How Financial Aid Works
The financial aid system works on one basic principle: parents and students are expected to contribute to the cost of college to the extent they are able ("able" as defined by federal and institutional formulas). If you are unable to contribute the entire cost, financial aid is available in the form of grants, loans, and work-study jobs to make up the difference. The formula colleges use to determine financial aid eligibility is simple:
Cost of Attending College (Total Attendance Budget) -
Amount Family Can Contribute (Expected Family Contribution)
= FINANCIAL AID ELIGIBILITY (THE FAMILY'S NEED)
There are several estimators online that will provide an estimate of your EFC, or expected family contribution. Please refer to the helpful websites listed below.
How Financial Aid Can Help Students Attend the College of Their Choice
In your investigation of colleges, you should not immediately rule out a college because of cost. As illustrated by the financial formula below, college cost will vary, but the expected family contribution remains the same. Be aware the financial aid eligibility cost will be comprised of some grant (you won't have to repay), some loan (you will have to repay, usually at a low interest rate, after you finish college), and some work-study (you will have an on campus job subsidized by the federal government, usually about 10 hours per week). The amount of each of these components will vary from school to school (pay careful attention to the loan portion, since you will have to pay that back).
Here's one example of how it works. Suppose the expected family contribution is $10,000 a year. According to the formula, financial aid eligibility would look like this:
College X Total Cost $19,000
- Family Contribution $10,000
= FINANCIAL AID ELIGIBILITY $9,000
College Y Total Cost $29,000
- Family Contribution $10,000
= FINANCIAL AID ELIGIBILITY $19,000
The expected family contribution stays the same at each college, while financial eligibility increases as the cost increases. For this reason, you and your parents can, and should, consider a range of colleges representing different costs. For example, the more expensive school may have a larger endowment and therefore offer more generous financial aid. It is important to ask each college what its financial aid policies are, and to find out, in particular, whether or not they are committed to meeting your full financial "need".
Most colleges will require the Free Application for Federal Student Aid (FAFSA). The Federal government will process this form free of charge. The Department of Education highly recommends you submit the FAFSA online at www.fafsa.ed.gov
, but paper forms are available. Generally, the FAFSA should be submitted by mid February of your senior year, but cannot be submitted before January 1. To provide accurate information about your income and assets, you will need a completed income tax return to fill out the FAFSA form, so filing your taxes early would be wise.
Questions to Ask
The following questions may be asked or either financial aid or admission officers:
What is the current total student budget? What does this include? Tuition? Travel? Room and board? Required fees? Estimated books and personal expenses?
Does the college meet the demonstrated financial need of all admitted students? If not, what are the college's policies? What percentage of a student's need does the college meet?
What financial aid forms does the college require? FAFSA? CSS Profile? Their own form?
What is the maximum loan amount each year the college would give a student in his/her financial aid package? Will the amount of loan as a percentage of the total package increase each year, or remain approximately the same?
What academic, talent or athletic scholarships are available at the college? Upon what criteria are they based? What are the students chances of realistically receiving one of these scholarships? How much are they worth? How does one apply? Are they renewable for each year of attendance? Does the student have to maintain a certain grade point average to renew the scholarship each year?
Financial Aid Websites
: The most comprehensive financial aid website available; includes financial aid calculators
[Source: The Paideia School]