Need-Based Aid: What You Need to Know
How your financial aid is calclulated
Your applications are in and you’ve been accepted to your favorite school. Now who’s picking up the tab? If you’re lucky, maybe your parents, grandparents, or that lottery ticket you bought last night. But chances are some, if not all, of your college costs will fall into your own hands. If that’s the case, you can join the 14 million students just like you who rely on need-based financial aid to help pay for college.
Financial aid is meant to supplement how much you will owe for your education. (No, the financial aid fairy does not make the tuition bill go completely away, even though financial aid can do magical things for you). Students who do not account for their share of expenses for school usually wind up in the financial aid office the first week (after settling into their dorm and getting chummy with their roommate) with a bill they have no way to pay. The ugly truth at that point is they’ve flown themselves and all their belongings thousands of miles away only to immediately reship everything - including themselves - back home. Lovely, right?
Here are some must-knows about how to prevent yourself from getting into a sticky financial aid situation:
Your EFC figure is not necessarily how much you can expect to pay for your education. When you fill out financial aid applications (like the FAFSA or CSS Profile) you and your parents (if you are considered a dependent) will be assigned a number called the Expected Family Contribution (EFC). This figure is not necessarily how much you can actually expect to pay for college, it is merely a figure colleges use to compare students’ “neediness” when awarding need-based aid.
Your EFC can be based off more than just you and your parents’ adjusted gross income (AGI). The FAFSA is the standard federal aid application and it only looks at a family’s adjusted gross income (AGI), wages, and a small portion of its investments. However, more institutions are beginning to make students fill out a CSS Profile, which tends to go into greater depth when investigating a family’s financial strength. Depending on a school’s preferences, it can request information about your family’s home equity, additional real estate holdings, trust funds, and even what kind of cars your parents drive.
The majority of US universities and colleges cannot meet a student’s full need. When a school proclaims it meets 100% of its students’ need that means the school awards its students enough grant and/or loan money so that all the student is responsible for is their EFC figure. For example, if your EFC is $2,000 and a school costs $40,000, if that school meets full-need, then it will offer you $38,000 in financial aid. And it’s important to keep in mind that schools may count federal loans (that you have to pay back) as part of meeting your need, so not everything in your financial aid package will be “free money”. Be sure to check the financial aid facts you may find on the internet with the school itself before making any important decisions.
Universities and financial aid offices all across the nation would like to fully fund their students’ educational dreams, however, just like your empty pockets, those institutions probably don’t have that kind of cash. This means that you should probably think carefully about how much you can afford for college as well as investigate loan options, private scholarships, work opportunities, and cheaper living arrangements and/or alternate transportation options.
Looking for other ways of getting cash for class? Check out our scholarship listings for dollars just waiting for your application.