Financial Aid
Financial Aid
Financial aid offered by colleges assists students and their families in paying for various higher education expenses, including tuition and fees, room and board, coursework materials such as books and supplies, and transportation. Different types of financial aid are available.
- Grants.
- Scholarships.
- Federal, state, college or private loans.
- Work study and other programs.
Award Letter. The document you receive from a college that explains the terms of the financial aid that the college is offering you. The information includes the types and amounts of financial aid offered, what you’re expected to do to keep the award and a deadline for accepting the award.
Cost of Attendance. The total amount of college expenses before financial aid. Cost of attendance includes money spent on tuition and fees, room and board, books and supplies, and living expenses.
CSS Profile®. A financial aid application used by more than 300 colleges, universities and private scholarship programs to award their financial aid funds. College Board offers this service.
Demonstrated Need. The difference between your Student Aid Index (SAI) and the total cost of attendance for a particular college.
Student Aid Index (SAI). A measure of your family’s financial strength (formerly called the Expected Family Contribution or EFC). States and colleges use this number to help determine your financial aid award. The SAI is calculated using information you supply about your family’s financial circumstances.
Financial Aid. Money given or loaned to you to help pay for college. Financial aid can come from federal and state governments, colleges, and private and social organizations.
529 Savings Plans. State-sponsored investment plans — officially called qualified tuition programs (QTP) — that help families save money for college. The plans have tax benefits so your savings can grow faster. The money in the accounts can be used only for education expenses.
Free Application for Federal Student Aid (FAFSA). The free application form you submit to apply for federal financial aid. It is required for all students seeking federal student grants, work-study programs and loans. Most colleges require it as well. The FAFSA may also qualify you for state-sponsored financial aid.
Grant. A kind of "gift aid" — financial aid that doesn’t have to be paid back. Grants are usually awarded based on need.
Loan. Money you borrow from the government, a bank or another source. Loans need to be paid back, usually over an agreed period of time. You will most likely also have to pay interest on a loan — a fee for borrowing the money.
Merit Aid. Financial aid given to students based on their personal achievements. Most scholarships are considered merit aid, as they are generally awarded for success in school, the arts, athletics or another area.
Need-Based Financial Aid. Financial aid (grants, scholarships, loans and work-study opportunities) given to students because they and their families are not able to pay the full cost of attending a certain college. This is the most common type of financial aid.
Need-Blind Admission. A policy of making college admission decisions without looking at applicants’ financial circumstances. Colleges that use this policy may not offer enough financial aid to meet a student’s full need.
Net Price. Net price is the true amount a student will pay for a college. On this site, we use “net price” to mean the published price of tuition and fees for a college minus the amount of gift aid and education tax benefits a student receives. Another common definition of “net price” is the full cost of attendance at a college (including room and board, supplies, and other expenses) minus the gift aid and education tax benefits.
Net Price Calculator. An online tool that gives you a personalized estimate of what it will cost to attend a specific college. Most colleges are required by law to post a net price calculator on their websites.
Outside Scholarship. Also called “private scholarship.” A scholarship offered by a private organization — not the government or a college. Outside scholarships are offered by all kinds of groups, individuals, corporations and nonprofit organizations.
Priority Date. The date by which your application – whether it’s for college admission, student housing or financial aid – must be received to be given the strongest consideration. Since financial aid is often limited, meeting the priority date is important to be eligible to receive funds.
Residency Requirements. The amount of time a student has to live in a state before he or she is eligible for in-state tuition prices and state aid.
Scholarship. A kind of "gift aid" — financial aid that doesn’t have to be paid back. Scholarships may be awarded based on merit or partially on merit. That means they’re given to students with certain qualities, such as proven academic or athletic ability. Learn more about gift aid.
Work-Study. A program that allows students to take a part-time campus job as part of their financial aid package. To qualify for the Federal Work-Study Program, which is funded by the government, you must complete the Free Application for Federal Student Aid (FAFSA). Some colleges have their own work-study programs.
Basic Information
If you've started exploring colleges, you're likely familiar with the concept of financial aid. While the term itself is straightforward, those who have completed financial aid applications know that the procedure is far from easy. However, with some effort, it can be done. Gaining a fundamental understanding of financial aid can aid you in comprehending the process and ultimate aim as you furnish details to colleges and evaluate financial aid award proposals.
Financial aid is categorized into gift aid and self-help aid. Gift aid, such as grants and scholarships, doesn't require repayment and reduces college expenses dollar for dollar. Self-help aid, such as loans and work-study, utilizes personal resources. Loans accrue interest and must be repaid, while work-study is a part-time job funded by the government to assist with college expenses. As students must work to earn work-study money, it's not classified as gift aid.
College financial aid can be based on financial need, merit, or both. Demonstrating insufficient financial resources qualifies for need-based aid. Merit-based aid relies on academic achievement, high test scores, unique talents, and financial need may be a factor.
To apply for financial aid, submit FAFSA with family financial information. Some colleges require CSS/Profile. Colleges calculate your Student Aid Index (SAI) using this data to determine financial need and eligible aid. Reapply every year.
Colleges award merit aid to students with high GPAs and test scores above their freshmen class. Other factors like sports and art may lead to awards. Application may require a separate form or checking a box. Check website for merit scholarships and financial aid policies.
Grant
Grants are a highly sought-after financial aid for college, with the amount received usually based on the student's financial need. To maximize the grant aid, students can take certain steps. Unlike loans or work-study programs, grants don't require repayment, making them an ideal option for students.
Financial aid is categorized into gift aid and self-help aid. Gift aid, such as grants and scholarships, doesn't require repayment and reduces college expenses dollar for dollar. Self-help aid, such as loans and work-study, utilizes personal resources. Loans accrue interest and must be repaid, while work-study is a part-time job funded by the government to assist with college expenses. As students must work to earn work-study money, it's not classified as gift aid.
Students can become eligible for grants by submitting the FAFSA, which determines financial need. The FAFSA opens on Oct. 1 and has a federal deadline of June 30. Early submission increases opportunities for aid. State deadlines differ from federal, so tracking them is crucial for maximizing grant possibilities.
Grants and scholarships are both free money, but they differ in the criteria and funding source. Grants are usually need-based and funded by federal, state or institutional sources, while scholarships can be based on merit, athletic talent, or other achievements and funded by private sources or donors. Although financial aid officers may use the terms interchangeably, students should be aware that the application process can vary by school and scholarship. Scholarships are often preferred because they may not require annual reapplication and may be awarded for four years.
Many states offer grants to residents attending public colleges. Colleges also award grants based on financial need or other factors, such as academic achievement. To apply, check deadlines and requirements, which may vary by state or school. Additionally, various organizations and individuals also offer grants.
Scholarship
Merit scholarships are granted to students for academic, athletic or artistic achievements, and high grades. It is not required to repay the money awarded. Students must demonstrate leadership, passion, and involvement in community service to receive prestigious awards.
Academic scholarships are awarded to students with excellent grades, GPA, and test scores, but may have additional criteria to narrow the competition, such as being a first-generation student, Eagle Scout, or based on ACT score. Financial need is also considered, which is determined by FAFSA verification of family income.
To increase your chances of winning a merit scholarship, consider applying early and keeping your grades up. It's important to focus on awards you qualify for based on your skills, grades, and test scores, and to plan to ace the ACT/SAT by understanding the material, studying effectively, and practicing. Take active steps to achieve your goals, such as meeting regularly with teachers, coaches, and counselors, and find scholarships that match your interests and goals using tools like the Scholarship Match Quiz. Remember to submit a complete application and necessary documents on time to maximize your chances of success.
Scholarship application deadlines vary, so it's best to check each one individually. Some deadlines are up to a year before college starts, meaning that if you're currently in high school, you should begin researching and applying for scholarships during the summer between your junior and senior years. However, if you missed that window, don't worry! Check the scholarship information for current opportunities that you can still apply for.
The scholarship's handling of money depends on the scholarship itself. It could either go directly to your school and then to you, or it could be directly given to you. It's important to ask the scholarship provider about their procedure.
Your total student aid cannot exceed your cost of attendance, so a scholarship will affect your other financial aid. Notify your school's financial aid office about the scholarship so they can adjust your aid accordingly. This ensures the scholarship does not affect your eligibility for other aid. If you have any doubts, ask your financial aid office for assistance.
Loan
When you request financial aid, your college will probably provide student loans as part of the package. There are two types of loans available: federal and private. The federal government funds federal student loans and parent loans, while private student loans come from non-federal lenders such as banks, credit unions, state agencies, or schools.
To cover the cost of college or career school, federal loans are a good option to consider. These include Direct Subsidized Loans and Direct Unsubsidized Loans, as well as Direct PLUS Loans for graduate and professional students. Additionally, parents can apply for Direct PLUS Loans to support their child's education, but they are fully responsible for repayment.
Federal student loans are offered by the government with terms and conditions set by law and include benefits not found in private loans. Private loans are provided by banks, credit unions, or state organizations, with terms and conditions set by the lender. Private loans tend to be more expensive than federal loans.
Federal student loans have limits based on the year of attendance, student status (dependent or independent), and other financial aid received. Dependent first-year students can borrow up to $5,500, while independent students can borrow up to $9,500, both with a cap on subsidized loans. Second-year dependent students can borrow $6,500, while independent students can borrow up to $10,500. Dependent third-year and beyond students can borrow up to $7,500, while independent students can borrow up to $12,500. Graduate and professional students can borrow up to $20,500of unsubsidized loans only.
State aid is financial assistance provided by a state to reduce educational costs. Examples include Cal Grant and New York State Tuition Assistance Program (TAP). Each state has its own aid distribution process, which may require a separate application. State aid may consist of grants and scholarships, and some programs are first come, first served. Contact your state grant agency for more information; completing the FAFSA early maximizes eligibility.
Institutional student loans are available through some colleges and universities to help students with financial gaps not covered by federal and state aid. Eligibility requirements, maximum amounts, interest rates, and repayment options vary by institution. Completing the FAFSA application is usually a requirement to apply for institutional loans. Unlike federal or state loans, institutional loans are not required by law.
Work Study
The work-study program is a government-funded initiative that provides part-time jobs to college students with financial needs. While it doesn't cover all college expenses, it is a helpful opportunity for eligible students to combine work experience with their studies, along with personal savings, scholarships, grants, and student loans.
To be considered for work-study, select the box on the FAFSA application. Applying early is important since some aid is first-come, first-served. Selecting this option doesn't guarantee work-study will be awarded or that you must accept if offered. After a few weeks, you’ll get a financial aid award that may include work-study funds. However, the amount listed is not automatic; you must find a work-study job and work the required hours to earn that amount.
Once offered work-study, students must locate eligible jobs, which can be on or off-campus, related to their field of study, and offer flexible hours. Students typically cannot earn more than the financial aid award amount allocated for work-study, but some employers may make exceptions if the work is completed by the end of the semester. Work-study positions include community service jobs such as tutoring, child care, and health care, and are awarded based on availability of funds and financial need.
Students with a work-study job are guaranteed to earn the federal minimum wage, which is currently $7.25 per hour. If the state minimum wage is higher, they will earn that instead. The average work-study award is approximately$2,000 per year, and roughly one in five families use work-study as part of their overall strategy to pay for college.
You have the option to receive work-study payments through a check or direct deposit, or have it credited to your school account to cover various expenses like tuition, fees, or room and board. You're not required to use the money for any specific purpose, and many students use their work-study pay to cover everyday living expenses.
Your earnings from work-study are subject to taxes, and you must report them on your FAFSA in two sections the following year. Initially, add your work-study wages to your total income from employment that year. Second, report the amount you earned through work-study in the previous year. It's crucial to do this because the money you receive from work-study does not count in the computation of your eligible aid for the next year.
Financial Aid Application
The FAFSA, or Free Application for Federal Student Aid, is the official document utilized by the federal government, colleges, states, and other organizations to award financial assistance. By completing and submitting it, you unlock access to grants, scholarships, work-study programs, and federal student loans. If you're considering attending college, the first step is to complete the FAFSA. However, it's also crucial to be aware of other options and determine how much you can realistically afford to borrow. The FAFSA is the starting point for all of this. Be sure to submit it every year you're in college. Fortunately, it typically only takes an average of 30 minutes to complete as long as you're adequately prepared.
In recent years, the expenses associated with attending college have surged considerably. According to the College Board, the typical tuition charges for in-state public universities are approximately $11,610, while private institutions charge an average of $43,350. However, submitting the FAFSA can help you alleviate some of these expenses and prevent you from graduating with a burdensome amount of debt. The best part is that there's no risk involved in filing the FAFSA: you won't be charged any application fees and are not obligated to accept any of the financial aid you're granted.
Financial aid for college students can be categorized into three main groups: federal, state, and private. Within these categories, there are five different types of awards that students may receive:
- Grants: These awards are usually need-based and don't have to be paid back. The most common grants are the Pell Grant and TEACH Grant.
- Scholarships: These monetary gifts may be need-based, merit-based, or a combination of both. Scholarships are typically awarded in a single lump sum, and can be given by colleges, private entities, nonprofits, and professional associations.
- Loans: Financial awards that must be repaid, usually with interest. Federal loans include Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans. Private loans have higher interest rates and generally require a credit check.
- Federal Work-Study: This program helps students who demonstrate financial need earn money through part-time jobs, typically on-campus.
- Fellowships and Assistantships: These awards are primarily for graduate and postgraduate students and provide a stipend or salary while participants work and/or continue their education. Many are awarded to doctoral students in exchange for providing research or teaching services.
To qualify for federal financial aid, students must meet the FAFSA requirements, which include being a U.S. citizen, permanent resident, or eligible noncitizen, having a valid Social Security number, demonstrating financial need, maintaining satisfactory academic progress, and being enrolled in or planning to enroll in an eligible program. Undocumented and international students are not eligible to apply for federal aid. The FAFSA does not have an age limit or income cap, but these factors may affect the amount of aid awarded. However, all students should submit the FAFSA each year since it's free to fill out.
The FAFSA becomes available on October 1 each year, and students are encouraged to submit their applications as soon as possible. Students must reapply each year they need financial aid. The FAFSA is available for about a year and a half, with a federal deadline of June 30 each cycle. However, schools and states may have earlier deadlines, so submitting the FAFSA early is important to maximize the chances of receiving aid before funds run out.
Every year, the College Board's CSS Profile® provides access to billions of dollars in grants and scholarships for numerous students. This online application gathers information used by hundreds of colleges, universities, professional schools, and scholarship programs to award financial aid from non-federal sources. Once you submit your application, the College Board forwards it to the colleges and scholarship programs you have selected.
Award Letter
Students complete the FAFSA annually to determine their eligibility for federal student aid. The government analyzes income, assets, and benefits to calculate the Student Aid Index (SAI, formerly EFC). However, some students who qualify for aid may still struggle to pay tuition. One reason is that their parents may not contribute. To appeal their financial aid award amount, students can correct their FAFSA and write an appeal letter. Contacting the school's financial aid advisor is also recommended for more information.
Financial aid appeals are available at most colleges and universities, but the reasons for appeals may differ. Typically, students must submit a letter, financial documents, and meet with an advisor. The following are some common reasons students appeal their financial aid: changes in income, high medical expenses, or special circumstances that impact their financial situation.
- Learners who have recently become unemployed may face significant challenges in funding their education. This is because the FAFSA calculates the Student Aid Index (SAI) based on income, and the loss of a job can significantly impact a student's financial aid eligibility. As a result, it is important for students in this situation to explore all available options for financial assistance, including appealing their financial aid award or seeking additional scholarships or grants.
- Degree-seeking students who experience homelessness while in school may be eligible for extra financial aid since the federal government no longer considers them dependents. However, this provision only applies to younger students.
- If a learner changes jobs and earns a smaller salary, they should inform their school's financial aid department and update their FAFSA accordingly.
- Medical bills can have a significant impact on a borrower's financial situation. In some cases, students can qualify for extra financial aid from the government or their school if they have substantial medical debt.
- Having a child can have an impact on a student's financial situation, including their tax returns, FAFSA results, and financial aid eligibility. Students who have become new parents can speak with a financial aid advisor to determine how this change may affect their financial aid offer, especially with regards to childcare costs.
If college students want to appeal their financial aid award, they should contact their school's financial aid department and assess their circumstances. Financial aid advisors can provide information about the appeals process and requirements.
Although both serve the same purpose, changing a FAFSA form and writing a financial aid appeal letter require different steps. If a student's financial situation changes, they should first resubmit their FAFSA with new information. This step is crucial as schools determine need-based financial aid based on FAFSA results. A modified SAI may increase institutional financial aid significantly, making a financial aid appeal letter unnecessary. However, some degree-seekers may still require additional aid even with a modified SAI. These students can write a financial aid appeal letter to their school's financial aid department.
Student Aid Index (SAI)
Your Student Aid Index (SAI), formerly called the Expected Family Contribution (EFC), is calculated using a formula based on your family's taxed and untaxed income, assets, and benefits, as well as family size and number of college attendees. The SAI is used by colleges to determine your financial aid eligibility, but it's not the amount your family will pay for college or the federal student aid you'll receive.
Financial aid appeals are available at most colleges and universities, but the reasons for appeals may differ. Typically, students must submit a letter, financial documents, and meet with an advisor. The following are some common reasons students appeal their financial aid: changes in income, high medical expenses, or special circumstances that impact their financial situation.
Your SAI can impact the amount of financial aid you receive. To determine financial need, a school subtracts your SAI from its cost of attendance (COA), which includes tuition, books, supplies, transportation, room, and board. A lower SAI typically leads to more financial aid. Once your financial need is calculated, the school's financial aid office will prepare a package and offer it to you. Remember that a school's sticker price is not always an accurate indicator of cost, as many students receive financial aid in the form of grants, scholarships, or work-study programs.
Formula: Cost of Attendance (COA) − Student Aid Index (SAI) = Financial Need.
Experts recommend using a college's net price calculator, available on their website, to determine college expenses instead of relying solely on the Student Aid Index (SAI). They suggest that a private college might be cheaper than a public one for families. Moreover, families with a low SAI may qualify for Pell Grants, the largest federal grant program for undergraduates, which helps students from low-income families cover college expenses. The maximum Pell Grant award is currently $7,395.
Knowing your SAI can help estimate college costs and financial aid eligibility. High SAI families may focus on merit scholarships at competitive schools, while low SAI families may focus on need-based aid.
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