Many families skip the FAFSA on the assumption they won’t qualify for need-based aid. While that may or may not be true, there are plenty of other good reasons to fill it out. One of the best reasons:

You have to fill out the FAFSA to get any federal education loans. Any family who does not have the full cost of college locked away in a risk-free savings account should ensure that they have access to the federal loan programs. And even those who do, should. Why?

• Federal loans have the best overall borrowing terms including fixed interest rates, income-based repayment, consolidation programs, forgiveness programs, and more.

• Parents do not need to co-sign federal direct student loans taken out in the student’s name.

• Direct student loan amounts are capped each year. If you don’t take out a loan freshman year, you cannot take out a larger loan sophomore year. (That’s different from parent PLUS loans.)

• College is likely to cost more than you expect.

• You may change your mind about fully funding your student’s college career. If you haven’t completed a FAFSA, they won’t be able to borrow from the federal loan programs that year.

• If your student is planning on graduate school, you might do better to take out the direct student loans during the undergraduate years and save some 529 funds for graduate school. That’s because the undergraduate student loans have the best terms of all the federal loan programs.

Check out The FAFSA Formula Explained for more.