College FINANCIAL AID

Paying for college these days is a daunting undertaking. What's more, applying for need-based financial aid may be the most harrowing and onerous aspect of the entire college process for most families.

As no two financial situations are ever the same and there are so many variables to consider, it becomes next to impossible for anyone (save financial-aid professionals) to be of much specific help to students and their families.

What we can do is to provide the necessary general information so that students and their families can make sense of the process and to move forward with the aid application process. The following list of the terms and phrases, those that are often thrown about in conversations regarding financial aid, should be of some help in gaining a better understanding of the process.

Assets

Holdings in the form of cash, stocks, bonds, real estate, trusts, business equipment and business inventory. All are considered in the formulation of the Expected Family Contribution (EFC) for the Free Application for Federal Student Aid (FAFSA).

CSS Profile

A financial aid form used by more than 300 colleges and universities in order to supplement information received on the FAFSA. Along with a registration fee, there is an additional fee to send a CSS Profile report to each college that requires it. Low-income families who qualify for SAT/ACT fee waivers can qualify for a waiver of the registration fee and two reports.

Custodial Parent

The parent with whom a student lived the most over the course of the previous 12 months. It is a term used in cases where parents are divorced or separated.

Expected Family Contribution (EFC)

The amount a family is expected to pay for college as indicated by calculations made upon completion and submission of the FAFSA and/or CSS Profile.

FAFSA (Free Application for Federal Student Aid)

Form provided by the government and used by nearly every college. This is the form you need to fill out in order to be considered for federal aid such as the Pell Grant, and Perkins and Stafford Loans.

Federal Aid

Funds in the form of loans and grants provided by the U.S. government. These include the Pell Grant, Perkins Loan, Stafford Loan and PLUS Loans. (Check https://studentaid.ed.gov/sa/ for more detailed information on federal aid).

Financial Need

The difference between a family's ability to pay and the total cost of attending an institution.

Gapping

Financial aid policy in which demonstrated need is not met fully by the institution.

Grants

Financial aid awards that do not have to be repaid.

Institutional Aid

Funds in the form of grants and loans provided by the college itself.

Merit-Based Aid

Financial aid awarded in conjunction with a student's academic ability or, in some cases, special talents (athletics, arts or leadership). The family's financial need is not considered when it comes to awarding merit-based aid. Think of merit-based aid as a "scholarship."

Need-Aware Admission

The policy of admitting students based on their ability to pay the cost of attendance.

Need-Based Aid

Financial aid awarded solely on the basis of a family's ability to pay.

Need-Blind Admission

The policy of accepting students without regard for their ability to pay the cost of attendance.

Pell Grant

A federal grant program that helps families who show a very low estimated family contribution (EFC). The maximum grant for 2022-2023 is $6,895, depending on the EFC calculations and the cost of attendance at the college.

Perkins Loan

Funded by the federal government, this loan has among the lowest interest rates of all the loan programs (5 percent), with the debt incurred by the student. Repayment of this loan is deferred until nine months after a student graduates or leaves the college. The maximum loan amount is $5,500 for an undergraduate degree.

Plus Loans

A federally sponsored loan administered by private lending institutions. PLUS loans are taken out by parents at a relatively low interest rate. Loan amounts cannot exceed the balance of the total cost of the attendance, minus financial aid.

Preferential Packaging

A financial aid package that is enhanced in order to entice a student to attend that institution. Preferential packaging may increase grants over loans, or provide more aid than a student's demonstrated need.

Stafford (Subsidized) Loan

A subsidized Stafford Loan is federally guaranteed and is based on financial need. Interest on this loan does not accrue while the student is in school (as long as he or she is enrolled at least half time). The federal government subsidizes (pays) the interest on the loan while a student is enrolled.

Stafford (Unsubsidized) Loan

An unsubsidized Stafford Loan is federally guaranteed and is not based on financial need. Interest will accrue from the time the loan is taken out, but a student does not need to make interest or principal payments until six months after graduation (or until six months after a student drops below half-time status). There are maximum amounts a student can receive per school year.

Student Aid Report (SAR)

The Student Aid Report, which includes the EFC, is returned to you after completion and submission of the FAFSA.

Total Cost

All expenses involved in attending an institution of higher learning, including tuition, room and board, fees, books, travel, and any miscellaneous expenses.

Work Study

Federal program in which students are assured jobs in college in order to supplement their financial aid. Hours vary by institution, but cannot exceed 20 hours per week.

• www.finaid.org, an invaluable resource for all financial questions; includes a great EFC (estimated family contribution) calculator, great scholarship search information and many valuable links;
• www.fastweb.com, a great scholarship search site;
• www.fafsa.ed.gov, where you can fill out the FAFSA (Free Application for Federal Student Aid) online;
• www.collegeboard.com, the official site for the College Board; loads of information about testing, the financial aid PROFILE form and other College Board services;
• www.fastaid.com, a search site for financial aid; and
• www.financialaidforcollege.com, where you can find facts and advice about financial aid.

The following section takes a look at some of the important questions that all students and families applying for need-based aid should feel free to ask of admission representatives, as well as financial-aid professionals.

Oftentimes, answers to these and other questions regarding financial aid in the college process can be invaluable to students and families as they plan for college.

Q. Is your school need-blind? If you are need-aware, could you explain what, exactly, that means?

A. Only a small handful, and that would generally include the most selective colleges in the nation, are actually need-blind. Rest assured that, if admitted to a school that is truly need-blind, you will be aided to the fullest extent you possibly can. Schools that are need-aware do their very best to meet 100 percent of every admitted student's financial need, but simply do not have the financial aid budget to do so. As a result, some students, and it's usually those who are very marginal applicants, are either denied admission because of a lack of funding, waitlisted or, in some instances, admitted but are offered only a percentage of their full need.

Q. Does financial need have an impact on admission decisions?

A. This is a tricky one…of course, need-blind schools would never consider the ability to pay as a condition of an applicant's candidacy for admission. However, there are other schools where the ability to pay may indeed have an impact on a candidate's candidacy for admission. The prospects of finding this out are not good, though increasingly, colleges with relatively limited financial aid budgets are indicating that the inability to pay, particularly for the final few offers of admission, can result in a waitlist or a deny.

Q. Does the decision to apply for early admission (ED or EA) impact in any way need-based financial aid awards? How will I know if my entire need has been met through the early round at your school?

A. Traditionally, we have not encouraged needy students to opt for early decision programs, due in large measure to their binding nature. If admitted (and the aid award is sufficient), then students are bound to attend. Instead, we felt it is in a student's best interests to be able to compare aid awards in April and to investigate options. These days, it seems that an increasing number of needy students who are involved with early programs (ED/EA) are being aided favorably. Bottom line—as each student has different needs and interests, and each college does things in their own way, it makes sense to speak with your counselor about an appropriate strategy.

Q. Does your institution offer other financial aid programs such as merit awards or outside scholarships that do not include consideration of financial need?

A. Many colleges do grant merit-based financial aid as a reward for excellence in certain specified areas (academics, sports, leadership, etc.) that do not take into consideration a family's ability to pay. It's wise to investigate these types of awards as a means of managing the cost of attendance. It does fall to the student and his or her family to investigate these types of awards whenever possible.

Q. Will I continue to receive comparable need-based aid throughout my four years at your school?

A. As a generally rule, students who receive need-based financial aid as freshmen will continue to receive comparable aid awards throughout their time as undergraduates, provided they make satisfactory progress academically and they remain in good standing at their schools. However, some schools may "tweak" aid awards to include a higher percentage of self-help and/or loans. In other words, colleges do have the ability to "adjust" student packages as they see fit, sometimes cutting back on grant aid and increasing student indebtedness. So, while the overall amount of financial aid a student receives from the college will likely not change over four years, how the aid is apportioned (grants/loans/self-help) can be adjusted, depending on changes in family situation or how a student actually performs.

Q. What is the average indebtedness of your students when they graduate from your institution?

A. This is an important question to ask, as it can reveal a good bit about a college's commitment to supporting its financial-aid students. While every student and family circumstance is unique, as a general rule, it's best to leave college with as little debt as is possible. Keeping student indebtedness under, say, $20,000 (and hopefully less!) should be a realistic goal for every undergraduate.

Q. Do outside scholarships detract from my need-based aid award from your school?

A. It's not uncommon for students and their families to apply for outside funding, often in the form of local scholarships, to offset the cost of a college education. While it's always a good idea to consider applying for these types of scholarships, it's also a good idea to find out whether any outside monies will result in a lowering of the grant portion of a need-based aid award. For example, a student applies for and wins both a $1,000 scholarship from the local PTA and a $1,000 scholarship from the town business association, which is great; the student's total bill for the year is $2,000 cheaper, right? Unfortunately, some colleges simply lower the grant portion of the student's financial aid package; thus, the student's family is still paying the same overall cost of attendance, while the college just saved $2,000 dollars. The far better scenario is when the college reduces the student's loan or self-help portion of the aid award by $2,000 instead.

Q. Are there other ways to help finance my education, such as off-campus work in the community? Will the college help me to locate these types of jobs?

A. Most colleges will list on-campus work opportunities, and, quite often, they will be helpful to students who may want to look off campus for other types of employment. It's best to ask the school's financial aid and career services offices about such outside opportunities.

Q. When will I be notified about financial aid decisions?

A. This is a very important question to ask. Traditionally, you would learn of your financial aid award when you received your letter of acceptance, and, in many instances, that is still the case. However, with the growth of such early programs as Early Decision, Early Action and Rolling Admission, it has become a bit more difficult to know when the aid award will arrive. College financial aid offices try their best to push aid awards out in a timely fashion, but delays in the receipt of important financial aid information (FAFSA and CSS Profile) will surely make getting the aid awards out much more difficult. So, always…always…try to get your financial aid paperwork completed and submitted as early as you possibly can!

Financial Aid…Other Questions To Consider When Choosing a College

1. Are there any other costs not accounted for in the aid offer that I should plan for, such as expenses for books, room and board, transportation, or personal needs?
2. If I/we cannot meet the financial responsibilities from current income or assets, what financing options are available to help me/us pay my/our share?
3. If the financial aid award package is insufficient to make it possible for me to attend this institution, under what conditions, if any, will the aid office reconsider its offer?
4. Regarding renewal, what are the academic requirements or other conditions for the renewal of financial aid, including scholarships?
5. What impact will cost increases have on my financial aid package? What will happen if my family's financial situation changes?
6. When can my family expect to receive bills from the college? How many times a year will we be billed? If the bill is not paid by the deadline, will there be penalties? Does the college accept payment by credit card? Is there an option to pay monthly?
7. Is all financial aid credited to my student account, or will I receive checks for some or all of the financial aid awarded? What about my employment earnings? If aid exceeds billed charges, how does the student receive the funds?
8. How much money will I need during the first week of school for things such as books, a parking permit, etc.? Can I use financial aid to pay for books and supplies? Can books and supplies be charged to my account? What typical out-of-pocket expenses do most students have during the year?
9. Is information provided regarding budgeting resources, money management and credit card usage?
10. Are there banking services with fee-free ATMs and/or check cashing on or near campus?
11. Will the college be responsive to mid-year changes in family financial situations?
12. Regarding student employment, including federal work-study: How are jobs assigned? How many hours per week will I be expected or allowed to work? How often and in what manner will I receive earnings payments? Will earnings be automatically credited to my account?

—Taken from The College Board