Saturday, February 4, 2023

How Does Financial Aid Work For College

Don't Miss

The Student’s Financial Need

how does financial aid work

In the college financial aid process in the United States, a student’s “need” is a figure which colleges use when calculating how much financial aid to offer a student. It is determined by taking the college’s Cost of Attendance, which current rules require each college to specify. Then from it is subtracted the student’s Expected Family Contribution, based on the student’s income and assets, and calculated by the U.S. Department of Education under rules set by Congress and processed using the FAFSA system. For unmarried students under 24, Congress mandates that parental income and assets be included. The resulting figure is the student’s “need”. Colleges attempt to provide students with enough financial aid to meet all student need, but in most cases are unable to do so completely. The result is “unmet need”.

Under federal law, if there are special circumstances such as loss of a job or large medical expenses, college financial aid offices have considerable liberty to lower a student’s calculated need, thus resulting in a larger aid award.

Understanding Types Of Financial Aid

Financial aid comes in many forms, such as scholarships, which do not have to be paid back, and loans, which do have to be repaid. Unfortunately, international students are not eligible for loans from the US governmentbut there are some private student loan companies.

Most universities post the average amount of financial aid students received in previous years on their websites, which can be very helpful. When evaluating a school, look at the total aid dollars given to international students and the number of students supported to assess the full scope of resources available, Ziporyn says.

How Much Financial Aid Can I Get

The amount of need-based financial aid that you can get depends on your EFC , which is calculated when the federal government processes your Free Application for Federal Student Aid . Many variables go into the formula used to calculate your EFC number, so it is impossible to predict how much you might qualify for until you actually receive your FAFSA results.

If the amount of need-based aid that you get doesn’t cover the full cost of your education, then you might wonder how to get more financial aid. That’s normal. But it’s a good idea to proceed with caution. If your student loan payments end up being more than about 10 percent of your monthly take-home income after leaving school, then you might struggle to manage your finances.

That said, you might be able to uncover scholarship opportunities that you missed before by taking more time to research the possibilities. And taking out unsubsidized student loans through the federal government could definitely be an option, but you’ll have to pay the interest on them while you’re in school.

As a last resort, you might consider a private student loan from a bank. Just keep in mind that you’ll probably have to pay a high rate of interest. And private loans don’t usually come with the same protections or repayment options that government loans come with. A lot of students have gotten themselves in financial trouble by taking on too much high-interest debt. So only use that option if you really have to.

Recommended Reading: How Much Is My College Book Worth

Frequently Asked Questions About The Fafsa

What is a Schedule 1 FAFSA?

The Schedule 1 form is used to report income adjustments to tax returns for additional income, such as unemployment payments, capital gains, or alimony payments. One of the FAFSA questions asks whether you or your parents have filed or will be filing a Schedule 1 with your income taxes. The answer is factored into the calculations for your Expected Family Contribution or Student Aid Index.

Answering the Schedule 1 question has become much easier in recent years. If you’re using the Internal Revenue Service Data Retrieval Tool to pull information from your tax returns, the answer will automatically populate on your FAFSA form. If you’re entering data manually, the FAFSA help tools will guide you through the process of answering the question. Generally speaking, you’ll answer “No” if you or your parents don’t need to file a Schedule 1 or if you are filing to report one or more items listed in the help tool. You’ll answer “Yes” if you have filed or are planning to file a Schedule 1. You can also answer “Don’t know” if you’re still unsure after reading the help tool’s guided questions.

How do I change my name on the FAFSA?

  • You can log in at fafsa.gov, go to the “My FAFSA” page, select “Make FAFSA Corrections,” then make your changes and submit the new information.
  • If you submitted a paper application, write the corrections or updates on your copy of the form, make a new copy, and mail it to the address shown on your Student Aid Report .
  • Several Programs Offer Financial Aid Depending On Need

    Financial Aid 101: What Is Financial Aid & How Does It ...

    Many students and parents assume that financial aid for community college students doesnt exist because tuition for;these colleges;is so comparatively inexpensive. But that’s not the case.

    Unfortunately, money to pay for any college is becoming harder to find even as college costs increase at a rapid pace. It can help to understand all the various programs out there, the requirements for each, and how to apply for aid.

    Don’t Miss: Is College Free In Canada

    Plan On How Much Is Required

    It is important to make a thorough strategy in order to fulfill all the needs. Here needs in the sense, we mean not only about the tuition fee but also the room, transportation, books and all the expenses related to the college. Then you can calculate the expenses you can afford and how much extra money you will need in order to lead a peaceful college life.

    What To Know About College Aid

    Fast facts:

    • College aid is awarded by individual colleges and universities.
    • Depending on the school, aid may be awarded based on merit, financial need, or both.;
    • In addition to completing the FAFSA, you may also have to fill out the College Scholarship Service Profile to qualify for aid. The CSS Profile asks for more in-depth information about your financial situation.;

    Along with any federal or state aid, your school might offer additional grants and scholarships, often based on merit, financial need, or other qualifications to lower the cost of attendance and convince you to attend.

    You might need to complete the College Scholarship Service Profile, or CSS Profile, to qualify for aid. You’ll have to provide additional information about the financial situation of you and your family on the CSS Profile.

    Colleges generally send out financial aid packages around the same time they send out admission acceptance letters.

    Read Also: Who Buys Back Used College Textbooks

    Is A Financial Aid Appeal Different Than A Change To Your Fafsa Form

    Changing a FAFSA form and writing a financial aid appeal letter serve the same purpose but require different steps. Students whose financial situation changes can resubmit their FAFSA with new information. Learners complete this step first, as schools determine need-based financial aid on FAFSA results. A modified EFC may raise institutional financial aid considerably, making a financial aid appeal letter unnecessary.

    Some degree-seekers with a modified EFC may still need additional aid. These learners can write a financial aid appeal letter to their schools financial aid department.

    How To Apply For Financial Aid Through The Fafsa

    Financial Aid : How Does Financial Aid Work?

    Filling out the FAFSA form is the first and most important step in mapping out how you will pay for college. It can get complicated, but this step-by-step guide will help you navigate the process.

    Go to the FAFSA portal: Go to www.fafsa.gov to access the FAFSA form. You can start your application, save it, and finish it later if you need to. You can also and submit it by mail or complete it through the myStudentAid mobile app.

    Create an FSA ID username and password: Create these using your Social Security number and name as it appears on your Social Security card. Dependent students and a parent each need to have an FSA ID to submit the application online and use the myStudentAid app. It’s best to do this early on in case your information needs to be verified, which can take up to three days.

    Gather materials needed to apply: You’ll need your Social Security number, permanent resident card , driver’s license , W-2 forms, federal tax records, and information on your investments, cash, savings, and checking account balances. You may also have the option to have your tax information automatically entered through the IRS Data Retrieval Tool. You can request a digital or physical copy of your tax return through the IRS website.

    Log in and start your application: Once you have an FSA ID, you can use it to log in and start filling out your FAFSA. If you’re a dependent student, make sure to use your FSA ID on the application rather than your parent’s.

    Also Check: How Many College Credits Do You Need To Graduate

    What Is The Difference Between Need

    Need-based Aid

    Merit-based Aid

    It is funding given to the students based on their ability to afford for the college.

    It is funding given to the students based on exceptional performance in their academics or activities.

    It is given in the form of scholarships, grants, and loans.

    It is given in the form of scholarships or grants.

    It is determined by a standardized formula.

    Criteria vary with respect to college rules and regulations.;

    When Do I Need To Complete The Fafsa

    Get your calendar reminders ready! It is vitally important that you submit your FAFSA form by the financial aid deadline.

    Though the federal deadline to submit your FAFSA is June 30th of each year at midnight CST, state and college deadlines have their own requirements and cutoffs for financial aid consideration. State deadlines can be found at the Federal Student Aid deadlines site, but you will have to check with your financial aid office about specific college deadlines.

    Regardless of deadlines though, it is best practice to submit the FAFSA as soon as possible after it opens for filing on October 1 of every year. When it comes to filing the FAFSA, early applicants may get more money, says a 2015 Edvisors survey. The survey showed that students who filed within the first three months received double the financial aid package at their accepted schools compared to those students who waited. If your financial circumstances change between your FAFSA submission and school enrollment, contact your financial aid office to update your financial aid package.

    For a given academic year, the U.S. Department of Education allows students to submit the FAFSA forms between October of the previous academic year and June of the current academic year, with the federal FAFSA deadline that same June. For example, the FAFSA for the 2020-21 academic year was made available on October 1, 2019, with a federal deadline of midnight CST on June 30, 2020.

    Recommended Reading: How To Put Volunteer Work On College Application

    How To Update Your Fafsa

    Degree-seekers can update the FAFSA by resubmitting the form. The process involves answering the same questions and providing new documentation, if necessary. The FAFSA offers step-by-step guides. After updating the FAFSA, degree-seekers should contact their schools financial aid department to learn about next steps and whether their aid offer changes.

    Can You Tell Me How To Apply For Financial Aid

    How Does Financial Aid Work For College?

    If you want to know how to get financial aid, then the first thing to understand is that the sooner you start applying, the better your chances will be of getting everything you qualify for.

    Ensure You Meet Basic Eligibility

    Before you apply for financial aid, it’s important to make sure you meet the basic criteria specified by the government or private organization you’ll be applying to.

    Independent organizations each may have different minimum standards of eligibility for scholarships and grants, so contact each one you’re interested in to get the information you need.

    In the case of applying for government student aid, you generally need to meet basic requirements such as:

    • Having at least a high school diploma or equivalent
    • Being a U.S. citizen or eligible non-citizen
    • Having a valid Social Security number
    • Being registered with the Selective Service
    • Being accepted or enrolled in an eligible post-secondary program
    • Not having any federal student loans in default
    • Not owing a refund on a federal grant
    • Making a commitment to use the aid for educational purposes only

    Complete the FAFSA

    When it comes to applying for financial aid, the actual process usually begins with filling out the Free Application for Federal Student Aid . After submitting the FAFSA, you will receive your personal Student Aid Report , which is what the federal government, schools, many state governments, and other organizations use to help determine how much student aid to provide.

    Find Scholarships

    Read Also: How To Apply For College After High School

    How Is Financial Need Determined

    Colleges independently determine financial need by subtracting your unique expected family contribution from the average cost of attendance at a college, which typically includes tuition and fees, room and board, materials such as textbooks and school supplies, and travel expenses.

    The EFC is calculated in the Free Application for Federal Student Aid and then used by collegesâ financial aid staff to determine how much financial aid you would receive if you were to attend their school. When you fill out the FAFSA, you submit information about you and your familyâs income and financial assets, as well as how much you and your family are expecting to contribute to your college tuition.

    Important note: Your EFC is not the amount of money your family will have to pay for college, nor is it the amount of federal student aid you will receive. It is a number used by your school to calculate how much financial aid you are eligible to receive.

    How much does college typically cost at typical public and private 2 and 4-year colleges?

    The cost of college can vary widely depending on the type of school , 2-year or 4-year, and type of program. The image below illustrates how the typical cost of college can range widely depending on many factors, ranging from whether a school is public or private, the cost of room and board, and other expenses.

    Types Of Federal Financial Aid

    We will break down the main kinds of federal financial aid in two categories:

    • Need-based aid
    • Non-need-based aid

    Before we do that, note that the information on your FAFSA is run through a formula that determines a students ability to cover college costs and the need for financial aid. Here is what it uses:

    • Cost of attendance , or the total cost to attend a specific college, including all tuition, fees, educational expenses and living costs
    • Expected family contribution , which is the amount you and your family should be able to pay toward college costs, according to Federal Student Aid calculations

    The formula to calculate financial need is COA minus EFC.

    The higher a students need for federal student financial aid, the more need-based aid they will be granted. The lower it is, the more likely it is that the student will qualify for little to no need-based aid.

    So, now, lets look at need-based aid versus non-need-based aid.

    You May Like: Are Donations To Hillsdale College Tax Deductible

    How Do Colleges Help Meet Financial Need

    Once a college knows how much federal aid you are eligible to earn based on your FAFSA information, they can then determine how much your financial need is, based on the cost of attendance at their institution and your expected family contribution. There are two kinds of institutional awards that colleges contribute to help students offset the cost of college: merit-based awards and need-based awards.

    Merit-based aid is a grant award based on the strength of your application to a college. Once a college establishes the amount of federal aid you are eligible to earn, they will next determine how much grant money they can offer for your academic and extracurricular accomplishments.

    Need-based aid is aid that a college based on financial need. If the federal aid package plus the merit-based aid from the college is not enough, colleges will also offer students need-based awards to try to further cover the gap.

    Divorce And Financial Aid

    FAFSA Overview

    This page answers common questions about the relationship between divorce and financial aid. It discusses which parent is responsible for completing the FAFSA, the obligations of non-custodial parents to pay for college, college support agreements, the obligations of stepparents, and the ability of non-custodial parents to take advantage of the various tax benefits for education.

    Completing the FAFSA

    If your parents are separated or divorced, the custodial parent is responsible for filling out the;Free Application for Federal Student Aid . The custodial parent for federal student aid purposes is the parent with whom you lived the most during the past 12 months. Note that this is not necessarily the same as the parent who has legal custody. If you did not live with one parent more than the other, the parent who provided you with the most financial support during the past twelve months should fill out the FAFSA. This is probably the parent who claimed you as a dependent on their tax return. If you have not received any support from either parent during the past 12 months, use the most recent calendar year for which you received some support from a parent. These rules are based on section 475 of the Higher Education Act of 1965 ).

    Biological parents who never married are treated the same as parents who are divorced.

    Note, however, that any child support and/or alimony received from the non-custodial parent must be included on the FAFSA.

  • The parent who has legal custody.
  • You May Like: Is Grammarly Free For College Students

    More articles

    - Advertisement -

    Popular Articles