tracking, aid estimators, and real-time updates.

Applying for your federal student loan should no longer be a challenge. Besides, knowing how to use financial aid estimators would help you do the calculation and borrow only the necessary amount from private banks. An informed approach to borrowing student loans, along with timely repayments, would pave your path to a debt-free future. 

 

FAQ

How can FAFSA help me manage my college expenses?

Make sure to fill up your FAFSA application to qualify for grants. Early applicants stand better odds of qualifying for these free funds. Also, you can qualify for federal student loans through FAFSA after you file your application.

Can applying for FAFSA through a fintech platform help me qualify for more loans?

No, applying for your federal student loan through a fintech platform doesn’t impact your eligibility in any way. You simply benefit from a more seamless application process as fintech companies offer you their platform. While you can estimate how much you are likely to receive as a student loan by using their tools, there’s no way to alter your loan amount.

Why is it so easy to borrow student loans from fintech companies?

Fintech companies have made the student loan borrowing process faster and simpler. They largely bank on AI to evaluate the borrower’s risk potential. Even if the borrower lacks adequate credit history, AI algorithms assess their income and spending patterns to determine their risk profile.

Should I take a traditional student loan from a private bank or approach a fintech company?

The urgency of your loan requirement largely determines your action in this case. With fintech lenders, you may get the loan disbursed in a few days. Traditional private banks tend to be more stringent with their approach to loan approval. Compare the rates and factor in additional expenses like processing fees before you finalize your decision.

How can I manage my college expenses apart from tuition fees?

While federal student loans can help you fund only a part of your tuition fees, you need to tap other financial accounts. For instance, use the savings in your 529 student plan, income from part-time jobs, or parental savings to fund your college education. Besides, maximize free money through grants and scholarships to ease up your finances. Try to curtail expenses as a college student as you proceed toward a happening career.

Angela Ruth

Angela Ruth

Angela Ruth is a financial writer at Due. She has a passion for helping people get out of debt and live a better life.

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