Financial Aid

Most families find the whole process of applying for financial aid confusing and difficult.  It doesn’t have to be.  Armed with the right information, you’ll be able to get through the process.  Even if you think you won’t qualify for financial aid, apply anyway.  Be sure to apply early:  colleges tend to be more generous with the first few aid packages than they are with the last few.

Remember that you do not necessarily need to take the first financial aid package that is offered to you.  You may be able to negotiate a better deal.  The more desirable an applicant, the more likely for an offer of a better package with higher grants and scholarships and lower loans.

Basic Terms:

 

Grants – Grant aid is money you do not need to pay back to the school, state or federal government.

Scholarships – They are a form of grant aid - awarded for academic achievement, outstanding talent or skill, and/or financial need.

Loans - Loans might come from the school, the state, the federal government, or the bank where parents/guardians have their checking and savings accounts.  Unlike grants, however, loans must be repaid over time.  Loans are considered financial aid and are part of the total financial aid package for the vast majority of students.  When you read that a college can meet 80% of your financial need, that 80% figure could be composed entirely of loans.  Of course, you will still need to come up with the other 20% to complete your enrollment. 

 

CSS/Financial Aid Profile - Some colleges and universities, mostly private schools, required you to file the CSS.  The Profile is a supplemental needs analysis document used to determine eligibility for private, nonfederal funds.  You can begin the CSS filing process by going to http://www.collegeboard.com and registering.  There is a registration fee for filing the CSS and an additional fee for each school to which you send information, so be sure that the school you want to attend requires the CSS.  You should file the FAFSA even if you file the CSS form.

FAFSA - This form will be mailed to your home if you took the SAT 1 during your junior year.  If you didn't take the SAT I, come to the Guidance Office to obtain the form.  Every school you're seriously interested in should be named on this form and filed after January 1st of your senior year.  Be sure to read the instructions carefully and follow them exactly.  Even if you are convinced that you won't get any financial aid, file the FAFSA anyway.  Some campus based forms of financial aid (work study, paid internships, working in the library, helping in admissions, representing the college as a student ambassador, etc.) require you to have established financial need.  The FAFSA is the document which most colleges (about 99.95%) will use as the "financial needs" document.  This application establishes eligibility for all federal programs, including loan programs, and for some, institutional aid (aid based on funds from individual colleges).  The FAFSA must be completed in order to be eligible for a federal Pell grant.  The home page for the FAFSA is - http://www.fafsa.ed.gov.  Students and parents should also register for a PIN number at www.pin.ed.gov

EFC - This is the Expected Family Contribution, a number calculated to be what the financial aid wizard figures your family can afford for your education.  You EFC determines what colleges and government sources expect you to be able to pay.  This number comes from the FAFSA so it is necessary to be as accurate as you can when completing the FAFSA.

 

SAR - The Student Aid Report is a document that comes to you after you file your FAFSA.  You will need to be sure that the information on the SAR is 100% accurate (which the financial aid people call--verification).

 

Institutional Grants & Scholarships – Gift aid that is awarded by colleges from their own resources.  This type of aid, awarded based 

on merit, need, or both, can be very competitive,

 

Merit-Based Aid – Usually competitive, this type of financial aid program determines eligibility by evaluating a student’s ability and/or

potential based on academic records, athletic, or artistic ability.  Individual characteristics such as ethnicity are sometimes considered.

 

Need-Based Aid – Aid based on a family’s resources.

 

Federal Pell Grant – Grants intended to help the neediest students.  Most middle-income families do not qualify.  The single largest

grant program, the average amount awarded is approximately $2500.

 

Perkins Loan – Federal loans based on demonstrated need.  Participating colleges make these 5% interest loans directly to students. 

Interest does not accrue while the student is in school, and repayment doesn’t begin until 9 months after graduation.

 

            Stafford Loan – Lending institutions provide these loans to students.  Repayment of a Stafford loan begins after the student has graduated.  The Subsidized Stafford Loan is for students with financial need.  The Unsubsidized Stafford Loan is for students without financial need.  (The government pays the interest on Subsidized Stafford Loans).

 

PLUS Loan – Lending institutions provide these loans to parents.  PLUS loans are not based on financial need and repayment begins within 60 days.

 

Subsidized Federal Stafford Loan – Need-based loans made by a bank, saving and loan, or some other lender.  Interest doesn’t

accrue while the student is in school, and borrowers don’t begin repayment until six months after graduation.

 

Unsubsidized Federal Stafford Loan – Loans similar to the Subsidized Federal Stafford Loans, except that eligibility is not based on

need, and interest accrues while the borrower is in school.

 

Work-Study – A need-based financial aid program subsidizing jobs for eligible students.  Work-study is awarded by colleges, and a

portion of the funding comes from the federal or state government.

 

Federal Methodology – This term identifies the series of decisions and calculations the federal government applies to the data found in your FAFSA.  When all the numbers are plugged into the formula and all the figuring is completed, a three­ digit financial aid code is attached to your file.  It is this three digit code that all the colleges, universities, technical schools, trade schools, business colleges, etc., use to determine what type of financial aid you will receive, if any, and the amount of that aid.  The theory that drives Federal Methodology is quite simple:

Total costs - Expected Family Contribution = Financial Need

The difficulty most people have with financial aid is that just having financial need does not automatically mean that someone (the federal government, the state government, the post secondary school) will pay the financial need part while the family pays the EFC part.  Grants and scholarships are free money that do not have to be paid back. Loans and work study jobs are considered self help. It makes sense to apply for grants and scholarships before taking out loans.

A college will put together a financial aid "package". This package is a combination of grants, scholarships, loans, and/or work study. A package varies from college to college so it is important to compare financial aid packages.

Other ways to finance a college education include co-op programs and military programs. Money can be saved by attending a local community college and then transferring to a four-year college after one or two years. Not all students live on campus but commute to college, saving room and board expenses.