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Yes, your total loans for all 4 years (as a middle-class/rich student) will be capped at the cost of attending UVa for one year as an in-state student, which is around $15,000. So, even as an out-of-state student, where it costs roughly $31,000/year to attend UVa, you will not incur loans above $15,000. Any need above that will be covered w/ grants. Again, if you're a poor student, you will not have any loans at all even if you're an out-of-state student. All need will be covered w/ grants.
Yes, they use FAFSA.
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