Financial Aid Basics

Financial aid can be an important element of your overall financial planning for college. The sections below provide a starting point for assessing if financial aid is an option to you and provide an overview of the process to obtain financial aid. FAFSA Tutorial

 

What is Financial Aid?

Financial aid helps students and families pay for their college expenses, such as tuition, fees, room and board. Generally, there are three categories of financial aid: gift aid, work aid and loan aid. In addition, there are college savings plans and tax benefits available.

 

Types of Financial Aid?

Financial aid comes in the form of grants, scholarships, student employment and/or loans.  There are a variety of sources, such as the federal government, individual states, colleges and private sources.

 

Scholarships/Grants

Scholarships and grants are considered gift aid, which means you do not need to repay the award. There are four basic types of scholarships and grants: Federal, State, Institutional, and Private.

 

Student & Parent Loans

Loans are funds that you and/or your parent(s) can borrow to help pay for college expenses. Loans must be repaid, usually with interest. Loans also can be classified into four basic groups: Federal, State, Institutional, and Private.

 

Work-Study

The purpose of work-study programs is to provide students with part-time employment to help pay for college expenses and, if possible, provide work experience in a related field of study.  Each college has a different process for participation in the work-study program, so you’ll need to contact the financial aid office at the college you plan to attend to learn the details of their program.  Work study earnings are not automatically applied to the student bill, as the funds are paid directly to the student during the course of the enrollment period.

 

Who Should Apply for Financial Aid?

Everyone who thinks they may need assistance paying for college should apply for financial aid. Even if you think you may not qualify for financial aid, you should still apply.

 

To apply for federal financial aid, including Pell Grants, Stafford loans and work-study, you must complete the Free Application for Federal Student Aid (FAFSA). The FAFSA is also your application for many state and college financial aid programs. Go to www.fafsa.gov to complete the application.

 

How to Apply for Financial Aid

Go to www.fafsa.gov to complete the Free Application for Federal Student Aid (FAFSA).

 

If you file your FAFSA online, you will need a PIN (personal identification number). Having a PIN allows you to sign the FAFSA electronically. If you are a dependent student, you and your parent must each sign the FAFSA. You will each need your own separate PIN. You can apply for a PIN at any time at www.pin.ed.gov.

 

It is possible to complete the FAFSA using a paper application; however it may take up to 6 weeks longer for your information to be processed.  

 

In addition to the FAFSA, some colleges may also require the CSS/Financial Aid Profile or another type of school-based financial aid form. You should check with the financial aid office at the college you want to attend to learn about the forms required.

 

When to Apply for Financial Aid

You can submit the FAFSA after January 1 of the year you will be attending college. For example:

  • If you will attend during the 2012-2013 school year, you can submit the FAFSA beginning on January 1, 2012.
  • If you will attend during the 2013-2014 school year, you can submit the FAFSA beginning on January 1, 2013. 

Many colleges have deadlines as early as February 1, so it is better to file your FAFSA early! You do not need to be accepted into a college to complete the FAFSA.

 

You do not need to wait until your taxes have been completed to complete the FAFSA. The FAFSA asks for information from your federal tax returns; however, you may use estimated tax information if you have not yet filed a tax return. You will have an opportunity later to make changes to your application after your taxes have been completed.

 

What Happens after Applying for Financial Aid?

The federal processor will send you a Student Aid Report (SAR). The SAR is a summary of the information provided on your FAFSA.

 

You should review your SAR for accuracy. If you used estimated tax information when completing your FAFSA, you can make corrections at this time.

 

Each college you listed on your FAFSA will also receive the results of your FAFSA. The financial aid office at the colleges may contact you and ask for additional information.

 

What is the Expected Family Contribution (EFC)?

The EFC is an approximate amount that a family may be expected to be able to contribute to your college education. This amount is determined by information you provided on your FAFSA, such as dependency status, the family’s size, income, assets and the number of family members enrolled in college.

 

The EFC is not necessarily the amount you will need to pay to attend college for one year. There are many factors that affect the amount you will need to pay the college, including:

  • If you receive non-need based financial aid (merit aid).
  • If you are attending a college with a price that is less than your EFC.
  • If you reject a portion of your financial aid award (usually loans).
  • If you filed your FAFSA after the deadline.
  • If the college you are attending in unable to meet 100% of your financial need.

How is Financial Need Determined?

  Cost of Attendance
- Expected Family Contribution
  Federal Financial Need

Cost of Attendance : The cost of attendance is the average cost for one person to attend a college for one academic year. This includes tuition, fees, room, board, travel, books and other personal/miscellaneous costs. The Cost of Attendance varies from college to college.

 

Expected Family Contribution (EFC): The EFC is the amount that you and your family will be expected to contribute toward your college education. This amount is determined by information supplied on your FAFSA application.

 

Federal Financial Need: The College will use this amount to determine your financial aid eligibility. Generally, your financial aid award cannot exceed the amount of your federal financial need.

 

Because the Cost of Attendance will vary from college to college, you can expect your financial aid award from each college to vary.

 

Understanding and Comparing Award Letters

College costs and financial aid awards can vary significantly from one school to another, so it is important that you understand the types of financial aid that you have been offered and the costs associated with attending each school. Use FAME’S Comparing Costs and Financial Aid Awards to compare estimated college costs and financial aid awards or visit our Understanding and Comparing Award Letters page for additional information.

 

Tips for Filing the FAFSA

  • File Early! Some colleges have deadlines as early as February 1.
  • File Online. The online form has a built-in edit check, so it can help reduce errors.
  • Make copies of everything, including tax returns and your FAFSA.
  • When you file the FAFSA, be sure to print or save the confirmation page! This is your proof that you submitted your FAFSA. 
  • Use your legal name as it appears on your social security card. Do not use nicknames.
  • Double check your social security number and date of birth before you submit the application.

Special Circumstances

Sometimes families have circumstances that are not reflected on the FAFSA. If you feel you have special circumstances that may affect your ability to pay for your college education, you should contact the financial aid office at the college you plan to attend.

Some of the most common reasons for asking the financial aid office to review your situation include:

  • Loss of employment
  • Elder care expenses (nursing home fees, etc)
  • Death or disability of a parent
  • Divorce or separation after the FAFSA was filed
  • Loss of child support or alimony
  • Loss of social security benefits

The financial aid office will review your case and may require documentation before determining if your situation will result in an adjustment to your financial aid information.

 

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