Every student should submit the Free Application for Federal Student Aid (FAFSA) every year, even if they didn't qualify for student aid last year.

The FAFSA is used to apply for student financial aid from the federal and state government, from all public colleges and most private colleges. So even if you don't expect to qualify for government aid, you might qualify for financial aid from your college. College costs have increased enough, especially at private colleges, that many middle income families may qualify for financial aid.

The federal need analysis formula is also complicated enough that it is difficult to predict whether you will qualify without applying. There are no specific income cutoffs. Even families with six-figure incomes can sometimes qualify for the Pell Grant. Admittedly the figure is less than 1%, and 98% of Pell Grant recipients have family incomes under $50,000. But most families underestimate their eligibility for student aid.

Even if you didn't qualify last year, you should still submit the FAFSA. The number of children in college at the same time has a big impact on financial aid eligibility, since the parental contribution portion of the expected family contribution (EFC) is roughly divided by the number of children in college. Often an upper middle-income family will not qualify for need-based aid when their eldest child is a college freshman. But the next year, when they have two children in college, both children will qualify for financial aid. This is because the FAFSA's need analysis is heavily weighted toward current income, and your ability to pay does not increase just because there are two children in college. Those children will split the family's discretionary income and so each has greater financial need than one child alone.

For example, suppose that college costs are $30,000 and that the parent contribution is $20,000. With one child in college, the financial need is $30,000 - $20,000 = $10,000. But with two children in college, each has a financial need of $30,000 - $20,000/2 = $20,000. So just by having two children in college at the same time, this family will qualify for twice as much aid per child. The actual amount of financial aid, of course, will vary according to the college costs and family finances, but the moral of the story is that it is better to have children overlapping in college than separated in age by four years.

It is also important to apply every year because the financial aid rules change every year. Congress makes major changes in financial aid programs every five years when it reauthorizes the Higher Education Act of 1965. But there are also significant changes between reauthorizations, such as changes in the need analysis formula and the creation of new student aid programs.

Submitting the FAFSA is also a prerequisite for eligibility for some financial aid that is not based on financial need. Many scholarship sponsors will require applicants to submit the FAFSA to ensure that they get all the free financial aid to which they are entitled. Others use a combination of merit and need to determine eligibility.

In addition, the unsubsidized Stafford loan and the PLUS loan do not depend on financial need. These are low-cost education loans available from the federal government. You do not need to be poor to qualify, but you do need to submit the FAFSA. 

The TEACH grant, a $4,000 annual grant for students interested in pursuing careers in teaching, also requires students to submit the FAFSA even though it does not depend on financial need.