As a registered user of this site, you'll have access to tools that will help you determine how much aid you'll be eligible to receive - before you even apply to any school. Later in the process, you'll also be able to compare the financial aid offers at the schools where you've been accepted.
As you learn the ropes for finding the most money possible to pay for college, your very presence in the Pay for College area puts you on the radar screen of people looking to help you pay for it. As a registered user who has opted to capitalize on the full range of finance features available, you will have qualified lenders approaching you, ready to extend funding. Haven't yet registered and opted into receive information from our financial partners? Do so now to get the full benefits.
As a registered user you'll have access to a broad range of tools and resources that includes:
- Tips and strategies on how plan ahead for college costs.
- Tools and advice to help you get the most aid possible from the government and the schools.
- Search tools for finding scholarships and grants to help you pay for the school of your choice.
- Clear, no-nonsense directions to finding and applying for loans through our partnerships with select lenders.
- Information to to understand and compare the real value of award letters.
- An interactive tool to help you understand your financial aid awards—and compare offers from different schools.
- Offers and advice on other financial necessities to consider as you head off for school, including banking, credit and insurance options.
Access to these resources won't set you back a single penny -- it's all free.
After you have registered for this site, you should begin your funding search with a brief overview of the financial aid process. So here's a step-by-step guide to applying for financial aid
What the heck is a "Phaff-suh?"
As autumn unfolds and the days grow shorter, students start working on their admissions applications. At the same time, parents should start gathering together their records if they will be applying for financial aid. The most basic first step is to determine the deadlines and filing requirements for every school where aid will be sought. As a minimum, every student seeking aid (including student loans) will need to fill out a standardized need-analysis form called the Free Application for Federal Student Aid (FAFSA). This form is available online at www.fafsa.ed.gov, but also can be completed using a paper version that is readily available (usually in early December) from high school guidance offices public libraries and college financial aid offices. Make sure that you complete the proper version of the form for the academic year you are seeking aid and keep in mind that the FAFSA can be filed so earlier than January 1 of the year in which you are hoping to receive assistance. So for example, a student seeking aid for the fall 2004 and spring 2005 terms would use the 2004-2005 version of the FAFSA and file it no earlier than January 1, 2004.
Many private colleges and some state-supported institutions may require you to fill out the CSS / Financial Aid PROFILE form as well. This form is developed and processed by the same organization that brings you the SAT -- The College Board. A processing fee will be charged based on the number of schools to which you want the form sent. The PROFILE form involves a two-step process. If at least one college to which you are applying for aid requires the PROFILE, you must first register to get the actual form. A customized form will then be generated for which can then be completed and filed. Starting with the 2004-2005 version, the PROFILE can only be filed online. Registration information will be available in the high school guidance offices or online at www.collegeboard.com At some schools the PROFILE will need to be filed with the College Board by late-December for regular decision applicants, so you may well need to file the PROFILE before you can even file the FAFSA.
Some schools require still other forms, all with their own deadlines; for example, many selective private colleges often have their own financial aid forms. To find out which forms are required by a particular college, consult the individual school's general information bulletin or the admissions/financial aid area of each school's web site. At most schools, the deadlines for financial aid will coincide closely with the admissions deadlines. So don't make the mistake of assuming you should wait to hear if you are accepted before you apply for financial aid. Since the demand for aid exceeds the supply, missing the financial aid deadlines can result in a significantly reduced aid package. If you cannot get the tax returns prepared in time to meet your earliest school's deadline for the FAFSA and/or the PROFILE, it is perfectly acceptable (and indeed desirable) to estimate your income figures on the forms so that you meet all the deadlines.
Note: If you are an Early Decision applicant, you will most likely need to file the PROFILE and/or the school's own aid forms in the fall. If you are accepted, you'll get a tentative aid package usually in December or early January. You will then still need to file the FAFSA on a timely basis and possibly submit other paperwork (such as completed tax returns) before you will receive a final award for the year.
How Do They Crunch the Numbers?
All of the aid forms ask the same types of questions, some which seem invasive and prying. How much did you earn last year? How much money do you have in the bank? What is your marital status? A hundred or so questions later, a very clear picture emerges of the available income and assets of both the student and the parents.
The processor of the FAFSA form uses a federal formula (called the federal methodology) to decide what portion of your income and assets you get to keep and what portion you can afford to give toward college tuition this year. This amount is called the Expected Family Contribution (EFC). However, some schools do not feel that the EFC generated by the FAFSA form gives an accurate enough picture of what the family can contribute to college costs. Using the supplemental information on the PROFILE form and/or their own individual forms, they perform a separate need analysis (using a formula called the institutional methodology) to determine eligibility for aid programs that those schools control directly.
A Family's "Need"
Meanwhile, the admissions offices of the different colleges have been deciding which students to admit and which to reject. Once they've made their decision, the financial aid officers (known as FAOs) get to work. Their job is to put together a financial aid package of grants, work-study, and loans that will make up the difference between what they feel you can afford to pay and what the school actually costs. The total cost of attendance for a year at college includes tuition and fees, room and board, as well as allowances for personal expenses, books and supplies, and transportation (i.e. the cost of a few round trips between a boarding away campus and home or the cost of the daily commute.) Even if you live at home, many schools will include an allowance for the cost of room and board in the cost of attendance. The difference between what you can afford to pay and the total cost of attendance is called your "need."
In Theory, It's as Easy as E-F-C
In theory, the Expected Family Contribution will be approximately the same for all the schools to which you apply. If your EFC is calculated to be $10,300 and you are accepted at a state school that costs $13,300, you will pay about $10,300 and the school will make up the difference -- in this case $3,000 -- with an aid package. If you apply to a prestigious Ivy League school that costs $38,000, you will still pay about $10,300 and the school will make up the difference with an aid package of approximately $27,700.
Again, in theory, the only difference between an expensive school and a cheaper school (putting aside subjective matters like the quality of education) is the amount of your need. In some cases, depending on how badly schools want a student, there is not a penny difference between the costs of an exclusive private institution and a state school.
This is why families should not initially rule out any school as being too expensive. The "sticker price" doesn't necessarily matter; it's the portion of the sticker price that you have to pay that counts. Parents are often under the impression that no matter what type of school their child attends -- be it a very expensive private college, an expensive out-of-state public institution, or their local state university -- they will receive the same amount of aid. In fact, the amount of aid is in part determined by the cost of the school you choose.
But in Reality...
Of course, the reality is slightly more complicated. Because some schools are using supplemental data (such as home equity) to determine eligibility for their own aid programs, your expected contribution at a more selective university will most likely be different, and in some cases higher. How can you counter these differences? Read the article on EFC Tips to minimize the impact of these adjustments and maximize your eligibility for financial aid.
The Aid Package
Whether for early or regular admission, each offer of admission from a particular college is followed by an award letter. This letter will tell you what combination of aid the FAO has put together for you in order to meet your need. The package will consist of three different types of aid:
- Grants and Scholarships
These are the best kinds of aid, because they don't have to be paid back. Essentially a grant is free money. Some grant money comes from the federal government, some comes from the state, and some comes from the coffers of the college itself. Best of all, grant money is almost always tax-free.
Scholarships are also free money, although there may be some conditions attached (academic excellence, for example). Contrary to popular wisdom, scholarships are usually awarded by the schools themselves. The amount of money available from outside scholarships is actually quite small.
- Federal Work-Study (FWS)
The federal government subsidizes this program, which provides part-time jobs to students. The money earned is put toward either tuition or living expenses. Be careful when reviewing the award offers from colleges to discern how much of your award is based on work-study. Since this figure is based on anticipated earnings but does not guarantee them, the additional money may be misleading.
- Student Loans
These loans, usually taken out by the student rather than the parents, are often subsidized (and guaranteed) by state or federal governments. The rates are usually much lower than regular unsecured loans. In most cases, no interest is charged while the student is in school, and no repayment is required until the student has graduated or left college.
Unmet Need
In some cases, you may find that the college tells you that you have "unmet need." In other words, they were unable to supply the full difference between the cost of their school and the amount they feel you can afford. This is bad news. What the college is telling you is that if your child really wants to attend this college, you will have to come up with even more money than the college's need analysis decided that you could pay.
Usually what this means is that you will have to take on additional debt. Sometimes the colleges themselves will be willing to lend you the money. Sometimes you will be able to take advantage of other loan programs such as the Federal Parent Loans for Undergraduate Students (PLUS), which is a government-sponsored loan to parents. In addition there are numerous alternative loan programs, which can make up the difference in what your family is expected to pay.
Same Time Next Year
The financial aid package you accept will last only one year. That means that the typical college undergraduate candidate will have to go through the financial aid process four separate times, submitting new need analysis documents annually until the applications for senior year. If your financial situation were to stay exactly the same, then next year's aid package would probably be very similar to this year's. In reality, however, most families' financial situations do change from year to year.
And we'll be here with the latest tips, tools and strategies to help you get the most money possible.
