Father of three here, and dreading to do this year’s report.
Just to clarify a few things.
FAFSA doesn’t give anyone money, or even qualify anyone for money. FAFSA is simply a standardized form that most schools, lending organizations and the federal government have agreed to use for consistency.
You have three types of aid to qualify for – federal grants (very cool, you don’t have to pay them back) scholarships (you don’t have to pay them back, but they do have strings attached, like keeping a certain grade average) and subsidized or unsubsidized loans (there are some requirements for getting a subsidized loan, just about anyone who can get a credit card can get an unsubsidized loan.)
Except for scholarships, which may have conditions on what they can be used for (tuition, but not for room and board) all the aid can normally be used for direct expenses – tuition and fees, required books, room and board in a school facility and some other things(often they cover the purchase of a computer, unless the school provides one). Transportation and general living expenses are your own problem.
The way my daughter’s school (and I think most other schools) handles it is with a single student acccount. All the scholarships, wages from work study, grants and loans are put into a single account. Her scholarship can only be used for tuition and fees, so they’re charged against the scholarship total. And so it goes, until the miscellaneous stuff (books for example) are charged against her student loan.
By the way, you want all financial aid to go to the school. If it goes to you directly, it counts as income on your taxes.
Remember, that the school you choose may have other forms of financial aid. For example, one of my sons is going to a state school, which offered only a small scholarship. My daughter, who had almost the same GPA in high school, is going to a private college, which gave her a scholarship which amazingly just happens to pull her tuition down to the level of a state school. They also have a “supplemental” aid program, which is based on financial need rather than grades, just like the federal grant program. So don’t automatically choose the school with the lowest tuition. A higher-priced school may make it worth your while to choose them.