Applying for Financial Aid
If you are concerned about how to finance your college education, you are not alone. Many students and their families need some assistance to meet the costs associated with a college education. According to a study by the College Board, approximately $135 billion in student aid was distributed during the 2005-2006 school year, with approximately $95 billion of the aid coming from the federal government in the form of grants, tax credits, work-study and loan guarantees. State governments also provide financial aid assistance, as do many colleges and universities. Although not included in the College Board's research, many companies and community-based organizations also provide financial assistance to students. Are you interested in learning about the types of financial aid opportunities that may be available for you? Let's begin!
How Aid is Determined
If you want to be considered for financial aid, you should start by completing a Free Application for Federal Student Aid (FAFSA). According to the National Center for Education Statistics, during the fall of the 2003-2004 school year, 76% of full-time, undergraduate students received some type of financial aid. Many of these students began their search for financial aid by completing the FAFSA. In order to review all applicants in a consistent manner, the Federal government implemented a "methodology" used to evaluate each application which takes into account a variety of factors including:
- Parents' income;
- Parents' assets (excluding the home they live in and retirement savings);
- Student's income;
- Student's assets;
- Family size;
- Number in college;
- State of residence; and
- Age of older parent.
Many private colleges use a different approach when awarding their institutional funds. In addition to completing the FAFSA, these schools often require their applicants to submit a supplementary financial aid application, such as the College Board's CSS/Financial Aid PROFILE or their own institutional financial aid form. These supplementary applications often request more detailed financial information.
Expected Family Contribution
When the review of your FAFSA is completed, you will be sent a Student Aid Report (SAR) which lists your family's Expected Family Contribution (EFC). The EFC is the dollar amount your family is expected to contribute towards your college education. It is important to be realistic about your family's financial situation. Your EFC may not be what your family can pay out of their current income. Sit down with your family and discuss what they are truly able to contribute. You may need to tap into other resources to make up the difference.
Calculating Your Financial Need
Financial need is calculated by taking the cost of attendance (COA) as estimated by the school and subtracting out a student's expected family contribution (EFC). Cost of attendance includes all direct and indirect costs associated with attending a particular college including tuition, fees, room and board, books, supplies, travel, and personal expenses.
Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Need
Not all colleges are able to provide students with financial aid award packages that meet their full financial need. That's why it's important to carefully review and compare each college's financial aid award letter before making a decision on which college to attend. For more information on understanding financial aid award letters click here.