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  • How Does Federal Student Aid Work?

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    Applying for financial aid means filling out forms. A lot of forms. Start with the Free Application for Federal Student Aid (FAFSA), which you should complete after January 1 your senior year. Then check out the requirements for the schools where you're applying. They may have their own forms, or use the CSS/Financial Aid PROFILE Form. You'll need a lot of financial information from your parents for these forms, so take your time and be thorough.

    These forms ask a lot of prying questions. The answers you and your family provide help provide a snapshot of four things:

    • Parents' available income
    • Parents' available assets
    • Student's available income
    • Student's available assets

    This snapshot is used to calculate your Expected Family Contribution, or EFC, which is an estimate of how much you can afford to pay for college. In theory, your EFC will remain the same regardless of whether you choose to attend a public school that costs $18,000 a year or an Ivy League school that costs $62,000 a year.

    The cost of attendance at any college includes:

    • Tuition
    • Fees
    • Room and board
    • A personal expenses estimate
    • Books and supplies
    • A travel estimate

    Financial aid officers determine your individual need by subtracting your EFC from the cost of attendance at their school.

    Cost of attendance - Expected Family Contribution = Need

    Your financial aid package is intended to meet your need. It will consist of three types of aid:

    • Grants and scholarships
    • Federal work-study
    • Student loans

    Sounds simple, right? Not so much. Your EFC might be more than you can realistically afford. Some schools use supplemental data (like home equity) when allotting their private aid to students, which means your EFC might be different at a more selective school. Check out our book Paying for College Without Going Broke for more detail on these situations, and strategies for how to deal with them.

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